Rice Economy of Bangladesh

Progress and Prospects

Bangladesh has achieved remarkable success in attaining near self-sufficiency in the
production of rice. This paper traces the transformation of the rice economy of Bangladesh
over the past two decades. It examines the factors behind the growth in rice production and
the role of market-oriented policy reforms, particularly in respect of the liberalisation and
privatisation of agricultural input markets. The paper argues in favour of strengthening the
role of the private sector in input markets while emphasising larger allocations of public
resources for agricultural research and water resource development.
RAISUDDIN AHMED

I
Introduction

importation of wheat with the export of surplus rice, should

replace the concept of self-sufficiency.

ice is the most strategic commodity in the economy of

Bangladesh. It is the main staple of its countrys 130
million people and the source of about 76 per cent of the
calorific intake of the population. The share of rice in the
agricultural GDP (crop, livestock, forestry, and fisheries) was
35 per cent in 2000; rice accounted for about 61 per cent of value
added in the crop sub-sector in that year. Obviously, the pace
of growth in the production of rice sets the pace of agricultural
growth, which is crucial for the growth of farm and non-farm
income and eradication of poverty in rural Bangladesh.1 The role
of rice, as that of agriculture itself, is declining as other subsectors assume increasingly greater roles. But as the staple food,
its importance will continue to reign supreme.
Foreign sources of supply, be it food aid or commercial import,
have been perceived not only as unreliable but also demeaning
to national pride. Consequently, successive governments have
given top priority to foodgrain self-sufficiency, meaning elimination of foodgrain import. Thus, all agricultural plans have
historically been anchored to the objective of self-sufficiency in
foodgrain production, of which rice constitutes 93 to 96 per cent
and wheat the remaining (Table 1). Foodgrain self-sufficiency,
therefore, implies primarily an autarky in rice production.
This paper traces the process of transformation in the rice
economy of Bangladesh through changes in production, import,
marketing, technological progress, public policies, and demand
for rice. Lessons from historical perspectives are combined with
projections of future demand and supply to present an outlook
for rice in the future.
Analyses presented in the paper lead to a number of significant
conclusions. Bangladesh seems to have made remarkable progress
in the foodgrain sector which provides a psychological boost to
the nation in considering the occurrence of famine as a thing
of the past. This success has come from technological advance
in farming made possible by public-sector research, privatesector irrigation development, and market deregulation. Input
subsidy as a policy instrument has played a relatively small role
in Bangladesh compared with India. Self-sufficiency in rice
production is a reality now, even though self-sufficiency in wheat
will neither be feasible nor desirable for Bangladesh. Therefore,
self-reliance, implying a surplus production of rice and

II
Trends and Pattern of Production

Economic and Political Weekly September 4, 2004

Rice and wheat are produced by about 12 million family farms,

each operating an average area of 2 acres and consisting of 7-8
scattered plots. Farmers operating 0.05 to 2.49 acres of land are
classified as small; those operating 2.50 to 7.49 acres as medium,
and 7.50 or more acres as large. In 1996, small farms constituted
80 per cent of the total cultivating 41 per cent of the total land;
medium and large farms accounted for 18 and 2.0 per cent,
respectively of all farms, cultivating 42 and 17 per cent of the
total land [BoS 1996].
The aggregate production of rice has grown at 3.0 per cent
per annum during the 21-year period from 1980-81 through
2001-02 (Table 1). This growth rate accelerated peaking to about
4.2 per cent during 1996 through 2002. Wheat production has
grown at about 3.2 per cent annually during the same 21-year
period; but the growth rate was faster during the second compared
with the first decade. The success in wheat production is basically
a feat of the 1990s.
This growth rate of foodgrain production in Bangladesh is
remarkable when seen in the context of a near-stagnant situation
during the two decades before the mid-1980s. However, the
decline in population growth in Bangladesh has been spectacular;
the growth rate in population was 2.5 per cent in the early 1980s,
which has declined to about 1.5 per cent in the early 2000s. This
decline has translated into a growth of per capita production of
1.2 to 1.6 per cent per annum, enabling the country to reduce
the inflow of food aid.
The overall foodgrain production growth is largely a reflection
of the success in rice production. Rice crops are produced in three
seasons in a year - aus, aman, and boro. Changes in the seasonal
distribution of production have turned production into a continuous flow of foodgrains, reducing the need for elaborate commercial storage. The share of aus (harvested in June-July) has
gone down from 25 per cent in the mid-1970s to 7 per cent in
the early 2000s, while the share of aman (harvested in OctoberDecember) has registered a modest decline from 56 per cent in
the mid-1970s to 45 per cent in early 2000s. The share of
boro (harvested in May-June) has increased from 19 per cent to

4043

48 per cent during this period. These changes have implications

in seasonal prices and holding of trade-stock.
Regional distribution of production growth has implications
for spatial prices and regional income distribution. The pace of
growth of production was fast (3 to 7 per cent annual) in the
western and north-western districts, moderate (2 to 3 per cent)
in Khulna, Rangpur, and Faridpur, and slow (less than 2 per cent)
in central, north-eastern, and coastal districts of Bangladesh.
Broadly speaking, this spatial pattern of growth in rice production
has contributed towards equalisation of regional income distribution [Ahmed 2001].

Figure: Indicators of Increase of Rice Production by Sources

between 1975-77 (1st Period) and 1999-2002 (2nd Period)
(Production in million tonnes area in million acres, yield in kg/acre)
Panel A
Units
30
25.6

25.0

25

22.8

20

15

III
Sources and Determinants of Growth
in Rice Production
The growth in the production of rice that has occurred during
the past two decades was realised through improvement in yield.
Intensification of the use of modern inputs played a key role in
increased production. The land resources allocated to rice actually
declined over time, particularly during the 1990s and early 2000s.
Between 1975-77 and 19992001, production doubled, yield has
more than doubled, but land area under rice has declined from
25 million acres to 22.8 million acres (see the figure).2 Technological progress occurred not only against the background of
a falling land area under rice but also of a declining real price
of rice and rising labour cost of production.3
Agricultural technology: Irrigation-based seed-fertiliser technology constituted the foundation for growth in rice production in
Bangladesh. HYV seeds, irrigation, and fertilisers were the three
critical elements of the technology package. All technological
indicators demonstrate a robust progress in the diffusion of
modern technology (see the figure ). Irrigation is now provided
to half of the land under rice and two-thirds of the rice area is
planted with modern varieties. Fertiliser application has reached
an average level of 114 kg per acre against only 19.4 kg in the
late 1970s. According to the 1996 Census, 82.6 per cent of all
farmers use fertiliser and 71 per cent of the gross cropped area
is fertilised. Power tiller is not a directly relevant input for
increasing yield, but it is believed to have contributed to the
increase in cropping intensity and expansion of modern varieties
of rice. Increase in the cost of maintaining draft power for
cultivation and sharply increasing wage rates for agricultural
labour have motivated farmers to adopt power tillers.
The 1960s agricultural commission recommended direct public
initiatives for agricultural development. Its recommendations
included development of specific public institutions and policies
to support the spread of modern inputs in agriculture. The era
of burgeoning public intervention in agriculture thus began in
the early 1960s.
A number of key institutions, developed following the agricultural commissions report, contributed to the success in
agriculture. The Bangladesh Agricultural Development Corporation (BADC) was created to (a) supply chemical fertilisers and
pesticides, (b) develop small-scale irrigation systems based on
low-lift pumps and tubewells, (c) supply high-yielding seeds, and
(d) introduce mechanised cultivation in the haor (low-lying,
sparsely populated) areas. The Bangladesh Water Development
Board (BWDB), then known as Water and Power Development
Authority, was created to develop devices for large-scale irrigation,
flood control, and drainage. A system of 13 research institutes,

