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Out /*I of the Shadow of Famine Out _/*i of the Shadow of Famine Evolving Food Markets and Food Policy in Bangladesh Edited by Raisuddin Ahmed, Steven Haggblade, and Tawfiq-e-Elahi Chowdhury Out of the Shadow of Famine Other Books Published in Cooperation with the International Food Policy Research Institute Agricultural Change and Rural Policy: Variations on a Theme by Dharm Narain Edited by John W. Mellor and Gunvant M. Desai Crop Insurance for Agricultural Development: Issues and Experience Edited by Peter B. R. Hazell, Carlos Pomareda, and Alberto Valdes Accelerating Food Production in Sub-Saharan Africa Edited by John W. Mellor, Christopher L. Delgado, and Malcolm J. Blackie Agricultural Price Policy for Developing Countries Edited by John W. Mellor and Raisuddin Ahmed Food Subsidies in Developing Countries: Costs, Benefits, and Policy Options Edited by Per Pinstrup-Andersen Variability in Grain Yields: Implications for Agricultural Research and Policy in Developing Countries Edited by Jock R. Anderson and Peter B. R. Hazell Seasonal Variability in Third World Agriculture: The Consequences for Food Security Edited by David E. Sahn The Green Revolution Reconsidered: The Impact of High-Yielding Rice Varieties in South India By Peter B. R. Hazell and C. Ramasamy The Political Economy of Food and Nutrition Policies Edited by Per Pinstrup-Andersen Agricultural Commercialization, Economic Development, and Nutrition Edited by Joachim von Braun and Eileen Kennedy Agriculture on the Road to Industrialization Edited by John W. Mellor Intrahousehold Resource Allocation in Developing Countries: Models, Methods, and Policy Edited by Lawrence Haddad, John Hoddinott, and Harold Alderman Sustainability, Growth, and Poverty Alleviation: A Policy and Agroecological Perspective Edited by Stephen A. Vosti and Thomas Reardon Famine in Africa: Causes, Responses, and Prevention By Joachim von Braun, Tesfaye Teklu, and Patrick Webb Paying for Agricultural Productivity Edited by Julian M. Alston, Philip G. Pardey, and Vincent H. Smith Out of the Shadow of Famine Evolving Food Markets and Food Policy in Bangladesh EDITED BY RAISUDDIN AHMED, STEVEN HAGGBLADE, AND TAWFIQ-E-ELAHI CHOWDHURY Published for the International Food Policy Research Institute The Johns Hopkins University Press Baltimore and London © 2000 The International Food Policy Research Institute All rights reserved. Published 2000 Printed in the United States of America on acid-free paper 987654321 The Johns Hopkins University Press 2715 North Charles Street Baltimore, Maryland 21218-4363 www.press.jhu.edu International Food Policy Research Institute 2033 K Street, NW Washington, D.C. 20006 (202) 862-5600 www.ifpri.org Library of Congress Cataloging-in-Pubhcation Data will be found at the end of this book. A catalog record for this book is available from the British Library. ISBN O-8O18-6333-3 ISBN 0-8018-6476-3 (pbk.) Contents List of Figures ix List of Tables xi Foreword xv Acknowledgments xvii 1 Introduction 1 RAISUDDIN AHMED AND STEVEN HAGGBLADE PART I Shifting Structure of Foodgrain Supply and Demand 2 Foodgrain Production and Imports: Toward Self-Sufficiency in Rice? 21 PAUL DOROSH 3 Liberalization of Agricultural Input Markets in Bangladesh 49 RAISUDDIN AHMED 4 Evolving Rice and Wheat Markets 73 NUIMUDDIN CHOWDHURY AND STEVEN HAGGBLADE 5 Trends in Consumption, Nutrition, and Poverty 101 AKHTER U. AHMED PART II Historical Perspective on Public Food Interventions 6 History of Public Food Interventions in Bangladesh 121 A. W. NURUDDIN AHMED, LUTFUL HOQUE CHOWDHURY, AND STEVEN HAGGBLADE 7 Legal Environment Affecting the Foodgrain Trade 137 SHAMSUR RAHMAN 8 Food Aid in Bangladesh: From Relief to Development 148 DAVID A. ATWOOD, A. S. M. JAHANGIR, HERBIE SMITH, AND GOLAM KABIR Vll viii Contents 9 Dynamics and Politics of Policy Change 165 TAWFIQ-E-ELAHI CHOWDHURY AND STEVEN HAGGBLADE PART III The Changing Case for Government Intervention 10 Price Stabilization and the Management of Public Foodgrain Stocks in Bangladesh 189 FRANCESCO GOLETTI 11 Targeted Distribution 213 AKHTER U. AHMED 12 Agricultural Diversification: A Strategic Factor for Growth 232 WAHIDUDDIN MAHMUD, SULTAN HAFEEZ RAHMAN, AND SAJJAD ZOHIR 13 Prospects for Rice Exports in Bangladesh 261 FRANCESCO GOLETTI, A. S. M. JAHANGIR, AND SAJJAD ZOHIR 14 Conclusion: Old Lessons and New Directions in Food Policy 278 STEVEN HAGGBLADE AND RAISUDDIN AHMED Contributors 295 Index 299 Figures 1.1 Map of Bangladesh 2 2.1 Total rice production and availability in Bangladesh 32 2.2 Real prices of coarse rice, 1977-98 33 2.3 Import prices (exported from India) and quantity of private rice imports, 1993-98 34 2.4 National average real wholesale price of rice and wheat, 1987-88 37 2.5 Import parity prices and quantity of private wheat imports, 