Famine an issue in Africa, not a risk for Bangladesh

Countries that are self-sufficient in food production can never suffer from food shortages or famines, unless there is some kind of mismanagement. Since Bangladesh produces 95 per cent of its food grains, I do not see any danger of a food crisis.

I do not think Bangladesh will lack the necessary foreign exchange to import the remaining 5 per cent of food. If import is not possible, demand can be covered by increasing the production of other crops or changing our food habits.

Another thing is being said, the price of food products will be high in the world.

If you can maintain your own production, increasing the price in the global market will not be a problem. Still, I do not understand why there is a talk going on about a food crisis.

It is not clear to me why the problem of Africa was brought to Bangladesh.

The problem of famine is mainly in that region, because their food production cannot cover the demand. Bangladesh is far ahead in terms of food production compared to African nations.

According to the government data, we can see that Bangladesh produced 4.59 crore tonnes of food grains in the last FY. Of this figure, the amount of rice was about 3.82 crore tonnes, wheat 10.85 lakh tonnes and maize 56.29 lakh tonnes.

During that period, Bangladesh imported about 11.2 lakh tonnes of rice, which is only 3 per cent of the domestic production. But we are dependent on the global market for wheat. In FY22, Bangladesh imported around 50.63 lakh tonnes of wheat, and 22 lakh tonnes of maize.

Wheat is produced more than rice in the world. So the price of wheat will not go so high that we cannot import it. I think if the price of wheat goes up, it may come closer to the price of rice.

If it goes beyond our purchasing power, if there is no wheat, we would have to consume a little less. So we can solve this crisis by changing our diet.

Again, it is being said that food prices in the global market will increase so much that even if we have the foreign exchange, we would not be able to import it. I do not think this will be the case.

Even in 2008, there was no crisis in Bangladesh. At that time, there was a food crisis due to the increase in prices in the global market.

But the support given by the government helped the farmers achieve a bumper crop production. No one died of starvation then, and it will not happen this time. Because, excluding rice, our other agro products, such as vegetables, potatoes, are produced at a higher quantity.

So there is no reason to think that Bangladesh is in a crisis.

But yes, it is true that the price of rice and wheat will increase in the domestic market. In that case, people will have to make some changes in their diet. Dependence on rice should be reduced. There have already been some changes. However, we should be ready to face this increase in prices. The government should provide the necessary support to boost food production.

In the modern world, famine can be found in Africa. But this is not the case in present day Bangladesh. So I do not see anything to worry about. The Aman season’s harvest is now in the field, and the Boro season is ahead of us.

The government should provide good support so that haor region’s Boro crops grow properly. Then like in 2008, we can tackle the food crisis head on, and do better.

Saving forex reserves a must

Do not overuse foreign exchange reserves. If necessary, the exchange rate should be taken higher. But the reserve cannot be spent. Currently, the usable reserve is $27 billion. So the exchange rate should be entirely market-based to save reserves. In this case the cost of imports will increase, but we have no other alternative.

If you want to import fuel and gas, you have to pay higher prices, which will cause a further increase in fuel and electricity prices.

There is a false notion that if the exchange rate is set on a market basis, the export sector – as well as the readymade garment (RMG) industry – will have to import raw materials at higher prices.

Because of the back to back LC facility, the RMG sector can import raw materials with their own foreign exchanges. They do not need USD in cash. So if the USD price jumps a lot to protect the reserves, this will have no impacts on the export sector.

Besides, the production process should continue even if electricity prices go up.

The Bangladesh Bank is providing USD support from the reserves and reducing the production of electricity. This cannot continue. If a need arises to hike the electricity price by 20 per cent – 25 per cent, then my suggestion is to increase the supply of electricity to sustain production.

No need to think about the household electricity situation. The focus should be on supplying electricity to the industries, agriculture and service sectors. Household consumption should be reduced if necessary. We will have to manage this situation.

If we do not do this, there will be a crisis. If electricity cannot be provided, the production of agriculture and the export sector will be disrupted.

Apart from this, the government should be more careful about project approval and implementation. Government expenditure must be reduced. We have to save our reserves at any cost. On the other hand, to reduce pressure on reserves, short term foreign loans should be reduced. Currently, this loan is about 60 per cent of the forex reserves. 

If it is 100 per cent, the situation of bankruptcy is created in any country.

If there is an opportunity to reschedule this debt, the government should take it. If the debt cannot be paid in full, the government should take approval from the tenders for repayment through installments.

In addition, the government has huge loans in domestic banks. That should also be looked into.

Set unified $ rate to boost remittance

Export of manpower has increased significantly after the ease of the Covid-19 pandemic.

According to Bureau of Manpower Employment and Training (BMET) data, the number of manpower exports from January to September this year stood at 8,74,739, whereas the export of manpower in the last year was 6,17,209.

Remittance inflow in the country is not increasing as expected despite the manpower export boom. Remittance income fell by 24 per cent this September compared to the same month previous year.

A major reason behind the decline of this income is the difference of USD prices between the open market and the official rate, which are now Tk 115 and Tk 107 respectively.

In order to increase remittance income, this difference should be reduced. One way to reduce this is to move to a unified USD rate. Separate rates for exports and remittances will not work. Instead, there should be one rate for all types of remittance inflow in the country. Only then we expect remittances to increase.

Ahsan H Mansur is the executive director of the Policy Research Institute of Bangladesh (PRI). He can be reached at [email protected]