4044

12.3
10

5
490

1120

0
1
2
Production

2
Area

Panel B
70

67

2
Yield
Kg/acre
120
113.9

60

100
51

50

80

45
40

60
30
40
20
13

12

19.4

10

20

small
0

0
1 2
1 2
1 2
Proportion Proportion Proportion of
of HYV area of irrigated land cultivated
(per cent)
rice area by power tiller
(per cent)
(per cent)

1 2
Fertiliser
(kg/acre)

including the Rice Research Institute (BRRI), was developed.

Later, these institutes were consolidated and coordinated under
an apex body called Bangladesh Agricultural Research Council
(BARC). The Rural Development Academy (BARD) in Commilla
was set up to experiment with institutional models for rural
development. This academy became known globally. The model
of private sector shallow tubewells was an invention of the
academy.
Input market policies: Input market development till the change
in policies to end or significantly reduce public interventions are
briefly mentioned below:
(1) Irrigation development started with winter rice cultivation
initially in the low-lying (haor and beel) area but later extended
to all other areas of the country by using 2-3 cusec low-lift pumps
and sinking 2-3 cusec tubewells in upland areas. Initially, water

Economic and Political Weekly

September 4, 2004

charges were nominal, but over time farmers had to bear most
of the operation costs. This small-scale, mechanised irrigation
under public initiative could cover only about 5 per cent (out
of 15 per cent total land under irrigation) by 1985. The largescale irrigation and water control development (undertaken by
WDB) has not, even today, covered more than 2 per cent of total
irrigated area, even though such projects received the bulk of
the public funds for agriculture and rural development [Public
Expenditure Review, Ahmed 2002]. Such projects are located
mostly in the central, north-eastern, and coastal districts; as a result,
modern agricultural technology still remains in a rudimentary
Table 1: Production of Rice and Wheat, 1980/812001/02
(Production in 000 tonnes, Population in Millions)
Years

1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/2000
2000/01
2001/02
Growth rate (per cent)
1980/812001/02
Growth rate
1989/902001/02

Rice

Wheat

Total Proportion Population Per

Food- of Rice in
Capita
grain
Total
Produ(Per Cent)
ction of
Foodgrain
(kg)

13,880
13,629
14,215
14,509
14,623
15,038
15,406
15,413
15,544
17,856
17,852
18,252
18,341
18,041
16,833
17,687
18,882
18,862
19,905
23,067
25,086
26,032

1,092
967
1,095
1,211
1,464
1,042
1,091
1,048
1,021
890
1,004
1,065
1,176
1,131
1,245
1,369
1,454
1,803
1,908
1,840
1,673
1,850

14,972
14,596
15,310
15,720
16,087
16,080
16,497
16,461
16,565
18,746
18,856
19,317
19,519
19,172
18,078
19,056
20,336
20,665
21,813
24,907
26,759
27,882

92.7
93.4
92.9
92.3
90.9
93.5
93.4
93.6
93.8
93.5
94.7
94.5
94.0
94.1
93.1
92.8
92.9
91.3
91.3
92.6
93.7
93.4

89.9
91.9
93.9
96.0
98.1
100.3
102.5
104.7
106.8
108.9
111.0
113.0
115.0
117.0
119.0
121.0
123.0
125.0
127.0
129.0
131.0
133.0

166.5
158.8
163.0
163.8
164.0
160.3
161.0
157.2
155.1
172.1
169.9
170.9
169.7
163.9
151.9
157.5
165.3
165.3
171.8
193.1
204.3
209.6

3.0

3.2

3.0

1.1

3.1

6.1

3.3

1.6

Source: Computed using data in Ahmed (2001), and Dorosh et al

(2003).

stage in these areas. The subsidy involved in these large-scale

projects is still 100 per cent.
(2) Bangladesh has been following a policy of self-sufficiency
in the production of urea; most phosphatic and all potassic
fertilisers are imported. BADC, till the launch of policy reform,
enjoyed a monopoly in fertiliser supply; it, therefore, developed
elaborate systems of storage and sales centres. At the village level,
it introduced a system of licensed dealers. Sales were conducted
at prices fixed by the government, involving about 50 to 60 per
cent subsidy. The total budgetary subsidy in 1980-81 was small,
about 0.5 per cent of GDP and 3.6 per cent of total public
expenditures. This was primarily because of small volume of
consumption.
(3) Modern equipment in agriculture include low-lift and tubewell
pumps, diesel and electric engines, pipes, small tractors, power
tillers, and an assortment of other machines like dryers and
weeders. Engines and pumps are crucial for irrigation and their
supply is import-dependent. Most import was restricted. A number
of key restrictions were in effect on agricultural equipment.
(4) Private import of engines for irrigation was not allowed,
except for makes and models approved by a standardisation
committee and with the special permission of the ministry of
agriculture (MoA).
(5) Private import of pumps for irrigation was not allowed, except
with permission from MoA and a no-objection certificate from
the ministry of industries.
(6) No power tillers or tractors could be imported without the
approval of MoA in respect to the make and models of power
tillers [Guisselquist 1992].
(7) These restrictions were a key constraint to any private sector
initiative in modernisation.
(8) High-yielding seeds and pesticides, particularly the former,
are important ingredients of modern agriculture. The government
established 19 seed multiplication farms to multiply foundation
seeds from research systems. These seeds used to be distributed
as first-generation seeds, and farmers would produce and trade
seeds for second and subsequent generations. Imports of most
seeds were prohibited except by government. Government
seeds frequently suffered from poor quality. Plant protection
responsibility, involving supply and application of pesticides,
was left to the private sector, after about 3-4 years of experimentation under the public sector. However, aerial spraying of

Table 2: Gradual Reform of Input Markets

Actions
Fertiliser market
BADC withdraws from retail and wholesale markets, private traders introduced
Licensing requirement abolished. Restriction on movement withdrawn
Deregulation of prices
Private trade allowed to purchase directly from factory gates and port points
Free import from world market
Fertiliser crisis and reversal of some reform
Government does not privatise production of urea
Irrigation Policies
BADC sells all low-lift pumps
BADC sells all tubewells
Restriction on import of engines and standardisation requirement removed
No reform of BWDB policies
Power Tillers, pesticides, and seeds
Restriction on import and standardisation requirement removed
Restriction on brand names in import removed
Except rice and wheat seeds, all seed import liberalised
Rice and wheat seed import liberalised

Time

Remark

1978-83
1982-83
1982-84
1987
1992
1995

First done in Chittagong division, then other places.

