Agriculture Holds The Key

Flood,cyclone press for importing more food.
It still looms large though Boro harvest was good.
Govt can’t influence foreign consumer demand,
Focus on agriculture to bring back the economy on command.

It is, indeed, a good news that Bangladesh has become the third largest rice producing country of the world. This achievement has come at a moment when the country is facing asphyxiating situation in the transport sector, caused by Coronavirus, crippling the agricultural supply chain. Despite being a food importing country, sustained effort made it possible to increase the production of foodgrain and other vital crops. The success story is writ large on the graph of yield per acre(Kg) of some key crops.

Yield per acre(kg) Source: BBS Pocket Book 2018

Between 2011 and 2018, yield per acre of key crops like rice , wheat, pulses and oilseed rose steadily. Wheat production per acre made a significant mark in the given period. In 2011 an acre of paddy field yielded 1177 kg of rice. In 2018, an acre of rice field produced 1292 kg. For Wheat, it was 1053 kg in 2011 and 1267 kg in 2018. If we stretch the comparison for the last three decades , then the achievement will appear remarkable. Not just the yield per acre , but agricultural wage rose significantly in the given period. At least the BBS statistics claim so.

Nominal wage indices in 2018 were 150.59(Base 2011=100). For agriculture, industry and service, the wage indices were 150.27, 149.45 and 154.44 respectively. If this is really the case then this Rural labor market is really a promising sector, whose prospect is only hindered by seasonality.

Nevertheless, the success story of our crop production does not cease import of foodgrain. Domestic demand-supply mismatch often met by imported food grain. But the quantity of import is higher during the disaster years. Severe flood or cyclone years stalled or damaged grain production at home, pressing for more foodgrain import. I did a little analysis in this regard. I gathered data for import of foodgrain and rice production at home delving Bangladesh Economic Review 2018. The period under consideration was between 1996 and 2017. As usual serial correlation check for 22 observations and 1 explanatory variable reported no autocorrelation (d = 1.88). I constructed the following regression function:

lnFoodgrain_t = a + b RiceProd_t + c D_t

where lnFood_t = log natural of foodgrain import at t,
RiceProd_t = domestic rice production at t,
D= 1 for disaster years(any kind),
= 0 for calm years.

Resulting regression function looked like this:

lnFoodgrain_t = 6.825 + 0.0000396 RiceProd_t + 0.0639 D_t

(t=14.78, p=0.00, se= 0.46) (t= 2.52, p=0.021, se= 0.00) (t=0.36,p=0.72, se=0.18)
(F=2.15, p=0.066)

The model did not turn out to be significant at 5% level of significance. But it was significant at 10% level. Intercept and the dummy coefficient did not appear to be significant at 5% level of significance. If the dummy coefficient had been significant , foodgrain import during disaster years would have been higher by 6.597% than that of during calm years.

Despite the data at hand did not lend evidence, there is no gainsaying that foodgrain import was higher during disaster years. For instance, in the flood year of 1999 we imported 5491 thousand metric ton of foodgrain. In 1998 we also witnessed a severe flood.In 2000, a calm year, we imported 2104 thousand metric ton of grain. In 2008, post Sidr year, we suffered from cyclone Reshmi and imported 3471 thousand metric ton of foodgrain. The poin is if natural calamity damages our crop production, we rely heavily on foodgrain import. Some years remain as exception.

This year as the country embraces for another super cyclone, harvest of Boro crop has already been completed. Prior to this cyclone Amphan, our foodgrain stock is quite satisfactory that ensures our food security for at least a year. Depending on the damages of Amphan, we could say how much resources we have to mobilize to deal with the obstacles of next cultivation.

Till then, agriculture stands out to be the most promising sector that vies for more government allocation in the post covid-19 period. Since our external sector depends on the regeneration of consumer demand of foreign countries, government at home can stimulate economic activities by investing more in agriculture sector. Rare is the sector in our economy where 100% value adding economic activities take place.

Cyclone Amphan amplifies the possibility of import of food. There has already been a wheat ban, put up by major wheat producing countries, as this year’s yield did not live upto anticipated level. In the wake of cyclone Amphan, government should double its effort on agricultural activities to mitigate the losses of disaster.