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The recent coronavirus-induced shutdowns throughout Bangladesh have caused an estimated loss of BDT 565.36 billion (USD 6.66 billion) between March and May 2020 for the businesses working in agriculture, fisheries, and meat producing sectors.[1] Nation-wide disruptions have resulted in restricted access to agricultural products, markets, and advisory services. Under these circumstances, it is important to take proactive measures in order to increase economic resilience and reduce vulnerabilities of communities involved with the agriculture sector.

The government has already declared multiple stimulus packages with an initial focus on protecting the SMEs, industry, and service sector.[6] Prudent steps were eventually taken to help the agriculture sector. However, conventional economic shock management practices, which work in countries where farmers are more involved in the formal labor sector,  may not be adequate in dealing with the current crisis as the economy of Bangladesh is significantly different from that of the developed countries. Among 80 percent of the country’s workforce in the informal sector, more than 40 percent are working in the agriculture sector.  

Delayed Purchase of Paddy by the Government

Although 80 percent of the total paddy expected harvest of 19.73 million tonnes in the current Boro season is complete, the government has purchased only 2,750 tonnes of paddy as of 20th May, 2020.[2] The restrictions due to COVID-19 have slowed down the government’s buying activities. Food control officers in different districts have been panicking regarding the paddy collection activities due to the COVID-19 pandemic. They fear that the collection activities could increase the risk of contracting the virus as large groups of people including farmers, laborers, and government officials will gather at the same place. To address this risk, the government has allocated BDT 5,000 ( USD 58.91) in every district and BDT 2,000 (USD 23.56) in each Upazila for farmers and officials to buy hand sanitizers, masks, and soap to avoid coronavirus infections.[2] Even if these delays are addressed, farmers might remain unhappy as they are uncertain about getting the fair price for their produce amid price fluctuation across all sectors due to the coronavirus crisis. 

FIGURE: An overview of the government’s paddy procurement activities in April and May, 2020 / Source: The Business Standard 

Dissatisfied Farmers Despite Growing Rice Production

Currently, farmers in many districts are losing out on expected earnings as they have to sell wet paddy at BDT 600-650  (USD 7.07-7.66) per maund (37.32 kg) at the market. At least BDT 100-150 more could be earned if the paddy were dried properly. However, it was not possible due to the lack of feasible weather conditions and delay by the government in purchasing paddy. Moreover, farmers can not risk delaying their sales for drying crops as opportunities to sell are not readily available to them. 

According to a report by the US Department of Agriculture (USDA) published in April, 2020, Bangladesh is predicted to be the third largest producer of rice by the end of this year exceeding 36 million tonnes in the current fiscal year.[3] Despite the growth in production, farmers are still dissatisfied as the fair price of their labour has yet to be ensured. Due to manipulation by middlemen, which has further increased due to lack of local help under current circumstances, a large number of farmers are not getting the right price for their produce.  

Shift in Consumer Spending Pattern due to Reducing Income and Increasing Uncertainty

Under current situations, a slowing economy and rising poverty has reduced purchasing power of buyers reflected in the corresponding reduction in demand. People are making fewer visits to the food markets and buying more cereal crops to eat at home. For instance, consumers belonging to the middle class are not buying the fish like Pangash and Tilapia like they used to because of a drop in average household income.[4] The same pattern can be seen in the dairy and poultry industry. Interruption in the import-export business will cause a dearth of poultry feed as a major portion of the raw materials are imported from neighboring countries. Besides, the poultry sector, the dairy sector has also been impacted where approximately 110-220 thousand litres of milk worth BDT 570-600 million (USD 6.71-7.07 million) have been thrown away daily during the shutdowns due to supply chain disruptions.[5] 

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How to Protect the Agriculture Sector from Long-term and Short-term Shocks?

Besides ensuring economic stability in the rural area, maintaining vibrancy in the agriculture sector can ensure food security across the country. Hence, protecting the sector from mentioned vulnerabilities is crucial in order to cope with the immediate as well as long-term shocks. Three key issues that need to be addressed in order to do so are: i) ensuring proper transportation of farmers’ produce and fair prices for those; ii) providing arrangements for farmers to avail mechanized resources, to harvest the crops, and iii) securing safe access for farmers to finance required for harvesting and procuring materials for the next harvest of Aman crop around December. 

Ensuring Transportation and Fair Price of the Produce

Addressing the disruptions in the value chains and ensuring fair price for the produce is paramount in the wake of the current crisis. Despite some steps taken by the government, many households relying on income from agriculture are suffering due to partial lockdowns. Most of them are being forced to sell produce at throw-away prices. Some are not even lucky enough to sell at all. There are, however, some good examples like Ishwardi Upazila of Pabna, where farmers could sell their produce to local administration at BDT 10 per kg. This could morph into a win-win strategy if local administration could give fair prices to the farmers and complement the relief packages with crops procured from the farmers. 