Private trade responds vigorously.
Real competition starts
Vigorous response from traders
Good response but fear of oligopoly persists
Subsidy returns but on a smaller scale
Scope of inefficiency persists

1980-82
1983-85
1988

Good response from farmers

Good response from farmers
Drastic fall in cost and vigorous growth starts
Wastage continues

1989
1989
1990
1997

Vigorous response
Modest response
New private seed farms and nurseries are mushrooming

Source: Ahmed (2001), Guisselquist (1992) and also personal contact.

Economic and Political Weekly September 4, 2004

4045

pesticides, rarely needed, has remained with the public sector

till date.
Input market reforms: The process of input market reform started
in the early 1980s. Liberalisation of market means privatisation
of public marketing, decontrol of prices and deregulation of
restrictions, including import restrictions. A concise version of
the process of liberalisation is presented in Table 2. Liberalisation
of markets for fertilisers and irrigation equipment commanded
the highest priority. In case of fertilisers, persistent pressures from
donors and vocal opposition from politicians and farm representatives characterised the process of liberalisation. This resulted
in a gradual pace of liberalisation leading towards a competitive
market, except that production of urea is still under the public
sector. In case of irrigation, the driving force for reform was
generated from the internal competition between private and
public agencies for the spread of irrigation. This competition
started when expansion of private shallow tubewells (less than
1 cusec) under the auspices of the BARD initiated a challenge,
in terms of efficiency, to the tubewell programmes of BADC.
Seed market liberalisation has attracted a new generation of seed
Table 3: Release of High-yielding Rice Varieties by BRRI,
1970-2000
Name of
Variety
Chandina (BR-1)

Growth Period of Quality

Season Maturity of Rice
(days)

Boro
Aus
Mala (BR-2)
Boro
Aus
Biplab (BR-3)
Boro
Aus
Brishail (BR-4)*
Aman
Aman
Dolabhog (BR-5)*
Aman
BR-6
Boro
Aus
Bri Balam (BR-7)
Boro
Aus
Asha (BR-8)
Boro
Aus
Suphaja (BR-9)
Boro
Aus
Progoti (BR-10)
Aman
Mukta (BR-11)
Aman
Moyna (BR-12)
Boro
Aus
Gazi (BR-14)
Boro
Aus
Mohini (BR-15)
Boro
Aus
Shahi Balam (BR-16) Boro
Aus
Hashi (BR-17)
Boro
Shahjalal (BR-18)
Boro
Mangal (BR-19)
Boro
Niamat (BR-21)
Aus
Kiron (BR-22)
Aman
Dishari (BR-23)
Aman
Naya Pajam (BR-25) Aman
Shraboni (BR-26)
Aus
BR-27
Aus
BR-28
Boro
BR-29
Boro
BR-30 to BR-34
Aman
BR-35, BR-36
Boro
BR-37 to BR-39
Aman

Yield
(tonnes/
acres)

150
coarse
1.5
120
short
1.1
160
medium
1.5
125
fine, white
1.1
170
medium
1.8
130
coarse, white
1.1
145
coarse, white
1.1
145
medium, coarse 1.4
150
small, aromatic 0.85
140
long, fine
1.2
110
1.0
155
long, fine
1.2
130
160
medium
1.6
125
coarse
1.4
155
long
1.6
120
medium
1.4
150
medium, fine
1.8
145
medium, coarse 1.8
170
medium
1.5
130
coarse
1.2
160
medium
1.6
120
coarse
1.4
165
medium
1.5
125
fine
1.4
165
long fine
1.6
130
1.4
155
medium
1.7
170
coarse
1.6
170
medium
1.7
110
coarse
0.8
150
short, coarse
1.4
150
long, fine
1.5
135
short, coarse
1.2
115
fine, long
1.1
115
medium
1.1
140
coarse
1.4
160
medium, fine
2.1
120-145 medium
1.4
140-155 short ,coarse
1.4
122-140 fine
1.4

Note: * photo-sensitive.
Source: BRRI (2000), Dhaner Chash, Gazipur, Bangladesh.

4046

Year
of
Release
1970
1971
1975
1975
1976
1977
1977
1978
1978
1980
1980
1983

companies to produce and import seeds. Liberalisation of input

markets has resulted a large reduction in irrigation costs, enormous private participation and accelerated use of modern inputs.
But new problems emerge as old ones are solved. A number of
potential problem areas warrant public intervention. For example,
efficiency in publicly owned fertiliser industries, crackdown on
cheating of farmers by dishonest traders (selling single superphosphate for TSP), and monitoring of prices at farm levels, have
caused demand for public regulation. The operation of BWDB
with 100 per cent subsidy and little contribution to development
cannot persist without stifling progress. The achievements so far
are remarkable, but sustaining progress in the future depends on
how fast and efficiently the emerging problems are addressed.
The impact of input market liberalisation has been studied.
A study adopting a multi-equation modelling approach estimated
the impact on rice production. It concludes that growth rate
in rice production would have been 2.0 per cent per annum
instead of 3 per cent if market reform did not take place [Ahmed
et al 2000].
Besides this direct impact, there is the consideration of budgetary impact and macro consequences of reform. Subsidy on
fertilisers was reduced from tk1,286 million (0.60 per cent of
GDP) in 1980/81 to only tk25 million in 1992-93. Similarly, the
elimination of subsidy on small-scale irrigation through
privatisation resulted in a budgetary savings of tk1,500 million
by 1992/93. However, while elimination of subsidy on smallscale irrigation has been sustained so far, fertiliser subsidy of
substantial amount had returned in 1996 with the arrival of a
new government. In 2001/02, the subsidy, mainly on urea did
cost the budget about tk 3,000 million (or 0.15 per cent of GDP).
Mainly domestic producers of urea, mandated to sell at cheaper
rates to farmers, receive this subsidy. This policy of cheaper urea
compared with phosphatic and potassic fertiliser prices have
accelerated the NPK imbalance in soil. Currently, the levels of
phosphate and potash in the agricultural soil are 60-70 per cent
below recommended levels [Ahmed 2001]. A subsidy on diesel
fuel used for irrigation has been proposed in the 2003/04 budget.
It is estimated that the total subsidy on fertiliser and diesel fuel
for irrigation would be around tk7,000 million, equivalent to 0.24
per cent of 2003/04 projected GDP.

