ENHANCING HOUSEHOLD FOOD SECURITY IN A PANDEMIC: POLICY OPTIONS FOR RICE MARKETS AND SAFETY NETS IN BANGLADESH

Enhancing Household Food Security in a Pandemic: Policy Options for Rice Markets and Safety Nets in Bangladesh

Bangladesh has done remarkably well in reducing poverty and improving food security over the past decade. Various forms of COVID-19 induced lockdowns may slow down, or even reverse, the progresses the country has made in recent years. Based on his analysis of rice markets, Paul Dorosh argues that while expansion of safety nets programs are needed in the short run, market friendly policies and sustained investments in agriculture should remain priorities in the country’s COVID-19 recovery plans – Shahidur Rashid, series co-editor and Director, South Asia, International Food Policy Research Institute (IFPRI).

villagers thresh rice in Bangladesh before the COVID-19 Pandemic. Tommy Trenchard/ Panos

The COVID-19 pandemic is severely affecting the economic activities and food markets in Bangladesh, as is the case in many countries across the world. As various forms of lockdowns have restricted the movement of tens of millions of households, economic activity in the formal sector has greatly diminished in the country. Many, if not most households, have suffered severe losses in income, which has led to a decline in the demand for products and services throughout the economy, including in the informal sector, leading to further unemployment and loss of incomes.

Availability of food at the national-level is not likely to be a constraint in the coming months due to a good boro season rice harvest that is expected to add about 20.4 million tons of rice (the boro target for 2020) to the national supply. However, market demand for rice may be weak due to lower household incomes, which combined with increased transport costs due to market disruptions, could result in significant reductions in consumption even without a large increase in price. Moreover, for poor farmers who do not produce a rice surplus, as well as for rural and urban non-farm poor, losses in employment and income can reduce their access to food and threaten their food security. This decline in purchasing power is also likely to reduce their consumption of other foods, thereby contributing to worsened nutritional outcomes.

Expanding food distribution systems in Bangladesh

One option for addressing the food security problem is to expand the sales from the Public Foodgrain Distribution System (PFDS) and other distribution of rice and wheat. Prior to COVID-19 outbreak, the government’s planned distribution of rice and wheat during the July 2019-June 2020 fiscal year was 3.1 million tons. By mid-May, only 2.2 million tons had been distributed. This volume of distribution could be substantially increased through drawdown in public stocks, which were about 1.1 million tons by end-May, and procuring more rice and wheat (the original 2019-20 plan target was 2.1 million tons of rice and 0.2 million tons of wheat). These measures, while very helpful, may not be sufficient to meet the urgent food security needs, however, because even a 50% increase in domestic procurement would only enable increased distribution of about one million tons. Public sector imports are another option, but given the ample overall domestic supply, these would likely reduce farmer incomes and depress the rural economy.

Enhancing cash transfer mechanisms

Judicious use of market mechanisms could also help the country during this pandemic. In addition to direct food transfers to poor households or “Open Market Sales” of small quantities of grain per household at low prices, cash transfers could be utilized. To help ensure that these transfers actually reach the poor households, bank transfers could be used for households with banking accounts. Monetary transfers could likewise be used to supplement incomes of households that are already part of some government or NGO well-targeted programs. Leakages in these and other cash transfer mechanisms could be minimized through use of community-based targeting and effective oversight of operations.

Promoting private sector trade

The success of these cash-based safety nets in enhancing household food security largely depends on ensuring adequate market supply of food, particularly to urban areas. A severe economic recession could actually lead to reduced supply of food to urban areas as traders reduce their deliveries in response to a severe decline in urban incomes and demand. Given the considerable difficulties of massively increasing government procurement and distribution in the short run, a possible alternative could be to work with the private sector trade to ensure supplies of foodgrain in urban areas.

By providing clear signals to the private sector trade that a strong market for foodgrain will continue to exist, and avoiding any interference with private market flows of foodgrain, the government could help ensure that food supplies in urban are adequate to meet the demand rising from cash transfers. A similar approach was undertaken by the Bangladesh government in 1998, following massive floods that destroyed one quarter of the aman season rice crop. Promotion of private sector trade at that time resulted in a steady stream of private sector imports of rice over seven months, totaling over two million tons.

Prioritizing public investments in food production

In the long run, other measures are needed to enhance food security in Bangladesh. Ongoing IFPRI analysis shows that investments in government storage with accompanying effective policy implementation result in greater stability of prices and rice consumption for the poor, with estimated value of benefits outweighing the costs of the investment. Nonetheless, investments in agricultural technology and extension that lead to greater agricultural production provide an even greater return in terms of household incomes and food consumption. Thus, while short-term safety nets and price stabilization efforts are needed, it is important that public investments in food production receive a high priority in the COVID-19 recovery plans.

Bangladesh has a long history of successful policy measures and investments that have increased household food security and reduced poverty, including investments in agricultural production, well-targeted safety nets, and market stabilization through government imports and promotion, and private trade. These policies that have enabled Bangladesh to greatly enhance food security in the past several decades are still needed, both in the current COVID-19 crisis, and in the recovery period that will follow.

Paul Dorosh is Director, Development Strategy and Governance Division (DSGD), IFPRI. The analysis and opinions expressed in this piece are solely those of the author.

This blog has been published as a part of the International Food Policy Research Institute (IFPRI), South Asia, blog series on analyzing the impacts of the COVID-19’s pandemic on the sub-national, national, and regional food and nutrition security, poverty, and development. To read the complete blog series click here