However, stakeholders like the Department of Agricultural Extension (DAE) will need to step in to start cutting institutional deals instead of ad-hoc initiatives. The Sub-Assistant Agriculture Officers (SAAOs) employed all over the country need to stay engaged to conduct quick surveys about the amount of agricultural produce in the farmers’ hands and inform the head office accordingly. Concerned authorities and government intermediaries can take initiatives to procure items and market those based on the received information. 

With necessary information and support from the government bodies, large grocery chains and online service providers can play an effective role in procuring and selling the produce. E-Commerce Association of Bangladesh (E-CAB) can help online entrepreneurs connect with the local entrepreneurs at Union Digital Centers. Some such entrepreneurs are already running the e-commerce platform EK-Shop. Another e-commerce platform, “Amar Gram Amar Desh”, is connecting rural farmers and producers to the market. Besides, the post office too can join forces to market the produce. The Postal Department of Bangladesh has already started using its vast transport network to deliver seasonal fruits to customer doorsteps free of charge. Moreover, NGOs like Syngenta Foundation and YPARD working with the agriculture value chains can contribute to the same cause with their vast practical experience. I-Social is such an active NGO providing digital services to the farmers through their representatives who have been teaching how to use digital tools to boost their products and get access to necessary information. 

Addressing the Lack of Manpower to Finish Harvesting in Time 

Because of the ongoing travel restrictions among different districts, there has been a lack of manpower required to harvest the crops, especially the boro crop which is 54 percent of the rice produced in Bangladesh.[6] Steps of cultivation such as land preparation, pesticide application, and threshing are to some extent mechanized in Bangladesh. However, harvesting has yet to be fully so. Although harvesting expenses are to be reduced by 62 percent through the use of machines, only 1 percent of harvesting was done mechanically as of February 2018.[6] Neighboring India is on its way to reap the benefits of mechanized harvesting during the current lockdowns. 90 percent harvesting in the Punjab and 30 percent harvesting in the West Bengal have already been completed by mechanized harvesters.[6] The Bangladesh government has taken a BDT 31.98 billion farm mechanization project to promote mechanized harvesting in June, 2020.[7] In April, 2020, the Ministry of Agriculture allocated BDT 2 billion to help farmers buy mechanized harvesters at 50-70 percent subsided prices. The DAE can help in this regard by assessing demand and prioritizing the distribution of mechanized harvesters.  

The large number of urban workers engaged in the informal sector are a good short-term solution to the lack of manpower as ensuring mechanization is relatively less pragmatic in the short term. Authorities can ensure dual impact by engaging these migrated workers in harvesting–farmers will get enough workers to harvest and temporarily unemployed workers will have a scope to earn wages.    

Establishing Farmers’ Access to Finance 

In April, 2020, Bangladesh Bank (BB) declared a refinance scheme of BDT 50 billion for working capital facilities in the agriculture sector. BB will give the funds to the bank at 1 percent interest rate and the farmers can borrow at only 4 percent.[6] Reaching the farmers efficiently has been easier as farmers have no-frill accounts and mobile financial services along with agent banking are quite widespread now. Including the network of microfinance providers can benefit the agriculture sector even further. Under the BDT 30 billion refinance scheme, banks can seek funds from BB at 1 percent interest rate and can channel that to MFIs at less than 4 percent. The MFIs, in turn, can offer credit to farmers in need. This fund can also be helpful to farmers who do not own much land or rural people engaged in non-farming activities. 

Building a More Resilient Future by Engaging More Stakeholders

  • Organizations like Bangladesh Institute of Nuclear Agriculture (BINA) can play a significant role in modernizing agriculture. Many farmers are still a little unaware of ways to maintain soil health. BINA could conduct the necessary research on increasing production by maintaining soil fertility and can train farmers accordingly.
  • The stimulus package of BDT 50 billion needs proper distribution mechanisms to ensure that the help reaches people in need of it. Lack of a proper database is making it challenging to identify, monitor, and evaluate proper distribution channels. Local monitoring through NGOs or local government bodies can be a way to address this. Moreover, the introduction of the ‘Big Data Concept’ can go a long way in ensuring proper evaluation and distribution of the stimulus package by ensuring a complete database of farms, farmers, products, markets, and prices. 
  • The Department of Agricultural Marketing can also play a crucial role in overcoming the current crisis. They are already buying perishable products from farmers and distributing them to areas in need. They can also come forward to help market the products of farmers involved with production of fish, shrimp, and crab as they face export bans causing substantial losses.

Bangladesh focused on financing the base of the social pyramid during the last global financial crisis. The strategy was successful in shielding the economy from global shock and ensured fast and inclusive growth. Similarly, despite the current global economic crisis, the agriculture sector can stay vibrant pivoting on positive changes in the sector in recent years and coordinated support from the stakeholders.

Saim Ahmed Shifat, Content Writer at LightCastle Partners, has prepared the write-up. For further clarifications, contact here: [email protected]

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