Agricultural Research and Total Factor

Productivity

1983
1983
1983
1985
1985
1985
1986
1988
1988
1992
1993
1994
1994
1994
1994-95
1998
1998

The Bangladesh Rice Research Institute (BRRI), in collaboration with the International Rice Research Institute (IRRI), has
been very successful in developing varieties of rice that yield
about double the rate of local varieties and suit different
agroclimatic zones, except coastal areas (Table 3). The farmers
of Bangladesh are growing these varieties in two-thirds of the
countrys rice areas.
Beside these varieties, application of chemical fertilisers, irrigation water, plant protection measures, and improved cultural
practices has raised total factor productivity in rice cultivation.
The question is how to demonstrate objectively a measure of
contribution of research and technology.
Economists have attempted to measure this contribution through
estimation of total factor productivity (TFP), which is defined
as a residual after deducting the factor costs from product revenue
[Solow 1957]. This approach is controversial [see Felipe (1999)
and Fagerberg (1994) for the nature of controversies]. However,

Economic and Political Weekly

September 4, 2004

unlike TFP analyses for industry and aggregate economy, where

scale economy, underutilisation of capacity and market distortions are more widespread than in agriculture, the residual can
be argued as the main contribution of technology in the context
of the rice economy of Bangladesh.
Most empirical studies of TFP are done using current prices,
because current prices are expected to reflect changes in quality
in inputs as well as output [Solow 1957, Evenson et al 1999].
The estimates presented in Table 4 are at market prices as well
as at constant prices, and are taken from Ahmed (2001). Comparing growth rates in TFP at current and constant prices, the
results indicate no significant difference for the two decades taken
together. But the growth of TFP for the second decade (1.37 per
cent) seems to be larger than that in the first decade (0.79 per
cent) when constant prices are the basis of estimation. However,
at current prices the opposite results hold. Dissimilar trends in
rice prices and input costs result in a higher measure of TFP in
the second period than in the first when TFP is based on constant
prices.
It appears that the incentives to produce rice have increased at
about 1 per cent annually during the 22-year period from
1975-76 through 1997/98. This increase happened in spite of
a declining or stagnant rice price regime and rising input costs.
Increase in productivity sustained the incentives for rice production. Given that rice prices in Bangladesh were higher than world
prices at the beginning of the period and, consequently a declining
trend in future prices may seem desirable, the importance of
continued growth in productivity can hardly be overemphasised
for the future growth of rice production.

Rice Market Developments

It has been mentioned earlier that both the private sector and
the government operate in the supply of rice. The private sectors
role in marketing has been strong and increasing. This is more
so in rice than in wheat (Table 6). This section demonstrates the
magnitude and direction of change in the competitive marketing
of foodgrains in Bangladesh. Some indicators to change in
various aspects of the market are presented in Tables 5 and 6.
Increasing sale or commercialisation: In the 1960s, as shown
by various master surveys of agriculture conducted by BBS, only
about 12 per cent of production used to be marketed. This shot
up to 60 per cent of gross production by around 2000. The carrying
cost for home to market transfer by individual farmers is much
higher than the unit transfer cost for traders, who derive this cost
advantage from economies of scale. As a consequence, collection
of grains from farmers by itinerant traders has increased manifold.
Market functionaries: With increasing production and marketing, the number of mills of various sizes has shot up from about
6,155 in the 1960s to 50,868 in the 1990s (1992/93 survey under
IFPRI project). Rural electrification has been as instrumental in
this growth of processing mills.4 While the size of stock held
any time now is three times that in the 1960s, the average time
for holding the stock has fallen from four months in the 1960s
to only one month in the 1990s. Harvesting rice all round the
year has reduced the scope of stocking for a longer period. In
general, the number of traders in markets has multiplied pari passu
with volume.
Change in attitude and tied market: In the mid-960s, small
farmers used to hold all their rice harvest for family consumption
[Ahmed 1983]. Surveys conducted in 1995/96 and 1992/93

Economic and Political Weekly September 4, 2004

showed that small farmers sell 56 per cent of their gross production
compared with 66 per cent by large farmers [HES survey 1995/
96, IFPRI 1993]. Obviously, small farmers have become more
commercial now than in the past, selling as well as buying rice
as a business proposition as opposed to subsistence considerations.
In the 1960s generally and in remote areas even in recent
years interlinked markets of credit and rice were thriving in
an exploitative relation. Traders used to advance credit at sowing
time on the promise of delivery of rice by farmers at harvest time.
The terms were so exploitative that farmers received a price much
lower than the market price. These linkages of credit and paddy
markets have evaporated where infrastructural development has
progressed, as has happened in most areas of Bangladesh [Murshid
1999].
Market integration: Economists consider the test of market
integration as a reliable evidence of competitiveness and efficiency in marketing. In a system of spatially integrated markets,
any shock in one place will immediately be transmitted to other
places, creating forces for adjustment in all markets even though
the shock originated in one place. Similar truth would prevail
in an inter-temporal integration of markets. Through a serious
modelling exercise with rice prices during the 1980s, Goletti
(1994) demonstrated that the rice market of Bangladesh was
moderately integrated. Prices in some remote areas were still not
reacting sufficiently to changes in central markets. In 1998,
another study by Baulch et al (1998) shows that wholesale
markets for both rice and wheat are spatially integrated, with over
80 per cent of price changes transmitted between pairs of markets
within two weeks. Marketing cost per mile per tonne has declined
sharply. In the past, transport cost within a small area of market
was as high as transport costs now from one end of the country
to another. Therefore, if a comparison of a per tonne transportation cost now is found equal to the past transportation cost
within a fragmented market, it should not be wrongly concluded
that cost has not declined. This decline would be detected only
when cost per tonne is normalised for distance and then compared.
Condition for market entry: The rapid development of rice trade
with India as soon as the market was liberalised in 1994 is a
testimony to the ease of entry in market [Murshid 2001]. One
significant hurdle to entry into the market is credit. The credit
hurdle to entry into the wholesale market is particularly serious.
However, without real-world experience in trade, it may not be
possible for a party to begin wholesale trade in rice only because
he has access to capital. Upward movement is the normal route
rather than lateral entry. This process makes the credit constraint
less of an absolute constraint.
Table 4: Annual Growth Rates in Rice Revenue, Input Costs,
and Total Factor Productivity
Items
Based on current prices
Value of output (revenue)
Value of input costs
TFP
Based on constant prices
prices*
Value of output
Value of input costs
TFP

1975-76 to
1986-87

1987-88 to
1997-98

1975-76 to
1997-98

10.71
9.52
1.19

3.72
2.86
0.86

7.22
6.19
1.03

2.91
2.12
0.79

4.02
2.65
1.37

3.51
2.41
1.10

Note: * 1981/82 prices.

