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An Evaluation of Government Rice Procurement Programme in Selected Areas of Bangladesh

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An Evaluation of Government Rice Procurement Programme in Selected Areas of Bangladesh Bangladesh J. Agric. Econs XXVI, 1 & 2(2003) 111-126 Research Note AN EVALUATION OF GOVERNMENT RICE PROCUREMENT PROGRAMME IN SELECTED AREAS OF BANGLADESH S. A. Sabur Hasneen Jahan M. Selim Reza* ABSTRACT Government Boro procurement programme was evaluated with the help of primary data collected from different upazilas under Bogra and Naogaon districts during 2001. Additionally, secondary data were obtained from different sources. Farmers and millers directly sold paddy and rice respectively to the procurement centre. Faria and Bepari did not sell paddy or rice directly to the procurement centre but they formed a complex channel in procurement of rice in the study areas. Large differences were observed between procurement price and market price and procurement price and cost of production in different years. The highest difference between procurement price and market price was observed in the month of May for paddy and June for rice. Positive relationship was observed between the percentage of marketed surplus procured and market price of paddy. Small farmers sold the highest proportion of their surplus to the procurement centre compared with large farmers. The cost of selling paddy to procurement centre was more than double as much as the cost involved in selling paddy in the market. Majority of millers were not satisfied with the size of quota received for Boro rice. The factors such as marketed surplus, experience, education, metalled road and distance of procurement centre were found to influence the participation of farmers in procurement programme. The major reasons for not selling paddy to the procurement centre by farmers were lengthy procedure, loss of time and high transportation cost. I. INTRODUCTION Economic development in Bangladesh cannot be achieved unless there is a breakthrough in the agricultural sector. This sector employs about 62 per cent of labour force and contributes 23.47 percent to Gross Domestic Product (GDP) in 2002-03 (GOB, 2004). Agricultural sector of this country is largely dominated by paddy production. It is very unlikely in Bangladesh that a farmer is involved in agricultural activities without cultivating paddy. Bangladesh ranks fourth in terms of production among the paddy producing countries in the world after China, India and Indonesia (FAO, 2002 p. 77). The government of Bangladesh is consistently pursuing policies to attain food self sufficiency and also to improve the farmers' economic condition. The present food gain production in Bangladesh is sufficient to meet its domestic requirement. In the year 2002-03, the production of food grains was 268.70 lakh tons. In the face of more food grain production *The authors are respectively Professor, Department of Cooperation & Marketing, Assistant Professor, Department Agricultural Economics and Ex-Postgraduate Student, Bangladesh Agricultural University, Mymensingh. 112 The Bangladesh Journal of Agricultural Economics market price has been distorted and the farmers are getting low price for paddy. On the other hand, paddy production is becoming less profitable due to increased cost of production resulted from withdrawal of subsidies from modern inputs. Now, the government of Bangladesh has adopted paddy or rice procurement programme as an important tool to provide price incentive to the farmers. Among three varieties of paddy, Boro has an important role in achieving foodgrain self-sufficiency in the country. The area under Boro paddy cultivation has increased by 2.6 per cent and production by 4.5 per cent per annum during 1988-99. On the other hand, area under Aus and Aman decreased by 0.5 per cent and 4.5 per cent and production by 3.9 per cent and 1.2 per cent respectively (BBS, 2000, p.127). Thus in terms of both areas cultivated and production only Boro showed positive growth rates during the same period. Foodgrain procurement programme has a fairly long history in the region now comprising Bangladesh. For a long time, the primary objective of the procurement programme has been to secure enough food grains to feed the Public Food Distribution System (PFDS). Since 1975, however, price support became an important objective, although feeding PFDS remained an important concern. The price support programme has itself involved in two phases. Initially, the idea was to guarantee a floor price, which was announced just before the harvesting season. More recently, the whole system has been geared up towards guaranteeing an incentive price. The procurement price is now consciously related to cost of producing HYV foodgrain and is announced before the sowing season. It is said that the present procurement programme is not effective to provide incentive to the farmers. A recent study (Shahabuddin & Islam, 1999) on rice procurement programme showed that participation of farmers, especially the small and medium farmers was negligible and procurement appeared to be largely controlled by political elites. Therefore, this study is an attempt to evaluate the government Boro