Market Failure in Agriculture
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. Bangladesh’s 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.
“It’s 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
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. Bangladesh’s 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.
“It’s 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