Source: Ahmed (2001).

4047

The development of the structure and conduct of foodgrain

markets, as is true in case of various other developments in the
economy, has indeed been the result of a sustained success in
infrastructural development. The prospect of a faster future growth
seems promising because of the remarkable progress in
infrastructural development. The length of paved roads has trebled,
and the telephone connections have increased fivefold within two
decades. Cellular telephones have revolutionised rural connection with the outside world. Rural electrification had covered
all towns and 18 per cent of rural households in Bangladesh by
2000. The changes in foodgrain markets that have been portrayed
in this section cannot be seen separately from these remarkable
achievements in infrastructural development.

IV
Agricultural Diversification and Comparative
Advantage of Rice
Nowadays agricultural diversification is a topical issue in
policies for agricultural development. Theoretical rationales for
diversification are founded as a protection against risk. However,
self-sufficiency in staple production is often pursued to avoid
food insecurity. Should Bangladesh continue to strive for rice
self-sufficiency or a surplus, even if it can accelerate overall farm
income and agricultural growth by producing more high-value
agricultural products than rice?
The answer to this question warrants a correct assessment of
the comparative advantage of rice vis--vis other agricultural
products. At least three recent studies have examined the comparative advantage of various crops in Bangladesh agriculture
[Mahmud et al 1994, Goletti 1994; Shahabuddin 2000]. Before
the results of these studies are discussed, a few cautionary notes
should be sounded regarding empirical studies of comparative
advantage. The concept of comparative advantage is simple, but
the difficulties of using it as a guide for real-world decisions
are enormous, mainly because of the dynamic environment,
difficulties with analysis at the margin in place of at the average,
and the problem of appropriate opportunity cost. In a dynamic
world, particularly with dynamism of agricultural technology, it
is hard to be certain about the superiority of one crop over another
within a long-term context. Similarly, finding the exact opportunity cost of not growing a crop in favour of another is difficult.
Because of these problems, a role for judgment, based on
strong hunches, remains wide open. Furthermore, that time has
a cost is seldom taken into account in comparison of crops. For
example, when the economic profitability of rice is compared
with that of sugar cane, the fact that time taken in growing sugar
cane is twice the duration of growing rice is not factored in the
analysis. Two rice crops can be harvested from the land during
the time taken for harvesting a sugar cane crop. With
these cautionary notes, let us now look at the results of studies
mentioned here.
The results are presented in Table 7. This is a summary table
that includes results in an abridged form. Net financial return
is calculated by valuing output and input at actual market prices.
Net economic return is calculated with output and tradable input
valued at world prices. In this case, import parity or export parity
world prices are used based on the judgment of whether the
product is exportable or importable. Domestic resource cost
(DRC) bears the usual meaning, indicating how much domestic
resource cost is involved in earning a dollar. A DRC of 0.60

4048

means it costs 60 cents, equivalent of domestic resource to earn

a dollar from the commodity. A value of DRC equal to or greater
than 1, therefore, means a comparative disadvantage. This, of
course, is the notion of absolute comparative advantage, which
is less meaningful than relative comparative advantage. In applying the concept of relative comparative advantage, the DRC
of a product (say, A) is compared with the DRC of the alternative
Table 5: Summary of Foodgrain Statistics
Indicators
1980-81 to
1981-82

Foodgrains
Net production/capita (kg)
146.4
Total supply/capita (kg)
159.0
Share of production in supply (per cent)
92.1
Proportion of private market supply
in total supply (per cent)
87.8
Food gap1 (per cent)
+11.6
2
Consumption/capita (kg)
159.0
Consumption/capita3 (kg)
166.7
(Household Expenditure Survey)
(1981/82)
Rice
Net production/capita (kg)
136.2
Total supply/capita (kg)
135.4
Share of production in supply (per cent) 100.0
Proportion of private market
supply (per cent)
96.3
Food gap1 (per cent)
+12.8
Consumption/capita2 (kg)
135.4
Consumption/capita3 (kg)
145.3
(Household Expenditure Survey)
(1981/82)
Wheat
Net production/capita (kg)
10.3
Total supply/capita (kg)
23.6
Share of production in supply (per cent)
43.6
Proportion of private market
supply (per cent)
39.0
Food gap1 (per cent)
+12.6
Consumption/capita2 (kg)
23.6
Consumption/capita3 (kg)
21.4
(Household Surveys)

Average
1991-92 to 1999-2000 to
1992-93
2000-01
153.3
165.8
92.5

178.8
194.4
92.0

91.8
92.5
+7.5
6.9
165.8
194.4
185.8
179.0
(1991/92) (1999/2000)
142.5
144.8
98.4

164.1
169.6
96.8

97.1
95.9
+6.4
8.2
144.5
169.6
172.6
168.6
(1991/92) (1999/2000)
8.9
21.6
41.2

12.2
24.8
49.1

52.7
+24.1
21.6
13.2

69.2
+3.9
12.2
10.4

Notes: 1 Foodgrain requirement @454 grams/cap/day minus net production

(expressed gap as per cent of requirement). It is assumed that 7 per
cent of 454 grams are in wheat.
2 Assuming supply = consumption
3 Consumption surveys (HES) of 1981/82, 1991/92, and 1999/2000.
Source: Computed from Appendix Tables 1, 2 and 3.

Table 6: Broad Changes in Bangladesh Rice Market

Indicators

1960s 1970s 1980s 1990s 2000s

Average production (mn tonnes)

10
12
15
18
HYV share (per cent)
1
23
36
63
Quantity marketed
As share of production (per cent)
12
27
34
49
Marketing per capita (kg)
20
41
51
76
Share sold on the farm to itinerant
traders (per cent)
28
na
na
66
Number of marketing agents
Itinerant traders
4,000
na
n a 48,000
Millers
Automatic
0
3
66
88
Major
106
152
251
480
Husking mills
6,049 11,437 43,374 50,300
Total
6,155 11,592 43,691 50,868
Private stock
Number of months consumption
requirement
1
na
na
3
Average storage time for traders (months) 4
na
na
1

23
77
601
107
na
na
na
na
na
na

na
na

Note: 1 Calculated from Household Survey data.