1993-98 38 4.1 Changes in rice price seasonally 76 4.2 Rice marketing sector map, 1990 77 4.3a Quantity marketed by farm size (aman HYV paddy), 1993/94 79 4.3b Average price received (aman HYV paddy), 1993/94 79 4.4 Wheat marketing subsector map, 1992/93 91 5.1 Intrahousehold calorie adequacy (intake per requirement) 107 5.2 Gaps in calorie intake 114 6.1 Public foodgrain procurement and distribution 127 6.2 Ration prices as share of market prices for rice and wheat 128 6.3 Weekly statutory ration quotas for adults 130 6.4 Government foodgrain storage capacity 134 10.1 Conditional variance of prices 191 10.2 Total public foodgrain stock 191 10.3 Expected poverty 196 13.1 Rice surplus scenarios 264 13.2 Rice price scenarios 264 13.3 Consumption per capita of foodgrains 266 IX Tables 1.1 Changes in selected economic and social indicators, Bangladesh, 1973/74-1993/94 6 1.2 Per capita income of South Asian countries as a multiple of the per capita income of Bangladesh 13 2.1 Distribution of cropped area in Bangladesh, 1995/96 23 2.2 Growth rates and variability of foodgrain production, 1974-98 25 2.3 Rice yields and prevalence of HYVs and irrigated area by season 25 2.4 Growth rates of modern and local rice varieties by season, 1973-98 26 2.5 Production of modern and local rice varieties by season, 1973-98 28 2.6 Foodgrain availability and requirements in Bangladesh, 1972-98 30 2.7 Bangladesh foodgrain imports, 1980-98 35 2.8 Estimated production, demand, and supply of wheat with alternative parameter values and world prices 40 A2.1 Rice production, availability, and prices, 1977-98 44 A2.2 Time-series estimates of rice demand parameters in Bangladesh 46 3.1 Step-by-step liberalization of agricultural input markets in Bangladesh 53 3.2 Time-series data used to estimate models for measuring the impact of liberalization 62 3.3 SUR estimates of fertilizer consumption, fertilizer price, irrigated area, and rice production 63 3.4 Estimated contribution of liberalization to rice production, 1976-97 68 4.1 Broad changes in Bangladeshi rice markets 74 4.2 Rice marketing by farm size, 1989/90 78 4.3 Key holders of foodgrain stocks, 1990-93 82 4.4 Trade credit among rice and paddy traders, 1989/90 85 4.5 Farm credit, 1989/90 87 4.6 Broad changes in wheat markets 89 xi xii Tables 4.7 Contrasting rice and wheat markets, 1990—98 95 5.1 Consumption of rice and wheat 102 5.2 Estimated expenditure elasticities of demand for foodgrains 103 5.3 Foodgrain expenditure elasticities by quartile 104 5.4 The effects of income on food consumption and nutrition 106 5.5 Regional variation in expenditures, food consumption, and nutritional status 109 5.6 Seasonal variations in consumption and nutrition of low-income household members 111 5.7 Recent trends in poverty in Bangladesh 112 6.1 Administrative history of Bangladesh's government food operations 123 6.2 Evolving objectives of the Bangladesh food administration 124 6.3 Overview of public food distribution channels 126 6.4 Trends in direct public purchase and distribution of foodgrains 129 6.5 Food subsidies in the government budget 132 7.1 Current status of acts and orders relating to foodgrains in Bangladesh 141 8.1 Average concessional and commercial import of foodgrain by source 149 9.1 Key stakeholders in Bangladesh's food policy reform 166 9.2 Chronology of food policy reforms 170 9.3 Ration channel distribution over time 172 9.4 The demise of the ration channels 176 9.5 Rebalancing stocks in the public food distribution system 177 9.6 The decline of noncereals in the public food distribution system (annual public distribution) 180 10.1 Rice price variability 190 10.2 Price stabilization and expected utility 194 10.3 Benefit to producers 195 10.4 Summary of various policy options 205 10.5 Market price of rice and offtake from the public food delivery system in five disaster years 209 11.1 Profile of targeted intervention programs, 1994 217 11.2 Cost-effectiveness of targeted income transfer programs 222 11.3 Characteristics of program beneficiary and nonbeneficiary households 224 11.4 Comparison of food consumption patterns of program beneficiaries and nonbeneficiaries, 1992-94 225 11.5 Prevalence of malnutrition among preschool children aged 6 to 60 months: Program versus control groups, 1992—94 226 11.6 Influences of forms of income on food consumption of program beneficiaries 228 Tables xiii 12.1 Results of an estimation of the area response equation for crops and crop groups 235 12.2 Domestic-to-border price ratios of selected commodities at the official exchange rate 241 12.3 Trends in domestic-to-border price ratios of selected commodities at the equilibrium exchange rate 242 12.4 Trends in estimated border prices of selected commodities in constant 1985 dollars 245 12.5 Private and economic
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