The New Nation - Internet Edition

DEVELOPMENT of a modern agricultural marketing system is very much required to check commodity market volatility. The absence of a modern agricultural marketing mechanism and demand-based production and distribution system ultimately result in unstable commodity prices, huge post-harvest losses and widening gap between farmer and consumer prices. The participants at a recent seminar in the capital said that commodity prices are crucial for both producers and consumers, especially for the poor, as sharp increases in prices significantly lower their real incomes and force them to spend a large proportion of the incomes on food. Instability in producer level prices increases farmers' uncertainty and also discourages private investment in agriculture.

Year to year fluctuations in nominal prices of rice in the country were very high ranging from 0.49 per cent to 21.99 per cent during the period between 2001 and 2007 while it was around 66 per cent in 2008. Though Bangladesh produces about 93 per cent of domestic food requirements, local market prices are virtually controlled by global prices.

Food price increases, in such circumstances, reduce the purchasing power of poor households and compel them to cut on expenditures on other items like eggs, vegetables, meat and milk, which would result in lower intakes of calorie and nutrition.

The Agricultural Produce Markets Regulation Act of 1964 amended in 1985, clarifies only agricultural marketing management but does not have any provisions for organised sale of goods, protection of growers' interests, maintenance of quality standards, safe storage and packaging and transportation. One economist remarked that the politics with food had been intensified all over the world including Bangladesh. The government would have to redefine its role and initiate institutional and policy reforms to strike a balance between demand and supply.