Farmers, not lenders, hold key to food security

Tanim Ahmed*, NewAge, April 18, 2008 Photo: NewAge

Food security of Bangladeshis is directly dependent on the survival of and sustenance of the small farmers. If the incumbents can’t ensure implementation of a mechanism that guarantees prosperity for the small farmers, instead of hurtling them down the familiar path of further marginalisation, it will eventually ruin the realistic prospect of attaining sustainable food sufficiency in a few staples and long-term food security in general. 

ONE would be in quite a quandary if one were to decide which is scarier – that the World Bank and the International Monetary Fund have begun to talk about global food crisis and believe there is something to be done, or that the finance adviser has started to bemoan that the international finance institutions only talk the talk but not walk the walk.

When the World Bank and the IMF talk about global food crisis, it bodes ill. They are almost sure to come up with a number of policy advice and prescription which, if previous such cases, e.g. the crisis in Asia and Latin America, were any indicators, would prove to be even more disastrous. In other words, one might be looking at a further deterioration of the economy in general besides more empty and half-fed stomachs. When the multilateral lending agencies, especially the International Monetary Fund, take interest in a crisis, more often than not it seems to be because there is money to be made.

Besides the Bretton Woods Institutions, the United Nations has also released a study on agriculture recently while the International Rice Research Institution has sounded a warning. The World Bank president called for rich countries to donate $500 million to the World Food Programme to put food in hungry mouths around the world. In other words and for a better frame of reference, this amount is almost the same as the tariffs that Bangladesh paid the United States in 2006, which was $496 million, and half the amount that the rich countries pay their farmers in subsidies every day.

From a different perspective though, it means that the international organisations see no problems with poor countries surviving on charity and alms of the rich. But they do not see any reason for retaining large food stocks or provision of subsidies for farmers in the poorer countries while the richer ones continue to subsidise their farmers and thereby agriculture ensuring its sustainability. Bangladesh was repeatedly asked to lower its amount of buffer food stocks and caught unawares when there was the need for it.

Presumably there would be more of such policy advice from the lending agencies dealing with more specific and sensitive issues including agricultural input subsidies and mechanisms to ensure better prices for the farmers, besides, of course, the relentless push to promote genetically modified crops – which represents a large business interest – and new financial services. These are discussed at length in the last World Development Report 2008, which focuses on agriculture as an avenue towards development.

It is a rather curious coincidence that the World Bank chose to highlight agriculture over 20 years later in its annual flagship publication shortly before the food crisis became a global phenomenon. This publication will regardless be referred to time and again to promote and push policies across the globe calling for more involvement of the private sector and withdrawal of the state in all spheres of agriculture, despite the fact that the report admits to the failure of the private sector in certain sectors in different countries.

Findings of an Independent Evaluation Group report of the World Bank’s agricultural programmes in Sub-Saharan Africa between 1991 and 2006 only confirm that policymakers in Bangladesh or, for that matter, anywhere else in the world, should not be looking to the lending agencies for advice. The report, published late last year, found that donors and governments had neglected agriculture for a long time. Whatever limited activity there had been had performed ‘below par’. During the period of the study, the bank channelled $2.8 billion in investment lending to agriculture, constituting just 8 per cent of its investment lending to the region.

The authors of the report make a number of criticisms of the agency’s work. Apparently, having encouraged governments to close their public seed companies, ‘Bank projects have not been very successful in promoting private sector participation in seed production’. Regarding soil fertility, the report said the World Bank ‘did not appear to have engaged its African clients in serious policy dialogue about the region’s declining soil fertility’.

Regarding agricultural extension, the report says private extension services are generally skewed towards well-endowed regions and high-value crops — which are of little surprise. As for market access and ensuring better prices for the farmers, the study found that in most reforming countries the ‘private sector did not step in to fill the vacuum when the public sector withdrew’. Consequently, it found, the results fell short of expectations due to ‘inadequate background analytical work, weak political support, and insufficient appreciation of the system’s incentives’.

In conclusion, the report says ‘despite its presence for more than two decades in several countries, Bank support has so far not been able to help countries increase agricultural productivity sufficiently to arrest declining per capita food availability’.

While this internal study adds to the embarrassment of the lending agency, one really does not need to draw upon the Internal Evaluation Group’s findings to realise that the international financial institutions’ policies and prescriptions would eventually fail in developing countries like Bangladesh where over 80 per cent of the farmers are small and marginal. It is precisely because all policies and prescriptions of the lending agencies would necessarily hinge on the assumption of the ‘perfect market’ where information is ‘symmetrical’, competition is ‘perfect’, and individuals act as free radicals and to the best of their interests – all necessary presumptions of the ‘free market’.

It is a hard fact in Bangladesh that such a market does not exist. Information is anything but symmetrical and in fact highly skewed. Small and marginal farmers hardly realise that the price of their products rise several times by the time they reach the consumer or even the retailer. These farmers cannot – as perfect competition would dictate – sell their product to the highest bidder since they are simply not allowed to have a voice in the sales of their products. It is almost always a coercive process where the farmers are desperately dependent on the one or two brokers for their urgent need for cash, or are forced to sell to a certain agent at a certain price without ever participating even in the smallest of the local markets.

Thus, the lending agencies would be spewing out, as the World Bank does in its latest development report, sets of prescriptions based on a premise that does not exist in reality. That such prescriptions will fail should not come as a surprise but is absolutely predictable. But AB Mirza Azizul Islam, the finance adviser to the military-controlled interim government, and his comrades in arms running the current regime, appear more likely to gulp down whatever prescriptions come from these agencies, if they are is a hint of assistance.

The same day that he criticised the lending agencies to being all talk and no action (April 15), politicians and economists criticised the role of lending agencies and the governments’ subservient roles as regards their imposed diktats. They rightly suggested that the government should build a sufficient food stock to weather food crises in future. This is also what the incumbents should be concentrating on at the moment.

It would have been more helpful to the people if the incumbents themselves were more active instead of criticising the lenders for their ‘inaction’. In this regard the incumbents deserve to be commended indeed for finally, although belatedly, breaking out of their bureaucratic lethargy and declaring a procurement price for boro rice. However, the procurement target appears to have been reviewed downwards to some 1.5 million tonnes instead of 2 million tonnes as was hinted at earlier. And as for the procurement price, there are doubts that the benefit reach the farmers as they would not be selling the rice directly to the government but the rice millers would.

There should be little doubt that the backbone of Bangladesh agriculture are the small and marginal farmers constituting over 80 per cent of the 22 crore people engaged in farming, which incidentally makes the peasantry the largest employers of the country. Consequently, food security of Bangladeshis is directly dependent on the survival of and sustenance of the small farmers. If the incumbents can’t ensure implementation of a mechanism that guarantees prosperity for the small farmers instead of hurtling them down the familiar path of further marginalisation, it will eventually ruin the realistic prospect of attaining sustainable food sufficiency in a few staples and long-term food security in general. 

*Tanim Ahmed, journalist, NewAge, Dhaka, Bangladesh. Contact:


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