Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
57
imports of diesel engines and pumps for tubewell irrigation were liberalized in 1988, and
as more farmers came to use fertilizer and high-yielding rice varieties, boro area increased
sharply. Over 1981–90, boro area expanded by an average of 7.5 percent per year,
replacing the lower-yielding aus rice crop (April–August) in many areas.
Through rapid increases in rice (and wheat) production in the 1980s and 1990s,
Bangladesh achieved its food grain production targets. Total production of rice and wheat
grew by an average of 2.5 and 2.1 percent per year, respectively, outpacing population
growth of about 1.9 percent per year. By 1999/2000, these increases in production per
capita eliminated the so-called “food gap”—the difference between the amount of food
grain required to meet the consumption target of 454 grams of food grain per person per
day and net domestic production—and weakened the case for large flows of food aid.109
Increases in rice production also led to a long-term decline in domestic rice prices. From
the late 1970s to the early 1990s, real rice prices fell by about 30 percent. Since the early
1990s, real rice prices on average have remained approximately constant, although with
substantial fluctuations. Nonetheless, the real incomes of farmers adopting the new
technology, particularly those who increased their boro rice area, generally rose. On the
other hand, farmers who could not adopt the new technology (because they lacked
irrigation, appropriate drainage, or had other constraints), particularly in southern and
northeastern Bangladesh, may have experienced declining real incomes as real rice prices
fell.
Net consumers of rice have enjoyed greater food security thanks to increased rice
production and market liberalization. Lower real rice prices directly benefit net rice
purchasers. Moreover, the increased size of the total rice harvest and the more even
seasonal spread between the aman and boro crops have improved price stability by
reducing the time between major rice harvests. Boro rice has been especially important in
years when droughts or floods damaged the aman crop. Private rice imports (made
possible by trade liberalization in the early 1990s) add to price stability in years when rice
harvests are poor (as in 1994/95, 1997/98, and 1998/99) by keeping domestic rice prices
from rising above the cost of imported rice. To keep real prices from rising and to free land
for diversification into high-value crops, Bangladesh needs further increases in rice
production, based on higher yields.
As is the case for staple food crops in many developing countries, the value chain for rice
in Bangladesh traditionally has been “geographically long and intermediationally long.”110
Paddy is sold to village traders, who sell it as paddy or have it milled in village mills and
then sell it to rural wholesale markets, where it is bought by wholesalers from cities.
Those wholesalers sell on to semi-wholesalers (who sell to retailers) and/or traditional
retailers.111
109 World Bank (2008).
110 Reardon et al. (2012).
111 Reardon et al. (2012).