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Food Security Agriculture Needs Further Precedence

05 June 2020 Ferdaus Ara Begum

Food security is one of the priorities for a developing country like Bangladesh and for this thrust on agriculture is a must. Government in its 7th Five Year Plan, 8th Five Year Plan, Vision 2021, National Agricultural policy, and SDGs has given enough importance on agriculture. As a result, food grain production has been increased since last several years,  it was 415.74 lac MT in 2018-19 raising from 413.25 lac of 2017-18. This year also it maintains targeted growth. On the other hand, According to BBS up to February 2019 food grain import was 7.28 lac MT by the government while through private sector import was 35.55 lac MT( it included rice, wheat etc.).  Government gives enough importance on agricultural loan and subsidies also.  Rice sector contributes one-half of the agricultural GDP and one-sixth of the national income in Bangladesh. Almost 13 million farm families are engaged in growing rice which is grown on about 10.5 million hectares of land. Outbreak of COVID-19 has brought a new critical situation where agriculture needs a further boost for self sustenance.
Bangladesh is self sufficient in food grain production but dependent in importing a number of essential commodities such as raw sugar, palm oil, soyabean oil, milk and cream, ginger, chillies, wheat, rice, lentil and others, also onion, garlic, tea, oilseed, and other spices etc. The country needs a consolidated effort to reduce its dependency on food and thus ensure food security.
Recently published report of World Bank and ADB predicted that both the Manufacturing and Service sectors in Bangladesh would face a huge negative impact due to COVID-19, GDP growth rate would be 2-3% for the next 3 year.  Governments of many developed and developing countries have put their focus to the agriculture sector. Bangladesh Government also needs to extend further financial stimulus to the agriculture sector to ensure a satisfactory sustainable economic growth. Moreover, we need to focus on the achievement of SDGs by 2030. Impact of COVID-19 may slow the activities to attain SDGs, higher budget to agriculture sector, agro-processing industry and agricultural machinery manufacturing industry would give the economy extra advantage over manufacturing and service industry. SDGs has direct links with agriculture, BUILD identified the following:
1. Food Security (SDG 2: No Hunger)
2. Social Safety Net (SDG 2: No Hunger)
3. Sustainability of Employment (SDG 8: Decent Work and Economic Growth)
4. Facilitate Informal Workers in the Main Stream of Economy (SDG 8: Decent Work and Economic Growth))
5. Ocean Economy and Coastal Employment (SDG 14: Life below Water)
6. Innovation for Industrial Emerge of Agriculture Sector (SDG 9: Industry, Innovation and Infrastructure).
In view of the above, in the FY 2019-20, allocation for agricultural subsidy needs to be increased to at least BDT 15,000 crore which was BDT 9000 crore in 2019-20. The agricultural subsidy would need to be sanctioned to reach seeds, fertilizers, pesticides, and other agricultural materials to the farmers on time. Due to COVID-19, the trend of worldwide fuel price has faced a downward slopping. Government may purchase fuel in that time at reduced price which would be supplied to the farmers as agricultural subsidy later. For this storage capacities would need to be increased.
The issue "Food Security" is directly linked up with the peace of the socio-economic condition of a country. Lockdown, imposed for the COVID-19, will hamper the food production and food supply chain in long run. Supply chain of seeds, fertilizer, poultry feed etc. are disrupted by this pandemic. Food safety for essential items needs to be ensured by providing financial stimulus fund and cash support as well. "Social Safety Net Program" supports for the marginalized and vulnerable groups to have their minimum livelihood from the government that needs to be extended.
Reduction of duties at import stage for "heavy and light agricultural machinery" like tractor, power tiller, diesel engine, water pump, rice trans planter, combine harvester, rotavator and rice and wheat reaper etc.  could be  helpful  at least till FY2022.
Presently total tax incidence on agricultural inputs is 12.4-27.5 per cent, agricultural machinery manufacturers have to pay customs duty up to 60 per cent on import of 34 spare parts as only nine spare parts are enjoying duty waiver, import duty needs to be exempted for essential agricultural machinery spare parts and raw materials also. Value-Added Tax (VAT) imposed on agricultural machinery at the stages of production and sales needs to be exempted.
The ocean contributes more than $6 billion annually to the Bangladesh economy and has the potential to generate more income. This sector provides more than 8 lack of employment. The ocean contributes 18% of the total fish production in Bangladesh. Duty on import of heavy Ocean going fishing vessel and spare parts needs to be reduced at a logical rate to grab the benefits of "Blue Economy".
Bangladesh Bank has formed Special Incentive Refinancing Scheme for agricultural sector of BDT 5000 crore at 4% interest rate with an 18 months repayment schedule. Interest rate for "Special Incentive Refinancing Scheme for Agricultural Sector" or any other financial stimulus fund by the government for this sector should be set at by 2-3%.
(Ferdaus Ara Begum is CEO, BUILD- an Organization of Public Private Dialogue (PPD).

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