procurement programme with special emphasis on comparison between procurement price and market price and also participation of farmers and other different stakeholders. This study may be helpful to examine the effectiveness of the procurement programme and to find out its problems at least in the study area. II. METHODOLOGY Bogra and Naogaon districts were purposively selected because of the fact that these two districts are the leading Boro producing area of Bangladesh. On the basis of higher concentration of Boro paddy production, Sherpur and Gabtali upazilas under Bogra and Mahadebpur and Sadar Upazilas under Naogaon district were purposively selected for this study. In the selected four upazilas, Sherpur, Gabtali, Naogaon sadar and Mtazihat procurement centres were purposively selected. Farmers, traders and millers were chosen from around maximum of 10 kilometers of these procurement centres. Besides, Officers in Charge of the procurement centres and Upazila Controller of Food from four upazilas were interviewed. Thus, thirty six farmers (participants and non-participants), sixteen traders, twenty millers and eight officials were chosen for this study. Out of thirty six farmers, 12 An Evaluation of Government Rice Procurement 113 were small, 17 were medium and 7 were large farmers. Five sets of survey schedules were used for collecting information. Two sets of schedules were used for the farmers; one for the farmers who sold paddy to the procurement centre and another for those who did not sell paddy to the procurement centre. For traders, millers and officials separate schedules were used for collecting information. In addition to primary data secondary data were collected from different sources. Primary data were collected during the months of July and August 2001 and secondary data covered the period from 1989 to 2000. III. PROCUREMENT SYSTEM Government Procurement Procedure Government procures paddy from the farmers and rice from the millers through its procurement centres located in different areas of Bangladesh. There is an Officer in Charge (OC) and other employees in each procurement centre. Upazila Controllers of Food (UCF) supervises the procurement system of each upazila and District Controller of Food (DCF) supervises the procurement system of each district. Government fixes procurement target for each procurement centre on the basis of procurement centres' capacity and national procurement target. Then the UCF calls on a committee meeting and listed the farmers and millers. Rice procurement target is distributed among the agreed upon millers on the basis of their milling capacity. The agreed upon millers are those millers who are already listed for selling rice to the procurement centre. Union Parishad chairman provides the lists of farmers to the UCF for selling paddy to the procurement centre. A farmer can sell minimum of 70 kg and maximum of 5 tones paddy to procurement centre. Procurement Channel The growers sell their paddy mainly to the middlemen in the post harvest season. Middlemen involved in the trading of paddy are of different categories. They are commonly known as Kutial, Barkiwala, Faria, Bepari and miller. But the Kutial and Barkiwala were not involved in the procurement channel. The suppliers to the procurement centre are either farmers or the millers. The common procurement channels from growers to the procurement centre are shown in Figure 1. Boro procurement channel starts from farmers who sell paddy to Faria or Bepari in the market or at the farmyard. Sometimes they sell directly to the millers and also to the procurement centre. The seasonal Farias buy paddy from village, but regular Farias operated in the market. They sell paddy mainly to the Beparis and millers. Beparis are licensed traders who sell paddy mainly to the millers. Millers purchase paddy from farmers, Farias, Beparis or procurement centres and sell to the procurement centre after processing at their mills. Procurement centres collect paddy from farmers and rice from millers and supply paddy to the millers to process paddy into rice. It supplies rice for Public Food Distribution System (PFDS). In the case of PFDS, government supplies rice to the people through different programme such as Vulnerable Group Feeding (VGF), Food For Work (FFW), Food For 1n Evaluation of Government Rice Procurement 117 Different Markets During 2001 For this section data were collected by field survey from different markets and are presented in table 1. The lowest and highest differences between procurement price and market price of paddy were found at Naogaon and Gabtali upazilas respectively. The average difference of procurement price and market price of paddy for all upazilas was found 221.25 Tk/quintal. On the other hand, the highest difference between procurement price and market price of rice was found at Mahadebpur upazila and the lowest at Sherpur upazila. The average difference for all upazila was found 86.25 Tk./quintal. If rice price is converted into paddy equivalent price, it is found that rice price difference was much lower than paddy price difference. That means farmers were more benefited in selling paddy to the procurement centres than millers who sold rice to the centre.
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