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Towfiqul Islam Khan on implementation of indirect economic policies

Published in The Financial Express on Wedday, 17 February 2016

Bangladesh top agro-inputs importer in South Asia : Study

Imports reach $6.0b in five years to ’14

Yasir Wardad

Bangladesh’s dependence on the imports of four major agricultural inputs such as cereal seeds, fertiliser, pesticides and agro-machinery is highest in South Asia, according to a study.

The country imported agro inputs worth US$ 6.805 billion during 2010-2014 and the amount was 12.44 per cent of the region’s total import in the period.

At the same time, export of these farm inputs was negligible, only $75.51 million or less than one per cent of the region’s total import.

India leads the export market of the four intermediates with more than 82 per cent share.

A study titled “Agricultural Input Trade and Food Security of South Asia” revealed the scenario, which also showed that countries like Nepal, Bangladesh, Pakistan, Afghanistan and Sri Lanka were already importing agricultural inputs from within SAARC countries.

Consumer Unity & Trust Society (CUTS International), an India-based international research organisation, conducted the study last year.

The report showed Bangladesh recorded a trade deficit of nearly $ 6.73 billion in the four agricultural inputs in five years.

CUTS finding showed the eight SAARC countries import key agro inputs including cereal seeds, fertiliser, pesticides and machineries worth $ 54.70 billion combined between 2010 and 2014.

India has been leading both export and import trade in the region with a $ 39.64 billion of import and $ 9.60 billion of export.

Bangladesh’s overall import and export ratio is 90:1 when it is 4:1 for India and 56:1 for Pakistan, according to the CUTS study.

The research observed that as India has a trade surplus in some inputs, the imports share of cereal seeds is significantly lower as compared to its export share, this indicate that India can act as the trade equaliser in promoting trade among SAARC nations.

The CUTS research also finds a positive trend in Bangladesh in terms of the food production index as well as the crop production index as the country ranks top both in the twos.

In its conclusion, the report said revolutionising the agricultural input supply system in South Asia (with focus on BBIN) requires a   holistic approach that addresses among other issues, access, affordability, availability, and incentives.

Senior Research Fellow at the local think-tank Centre for Policy Dialogue (CPD) Towfiqul Islam Khan told the FE that implementation of many indirect economic policies like land boundary acts, motor vehicle agreements of BBIN (Bangladesh, Bhutan, India, Nepal), countries might boost agricultural trade in the region.

He said an MoU between Bangladeshi and Indian private seed companies’ associations was signed in 2015, which should be effective to enhance seed trade.

Mr Khan pointed out that having a trade deficit doesn’t mean that it is harmful for farms.

“Most important thing is what the outcome from such import is”, he said.

He said output of rice, potato and vegetables has remained better in Bangladesh for years.

He said trade deficit in agricultural inputs, specifically in fertiliser, has gradually been increasing amid reduced local production and increased demand.

He said newer source of natural gas is needed to increase production of urea, which is now not possible.

“Many countries in the world have been going for joint-ventures to set up urea factories in gas-rich countries like Qatar,” he said.

“If we want to do the same thing in future, we have to bring change to our outward investment policy and also will need to develop private sector’s expertise,” he said.

The global fertiliser price is now lower amid a freefall in fuel prices and it might continue for the next two-three years, which is good news for the government.

Farm economist Golam Hafiz Kennedy said Bangladeshi farmers used 4.3 million tonnes of chemical fertiliser, 0.3 million tonnes of cereal seeds and 47,500 tonnes of pesticides in the financial year 2014-15.

He said import growth of agro machinery is more than 10 per cent year-on-year basis, which indicates a gradual mechanisation.

He said Bangladesh’s formal export of seed is negligible, although informal export is substantially high.

A large volume of seeds of rice, onion, garlic, chilli, hybrid and indigenous vegetables, pulses and oilseeds worth Tk 500 million is exported to India through the informal channel annually, which takes place between farmer to farmer or between trader to trader in border areas, he said.

“The non-tariff barriers imposed by Indian state-governments have been holding back our formal export potential,” he said.

Bangladeshi farmers are highly dependent on Indian jute seeds and the business is done mostly through the informal channel, he added.

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