STORY ON AGRICULTURE: BUMPER HARVEST BEGETS BLIGHT

FOR FARMERS
Individual Assignment # 03

Prepared for:
Sheikh Morshed Jahan
Associate Professor
Course Instructor: Bangladesh Studies (K202)

Prepared by:
Ayasha Sultana
Roll # 62
Section B | BBA 19th

Institute of Business Administration

University of Dhaka, Dhaka
April 13, 2013

Bangladesh has a primarily agrarian economy. Agriculture is the single largest producing sector
of the economy since it comprises about 18.6% (data released on November, 2010) of the
country's GDP and employs around 45% of the total labor force. The performance of this sector
has an overwhelming impact on major macroeconomic objectives like employment generation,
poverty alleviation, human resources development and food security (Wikipedia).
2012 was yet another year where farmers bagged another record harvest, which cut imports
further, easing pressure on the balance of payments, the country's external account. Bangladeshs
grain imports fell by 56 percent to 1.99 million tons in July-April 2012, compared to the same
period a year ago, according to data from the Directorate General of Food.
Rice production had reached 33.83 million tons, the highest in the history of Bangladesh, in the
outgoing fiscal year, thanks to favorable weather. The total cereal output rose by 1 percent to
34.82 million tons.
However, a spike in paddy yield could not bring smiles to the majority of growers. Many are
struggling to recoup their investments as prices continue to remain low. After a good harvest of
the main crop boro, the prices of the coarse and medium varieties are now at Tk 13-Tk 14 a
kilogram, which is lower than the government's estimate of boro production cost at Tk 15.76 a kg
for the year.
Its a harsh reality. The prices of paddy are low but those of other essentials are high. Running a
family only with agricultural income has become tough these days, said Abdul Motaleb, a small
farmer at Kaunia in Rangpur. The current prices are lower than my production cost, said
Motaleb, who grows crops by leasing lands from others.
A huge stock at public warehouses and market intervention by the government through various
safety net schemes also contributed to a fall in the prices of rice. On the other hand, growers'
production cost went up as the government hiked the prices of fertilizer along with fuel and
electricity, which are linked with tilling and irrigation costs. Keeping pace with high inflation,
wages for farm laborers also marked a rise, squeezing farmers scope to make margins at a time
when the prices of other major crops - potato and jute - remained low. To find a safe haven, many
farmers shifted from rice and potato to other crops such as maize. But maize also failed to
cushion the growers against losses as demand for the grains in poultry feed mills slumped after
bird flu hit farms in the second quarter of the current fiscal year.
During 2012, potato production slumped by 82.05 lakh tons as acreage fell amid farmers' shift to
other crops. Production of cash crop jute also slid 4.68 percent to 80.30 lakh bales in the fiscal
2011-12 from a year ago, according to Bangladesh Bureau of Statistics. Low prices have ruined
us, said Md Moqbul Hossain, a maize grower in Bogra. Rice growers are grappling with low
prices along with us. We spend months to grow crop. If we can't make profit, our efforts of
around six months will go in vain, said Hossain.

To help farmers get higher prices, the government increased the purchase target of food grains
from the domestic market to 1.35 million tons for the year. The food ministry had earlier said it
would buy one million tons of boro - 0.1 million tons of paddy at Tk 18 a kg and 0.9 million tons
of rice at Tk 28 a kg. Nirod Boron Saha, a rice and paddy wholesaler at Naogaon, said millers
have taken a go-slow stance to buy rice in the face of a lack of space at public warehouses. If
we purchase higher quantity of paddy and the government cannot buy the produce because of
space constraints, our funds will remain stuck, said the wholesaler. Until last week (May 2012),
food stocks at public warehouses were 1.19 million tons meaning that space for 0.33 million tons
was free. Against this backdrop, chances of an increase in the prices of rice are thin, he said.

Source: Low Prices Dull Celebration of Bumper Harvest The Daily Star, Monday June 4, 2012