Energy price hike a bane for food production, development

The war in Europe is manifesting itself in a plethora of harmful ways, with many countries, including Bangladesh, facing energy crisis. As a result, the price hike in the sector will create extra pressure on resources which would have otherwise been used for social protection and development based investment.

As per a report published in The Business Post on Thursday alluding to the quarterly report of the central bank says rise in domestic energy prices may undermine the growth, increase poverty, and divert budgetary resources away from productivity-enhancing investment and social protection,

Last week, the Asian Development Bank lowered its forecast for Bangladesh’s GDP growth to 6.6 per cent for fiscal 2022-23 from its April projection of 7.1 per cent. The figure is much lower than the government’s target of 7.5 per cent in the fiscal year.

Due to economic hardships triggered by the Ukraine conflict, inflation has soared, supply chains have been severely buckled while foreign reserves are taking a hit. Moreover, the sharp rise in the price of fuel and fertilizer will result in reduction of food production.

A US Department of Agriculture, paints a grim picture with the prediction that Bangladesh may harvest less Aus rice in the forthcoming season. The report also predicted probable stress over the grain market of Bangladesh due to the rise in local prices for rice, wheat, and corn stemming from the ongoing Russia-Ukraine war, and India’s restriction on wheat exports.

Industrial production growth can help boost GDP growth. But the quantum index to medium and large-scale manufacturing industries declined to 489.7 in Q4 of this year compared to the same period of the previous year.

However, the central bank expects that moderately increasing private sector credit growth will help boost industrial production.

A few weeks ago, the Adviser to the Prime Minister for Power, Energy and Mineral Resources Dr Tawfiq-e-Elahi Chowdhury expressed optimism to overcome the ongoing power and energy crisis in the country created due to Russia-Ukraine war.

Of course optimism in the face of adversity is a laudable trait and has been deemed as a major psychological condition in overcoming hardships; however, any positive feeling has to be buffeted by a strategic approach and the energy adviser has underlined the need to reduce dependence on fossil fuels to explore solar power plus hydro power options.

The government certainly deserves kudos for taking electricity to the remotest of areas although the challenge now will be to keep the grids active. Once people become accustomed to power and the comforts that come with them, it will be difficult to take them back to a regressive state without electricity.

In a practical approach, the first step should be to emphasise on the harnessing of solar energy. This year has already seen relatively low rainfall with prolonged periods of sunny weather. While this long stretch of summer has a debilitating impact on human lives and agriculture, it also has a positive side since the sun can be the source of solar energy.

Despite a lot of talk about solar power, Bangladesh has not seen a revolution with this energy. With energy crisis comes the opportunity to take solar power usage to every home, in both rural and urban Bangladesh. Focus should on using solar power in the food sector while solar panels need to be installed all over Bangladesh to facilitate agriculture production, especially during the dry season of winter, which is almost upon us.

Since there is a war raging, economic expectations need to be realistic with the acceptance of a hard time ahead. No country will be immune from the downsides of the global economic meltdown. However, to minimise the damage, a cohesive approach, encapsulating seeking out new markets for garments, diversifying export basket plus adopting frugality in all levels will help Bangladesh weather the storm.