Source: Chowdhury and Haggblade in Ahmed et al. (2000).

Economic and Political Weekly

September 4, 2004

production (say, B). A and B compete for resources and the one
with lower DRC wins the competition. It is, therefore, necessary
to ensure that the products are competing with one another.
A number of specific conclusions can be drawn from the results
presented in Table 7, without serious risk of going wrong because
of inherent uncertainty:
In case of rice, aman (except broadcast aman) varieties do have
superiority over boro and aus, but rice crops of the three seasons
Table 7: Financial and Economic Profitability, and Domestic
Resource Costs of Crops,1996/971998/99

Crop

Rice
Boro HYV
Boro local
Aman
HYV
HYV
HYV
Pajam
Local
Local

Technique

Net
Financial
Return
(tk/ha)

irrigated
irrigated

7,299
3,953

18,172
9,245

7,254
3,758

0.70
0.93

1.12
1.40

irrigated
9,782
rainfed
11,216
all
10,459
all
8,528
transplanted
rainfed
4,250
broadcast
rainfed
2,735

19,682
20,490
19,970
17,413

9,090
10,069
9,644
7,863

0.62
0.59
0.61
0.67

0.96
0.91
0.93
1.03

10,105

4,003

1.04

1.57

7,374

2,583

1.55

1.40

14,325

25,150

0.61

5,494
3,831
3,410

13,918
10,638
10,763

5,308
3,710
3,428

0.73
0.81
0.82

1.13
1.27
1.30

2,819
3,254
2,804
18,665
11,391

6,466
6,101

16,886

11,140

92,425

0.90
0.91

0.55

0.69

0.20

44,081
25,726
25,726
4,235
1,361
3,542

33,323
18,575
5,795
2,747
6,463
597

0.81
1.11
2.14
3.20
3.9
1.91

8,521 (H) 14,543

(L) 10,358
6,621 (H) 12,184
(L) 8,407
3,118
3,318

9,715

(H) 0.43
(L) 0.54
(H) 0.44
(L) 0.55
1.64

0.57

86,322

0.25

Aromatic
fine1
rainfed
Aus
HYV
irrigated
HYV
rainfed
HYV
all
Non-rice crops
Wheat
irrigated
Wheat
non-irrigated
Jute (tossa) rainfed
Cotton
rainfed
Tobacco
irrigated
Sugar cane
Sugar
modern
irrigated
Sugar
non-irrigated
Gur-making non-irrigated
Mustard oil non-irrigated
Sesame oil non-irrigated
Linseed oil non-irrigated
Masur
(pulse)
non-irrigated
Gram

non-irrigated

Chili (dry)
Onion

non-irrigated
traditional
non-irrigated 97,482

HYV potato
Fresh
Fresh
Chilled
Local potato
(fresh)
Brinjal
Brinjal
Radish
Cucumber
Beans
Tomato
Cabbage

Note:

Net Economic
Domestic Resource
Return (tk/ha)
(DRC)
Cost
Import
Export
Import
Export
Parity
Parity
Parity
Parity

7,826

0.56

irrigated
rainfed
irrigated

52,636
49,036
49,140

194,815
183,469
120,926

29,130
26,701

0.17
0.18
0.31

0.61
0.63

rainfed
modern
irrigated
non-irrigated
non-irrigated
traditional
traditional
modern
modern

12,388

71,876

3,944

0.32

0.56

322,014
239,561
351,669
194,865
207,248
553,940
498,056

0.10
0.11
0.07
0.11
0.12
0.05
0.05

53,206
39,666
13,572
26,213
27,177
93,730
42,638

1Goletti (1994). Average of 1996/97, 1997/98, and 1998/99 at 1997/98

prices.
Source: Shahabuddin and Dorosh (2002).

Economic and Political Weekly September 4, 2004

hardly compete with one another. Boro competes with wheat and
it has a comparative advantage over wheat. In general, importsubstitution strategy for rice that governments have been following for long, does seem to have solid economic foundations. Rice
does not fare well when considered for export, except for fine,
aromatic varieties, which have substantial comparative advantage
in terms of DRC. When these fine varieties are examined through
world price and in competition with basmati and jasmine rice,
their export potential is vindicated reasonably well [Goletti 1994].
The large gap in import parity and export parity prices warrants
a further examination. Is it because of quality differences or lack
of rigorous grades and standards?
Bangladesh seems to enjoy a fabulous comparative advantage
in case of vegetables. It has a remarkable comparative advantage
in case of jute (tossa), tobacco, and potato. Although production of vegetables and potato has been growing the fastest
among crops, jute and tobacco production is stagnant. Entry
into world market of vegetables and internal management
problems as well as competition from synthetics in case of jute,
have prevented the apparent comparative advantage to translate
into reality.
In general, sugar cane also appears to have no comparative
advantage, even though the absolute amount of financial return
is large. It should be borne in mind that a sugar cane crop should
be compared with the sum of two rice crops; this normalisation
for time makes the case of sugar cane further weak.
Like sugar cane, edible oils from oilseeds do not have comparative advantage in the crop sector of Bangladesh. Growing
something else and importing cheap edible oils from world
market would seem to be a rational policy.
Pulses do have some comparative strengths particularly as
import-substitution activity. Recently, pulses have gained some
strength through adoption of improved varieties. This has caused
some growth in production of pulses in recent years.
The picture of comparative advantage presented here reflects
the existing technology. Technological innovation has been
significant in cereal production; non-cereal crops have not got
similar public research investment. As the country strives for
diversification, larger flows of research innovation, including
import of technology, should be a strategic new direction of
public policy.

