Bangladesh is an agrarian country characterized by labor intensive, animal-powered subsistence farming.
AGRICULTURAL POLICY. Population pressures, overuse of land, inadequate infrastructure and recurring natural disasters continually raise the specter of famine in Bangladesh. More than half the population is undernourished in terms of recommended daily caloric intake. Accordingly, food policies are at the top of the national agenda.
The Bangladeshi government traditionally has played the major role in the country's food grains management and marketing systems. In terms of policy goals, achieving agricultural self sufficiency, while desirable, generally has taken a back seat to maintaining adequate food supplies and assuring relatively stable consumer prices.
Policy instruments used have included the Public Food Distribution System, which sells food grains at below-market prices; "food for work" programs; distribution of free food to the destitute during natural disasters; and targeted feeding programs. The government also historically has been responsible for domestic grain marketing and imports.
Beginning in 1988, the government began to reduce its participation in agriculture. Restrictions on domestic and international trade by the private sector have been eased, and the P.F.D.S. has been restructured to make it more effective in reaching the most needy groups.
The government supplements private market-based operations with its own food aid activities and operates the strategic reserve. The government also imports grain in exceptional circumstances.
The government has withdrawn from various other commercial activities and is streamlining, simplifying or abolishing rules and regulations governing private sector activities in agriculture. The government is liberalizing policies regarding investment in the irrigation sector, has privatized fertilizer trade and has reformed foreign exchange policies so that foreign exchange is readily available for commercial importers.
In August 1997, Bangladeshi officials announced the Fifth Five-year Plan, which calls for an outlay of the equivalent of U.S.$47 billion during the 1997-2002 plan period. The goal is to achieve a highly ambitious economic growth rate of 7.29% via expansions in the agricultural and industrial sectors.
Scheduled agricultural investments to accelerate growth include an irrigation project in the western part of the country. This U.S.$3.2-billion outlay will provide irrigation to an area of 1.32 million hectares.
The Fifth Five-year Plan's target is to raise food grain production to 25 million tonnes by 2002; the current annual output of rice and wheat averages just under 20 million tonnes.
Soil erosion, nutrient mining, soil salinity, water contamination and aquifer depletion are among other areas of concern. To increase farm income and improve soil resources, a recent policy statement calls for a shift from rice — currently accounting for 82% of total cultivated area — to diversified farming systems.
GRAIN TRADE. Bangladesh's grain imports are highly erratic, as the amount needed depends on harvests that can vary widely from year to year. A sharp increase in rice production in the early 1990s led to self-sufficiency in rice supplies for several seasons, but in mid-1994, hefty imports resumed following a decline in domestic production.
Although importing responsibilities were handed over to the private sector in the early 1990s, the government also imports as necessary to maintain strategic reserves. In 1995 through mid-1996, the government resumed large-scale rice imports to fill the supply-demand gap.
More recently, the government in January 1998 resumed imports when steep increases in rice prices prompted action. The government replenishes its stocks to maintain the desired minimum food grain reserve (wheat and rice) of 800,000 tonnes. Total grain storage capacity in Bangladesh is estimated at 3.8 tonnes, with 1.8 million of government storage and 2 million of privately owned storage.
Although Bangladesh is a rice eating country, officials also rely on wheat imports to help improve food security. Wheat, which is cheaper than rice, has been used as the primary grain for public distribution, whereas rice stocks have been used in market intervention to ensure price stability.
Between 1985 and 1994, the share of wheat in cereal imports averaged 90%, but that proportion has dropped to around 60% in the last two years. The flow of concessional wheat supplies by donor countries also has declined during the 1990s, falling from 90% of total wheat imports in 1991-92 to an estimated 50% in 1997-98.
Despite the sustained growth in Bangladeshi grain production during the past several years, the country remains deficient in grain production and imports are likely to continue, at least in the near future. The crop production plan announced by the Ministry of Agriculture targets food grain production of 24.53 million tonnes in 2000 and 29.1 million in 2010. But even if these targets are met, officials project food grain deficits of 670,000 to 1.75 million tonnes in 2000 and 2.27 million to 4.76 million in 2010.
Since December 1994, the import duty on rice has been set at zero and no quantitative restrictions on imports exists. But effective July 1, 1997, a 2.5% infrastructure development fee has been imposed on rice imports along with imports of most other goods, including wheat.
FLOUR MILLING. Bangladesh has a total of about 250 wheat flour mills, with milling capacities ranging from 10 tonnes to 200 tonnes a day on a wheat equivalent basis. Of the total number, only around 30 mills have daily capacities exceeding 50 tonnes.
Total wheat grinding capacity has been estimated at 2.4 million tonnes annually, based on a three-shift, 24-hour-per-day operating schedule. But most mills operate only one shift, and actual wheat grind is estimated at about 2 million tonnes.
The milling sector is private and operates freely. New mills may be built or existing mills expanded without government permission or restriction.
Flour, like wheat and rice, is traded on the open market with no government price controls or oversight. However, the government does influence market prices through its strategic reserve procurement activities.
The largest consumer of wheat in Bangladesh is the traditional household sector, where wheat is ground in "Chakki" mills (small-scale flour mills) into whole meal flour ("atta") to make "chapati," an unleavened wheat bread that is one of the country's primary food staples.
Demand for wheat by the fast food sector has registered healthy growth in recent years as ready to eat food items like hamburger buns, pizza, noodles and pasta are becoming increasingly popular. This sector is expected to generate an additional annual demand of 100,000 to 200,000 tonnes of wheat.