V
Future of Rice in Bangladesh
The discussion on the future prospects for rice can best be
conducted in the context of projections. Projections of the future
are generally based on past experiences of demand-and-supply
forces, and making a judgment as to how these forces will shape
up in the future. Such exercises are inherently speculative but
nevertheless educative in guiding policies.
On technical potential of production, a study conducted by the
World Bank in 1998 examined specific technical actions needed
to increase rice production. Excluding hybrid rice and super rice,
the remaining feasible options were simulated for probable area
under each of the actions. Then a weighted average (using
proportions of areas as weights) increase in production was
estimated [Ahmed 2001]. This estimation implies an increase of
44 per cent in production between 1997/98 and 2010, which
translates into an annual growth of 3.2 per cent in rice production.
In terms of policies, these actions would mean a continuation

4049

of the current technological thrust with increased focus on slowgrowing districts, as well as research.
On the consumption potential for rice, its already high level
in Bangladesh diet limits the scope for expansion. About 76 per
cent of the calorific value in the diet is derived from rice.
Bangladesh has the distinction of sharing with Mynamar the
status of highest per capita rice consumption in the world [Pingali
et al 1997]. Already, the income elasticity of demand for rice
has approached zero (positive for the poor and negative for the
rich). Diet diversification, urbanisation, and increase in per capita
income have been contributing to sluggish growth in per capita
rice consumption. Analysis of household expenditures shows
that, adjusting for differences in income and prices between urban
and rural consumers, rural consumption levels still remain 16
per cent higher than urban consumers [Ahmed 2001], and
urbanisation has been increasing rapidly in Bangladesh. Household expenditure surveys from 1980/81 through 1999/2000 (such
surveys are not conducted every year) show an increasing trend
in per capita consumption during the 1980s, but a declining trend
in the 1990s (Appendix Table 3). These indicators are suggestive
of a demand for rice in the future depending primarily on population
growth. Let us now turn to some projections of rice in Bangladesh.
Two recent projections are shown in Table 8. The excess demand
column in the table gives the quantities of surplus and deficit;
the positive numbers represent deficits and the negatives represent surplus. The projection in Ahmed (2001) reflects an
increase in rice production ranging from 28.4 to 53 per cent by
2010 whereas the Dorosh et al projection reflects an increase
ranging from 19 to 46.5 per cent by 2020. Differences in projection of both production and demand between the two do appear
to reflect optimistic and pessimistic assumptions. This has resulted in a picture of demand-supply balance in the two studies,
dominated by deficit in Dorosh et al and surplus in Ahmed (2001).
The deficits occur in a price-endogenous model of Dorosh et al
through adjustment in prices. Real prices rise in the Dorosh et al
model by a rate ranging from 5 to 35 per cent in various scenarios.

Whether such a result of rising price is consistent with likely

world prices, cannot be ascertained without a link with the world
market.
One conclusion is clear from both the studies if policies on
rice neglect investment in irrigation, research, fertiliser distribution, and related other issues in the coming years, the country
Table 8: Projections of Rice Production
and Excess Demand 2020
Projectionsb

Change in
Productiona
(Per Cent)

Change in
Pricea
(Per Cent)

Ahmed (2001) 19982010

Scenario 1
41.0
Prices do not
Scenario 2
28.4
change
Scenario 3
53.0
from 1996/97
Scenario 4
38.6
world price level
Dorosh and Shahabuddin (2001) + Rahman 20002020
Scenario 1
38.3
19.6
Scenario 2
45.8
4.9
Scenario 3
46.5
10.0
Scenario 4
41.0
35.0
Scenario 5
18.9
35.0

Excess Demand
(000 tonnes)

2.77
+0.40
5.05
2.33
0.00
0.00
0.72
+1.52
+2.67

Note: Both studies use year 2000 as base.

a Change from base year;
b Assumptions are as follows:
Ahmed (2001): Per capita consumption increases only in lower 2 quartiles
population rate declines.
Scenario 1: No change in rice area; expansion of fertiliser use will take place
at historical rates as in 1998/89 through 1996/97. No change in productivity.
Scenario 2: No area change, use of fertiliser slow down is two-thirds of
1. No change in factor productivity.
Scenario 3: As in scenario 1, except productivity will increase by 10 per cent.
Scenario 4: As in scenario 2, except productivity will increase by 10 per cent.
Dorosh et al (2003)
Scenario 1: Per capita income growth 3 per cent, population 2 per cent,
income elasticity 0 per cent, price elasticity 0.4.
Scenario 2: As in scenario 1, plus increase aman yield 1per cent, per year.
Scenario 3: As in scenario 2, plus export of rice of 0.72 million tonnes.
Scenario 4: As in scenario 1, but per capita income growth 5 per cent and
income elasticity 0.2.
Scenario 5: As in scenario 1, except boro yield growth slows down.

Appendix Table 1: Elements of Supply of Rice 1980-81

(In 000 metric tonnes, except per capita rice in kg)
Year

1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-2000
2000-01

Net
Production
(1)

Public
Import
(2)

12,492
12,266
12,793
13,058
13,161
13,534
13,865
13,872
13,990
16,070
16,067
16,427
16,507
16,237
15,150
15,918
16,976
16,976
17,915
20,760
22,577

84
144
317
179
695
37
258
590
61
300
11
39
20
0
230
491
19
92
488
5
32

Private
Import
(3)
0
0
0
0
0
0
0
0
0
0
0
0
0
74
584
650
15
993
2,660
428
529

Domestic
Procurement
(4)
841
290
168
266
133
219
138
288
366
918
723
939
233
150
247
353
513
430
616
942
1,058

Public
Open Sale
(5)

Total Public
Distribution
(6)

Market
Supply
(7)

Non-market
Supply
(8)

Total
Supply
(9)

40
35
31
25
21
10
15
5
167
16
74
274
7
172
156
404
0
163
10
0
0

514
472
496
403
399
372
495
468
690
675
971
759
476
350
329
593
687
529
530
876
949

11,691
12,011
12,656
12,817
13,049
13,325
13,742
13,589
13,791
15,168
15,418
15,762
16,281
16,333
15,643
16,619
16,478
17,702
19,969
20,246
22,048

474
437
465
378
378
362
480
463
523
659
897
485
469
178
173
189
687
366
520
876
949

12,165
12,448
13,121
13,195
13,427
13,687
14,222
14,052
14,314
15,827
16,315
16,247
16,750
16,511
15,816
16,808
17,165
18,068
20,489
21,122
22,997

Total Per
capita Supply
(10)
135.3
135.5
139.7
137.5
136.9
136.9
139.4
134.2
134.0
145.3
147.0
143.8
145.7
141.1
132.9
138.9
139.6
144.5
161.3
163.7
175.5

Sources: Computed from data in (a) Dorosh et al (2003), and (b) Ahmed et al (2000).

4050

Economic and Political Weekly

September 4, 2004

might revert to the old experience of frequent food shortages.

Existing initiatives indicate that the probability of such a situation
coming about, is, perhaps, low. A study at IFPRI has pointed
out the usefulness of a trade policy, swapping wheat for rice,
irrespective of whether the country is a deficit or surplus producer
of rice. Goletti (1994) demonstrates that Bangladesh has competitive strength in the world market for export of fine-quality
aromatic rice. Export of fine-quality rice and import of wheat
with the export earnings may give Bangladesh the ability to
increase food supply through this cheaper route. Such a policy
is widely practised by China, and this swapping may turn into
a powerful tool for correcting the imbalance between the wheat
and rice supply-demand equations in Bangladesh.

VI
Conclusions
Bangladesh has achieved remarkable success in attaining near
self-sufficiency in rice production, a strategic staple for the
country. The growth in rice production from 1980/81 through
2001/02 has exceeded the growth in population. The increase
in rice production has occurred through intensive use of modern
technology and under the adverse conditions of falling real rice
prices, sharply rising agricultural wage rates, and declining
availability of land for cultivation. Inputs relating to seed-fertiliserirrigation technology and their productivity have been the major
source of growth. Liberalisation of the import of agricultural
equipment (shallow tubewell engines and power tillers), particularly the removal of restrictions on import conditioned by public
specification of standards, resulted in a flood of supplies of cheap
equipment. Farmers responded enthusiastically to adopt these
machines. Competition in fertiliser distribution has kept stable
supply at market price.
Liberalisation and privatisation of the input market have not
always been an unmixed blessing. Production of fertilisers is still
in the public sector and public monitoring of factory-gate

interface between public managers and traders has occasionally

failed. Fraudulent practices by traders are frequently reported in
newspapers. A regulatory and monitoring institution for agricultural inputs is necessary for market liberalisation to function
smoothly.
The spread of modern technology has largely bypassed some
districts located in low elevation and coastal areas of Bangladesh,
where the BWDB was supposed to develop an environment for
modern agricultural technology. Hundreds of projects later, these
areas remain as vulnerable as before. Investigation into the causes
has identified problems that are mostly institutional rather than
technical [Soussan and Datta 1998; Khan 1991]. Reform in the
operation of BWDB is profoundly needed.
To increase food production, Bangladesh seems to have pursued
a route which began with significant subsidy on agricultural
inputs, involving direct public supply. But soon this mode of
supply was changed, involving no subsidy, or moderate subsidy
only. This approach to agricultural development contrasts sharply
with the strategy followed in India, where subsidy is relatively
large and has an increasing trend.5 This contrast has generated
debate in Bangladesh with arguments to increase subsidy to
agriculture for enhancing the sectors competitive strength.
Competitive strength can be improved by various other means.
Appendix Table 3: Per Capita Consumption Determined
through Household Expenditure Surveys
(In kg per annum)
Year
1981-82
1983-84
1985-86
1988-89
1991-92
1995-96
1999-2000

Rice

Wheat

Total

145.31
150.23
162.02
161.22
172.57
169.47
168.56

21.43
23.40
18.87
21.21
13.25
12.30
10.42

166.74
173.64
180.89
182.43
185.82
181.77
178.98

Source: Bangladesh Bureau of Statistics, Household Expenditure Surveys

(Dhaka, various years).

Appendix Table 2: Elements of Supply of Wheat 1980/81-2000/01

(In 000 metric tonnes, except per capita rice in kg)
Year

1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-2000
2000-01

Net
Production
(1)
983
870
986
1,090
1,318
938
982
943
919
801
904
959
1,058
1,018
1,121
1,232
1,309
1,623
1,717
1,656
1,506

Public
Import
(2)

Private
Import
(3)

992
1,111
1,527
1,877
1,898
1,163
1,509
2,327
2,077
1,234
1,566
1,524
810
654
1,325
1,093
712
706
1,604
865
447

0
0
0
0
0
0
0
0
0
0
0
0
355
238
430
200
222
142
805
806
534

Domestic
Procurement
(4)
176
13
24
0
216
130
50
87
50
42
60
77
0
16
30
69
102
187
137
25
30

Public
Open Sale
(5)
0
10
0
20
0
20
25
15
125
31
14
1
65
124
70
0
0
0
4
0
0

Total Public
Distribution
(6)
1,,028
1,595
1,439
1,648
2,163
1,169
1,625
2,035
2,251
1,489
1,401
1,586
597
1,026
1,244
1,202
1,422
1,092
1,603
1,024
958

Market
Supply
(7)
807
867
962
1,110
1,102
828
957
871
994
790
858
883
1,478
1,364
1,591
1,363
1,429
1,578
2,389
2,437
2,010

Non-market
Supply
(8)

Total
Supply
(9)

1,028
1,585
1,439
1,628
2,163
1,149
1,600
2,020
2,126
1,458
1,387
1,585
532
902
1,174
1,202
1,422
1,092
1,599
1,024
958

1,835
2,452
2,401
2,738
3,265
1,977
2,557
2,891
3,120
2,248
2,245
2,468
2,010
2,266
2,765
2,565
2,851
2,670
3,988
3,461
2,968

Total Per
capita Supply
(10)
20.4
26.7
25.6
28.5
33.3
19.7
25.0
27.6
29.2
20.6
20.2
21.8
21.5
19.4
23.2
21.2
23.2
21.4
31.4
26.8
22.7

Source: Computed from data in (a) Dorosh et al (2003), and (b) Ahmed et al (2000).

Economic and Political Weekly September 4, 2004

4051

A reversal of the market-driven approach should not be

abandoned simply because other countries are not following
this path. -29
Address for correspondence:
rahmed@cgiar.org

Notes
1 During 1989/90 through 2000/01, growth rate in rice production was 3.1
per cent and that of agriculture was 3.3 per cent per annum. Rice and
fish sub-sectors were the most dynamic in the agricultural growth of
Bangladesh.
2 In terms of annual rate of change, production increased at 3.0 per cent,
yield at 3.5 per cent, but land area under rice declined by 0.31 per cent.
3 The index of real rice price (nominal price deflated by inflation index)
declined from 100 in 1980/81 to 68.8 in 2001/02. The index of real wage
rate of agricultural labour (nominal wage deflated by nominal rice price)
increased from 100 in 1980/81 to 191.6 in 2001/02.
4 Bangladesh may rank below India, Pakistan, or Sri Lanka in terms of
rural electrification, but Bangladeshs policy of according highest priority
to electrification of rural growth centres in the rural electrification programme
was a key factor in causing rural processing and industrialisation to
develop fast.
5 At the risk of comparing the incomparable, a comparison with India is
made. The total subsidy on fertilisers, irrigation, and power supplied to
agriculture amounted to 8.72 per cent of agricultural GDP in India in
1999/2000, increasing from 2.11 per cent in 1982/83 [Gulati and Narayanan
2003]. In Bangladesh, subsidy on fertiliser and irrigation was only about
1-2 per cent of agricultural GDP in 1983/84, which declined to about
0.32 per cent in 1997/98 but increased again in 2003 to about 0.96 per
cent. The extent of subsidy to power used in Bangladesh agriculture is
unknown.

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Economic and Political Weekly

September 4, 2004