Dr. Atiur Rahman :Governor, Bangladesh BankA vast majority of population of the South Asian region lives in rural area and depends heavily on agriculture for employment, livelihood and subsistence. Food security is one area which requires huge investment in agriculture. South Asia has made commendable progress towards eliminating chronic undernourishment with considerable degree of variations across countries: Prevalence of undernourishment (PoU): During 1990-92 to 2011-13, prevalence of undernourishment (PoU) in Bangladesh has come down by 1.7% annually, whereas in Sri Lanka, India and Pakistan, it has come down only by 0.9%, 0.28%, 0.03%, respectively. Bangladesh recorded the largest reduction of (PoU) in comparison to their respective populations. Bangladesh is also one of the best performers in terms of the growth in agriculture value addition in the region.Food requirements for lifting the undernourished: For Bangladesh, India, Nepal and Pakistan, estimated calorie requirements are in the range of 112 kcal to 131 Kcal, and in Sri Lanka 200 kcal, per person per day amounting to approximately 9 million metric tons of additional food production. Common themes emerging from national policies for food security: a) Improving agricultural productivity and production systems; b) Enhancing agricultural R&D, dissemination and knowledge sharing; c) Managing food security risks and vulnerabilities; and d) Safety nets.Opportunities for realizing food and nutrition security in the Post-2015 era: The challenge for the region is not just to ensure food security to an estimated 295 million people currently undernourished, but also to feed 2.2 billion people expected to inhabit the region by 2050. Doing so without damaging the environment further will determine the extent to which sustainable food security can be achieved. The subsequent six goals of SDGs relate more to mechanisms for ending hunger and malnutrition include: (a) doubling agricultural productivity of small-scale food producers; (b) ensuring sustainable food production systems and implementing resilient agricultural practices; (c) maintaining genetic diversity; (d) increasing agricultural investment; (e) correcting and preventing trade restrictions and distortions in world agricultural markets; (f) adopting measures to ensure the proper functioning of food commodity markets and their derivatives.Investing in agriculture and proper functioning of agricultural markets: Investing in agriculture, correcting and preventing trade distortions and adopting measures to ensure proper function of food markets- are undoubtedly useful for revitalizing agriculture in countries of South Asia. This refers to the Doha Development Round as it related for taking action to correct and prevent trade distortions. The proposal on investment calls for investing in rural infrastructure, agricultural research & development (R&D) and extension services, technology development, and plant and livestock gene banks to enhance agricultural productive capacity in South Asian countries. Investments are also required in enhancing market participation of smallholders, generating and disseminating knowledge on nutritional value of nationally and locally available food varieties so as to create better food habits.It is difficult to attract investment into agriculture both from farmers themselves and the private corporate sector without having effective and competitive agricultural markets for inputs, outputs, and services. The current systems are distorted by many factors: cartels of input suppliers, millers, transporters and wholesale traders; agricultural policies including imports and exports that are determined by political economy considerations than economic efficiency; agricultural price distortions; and anti-agricultural bias created by incentives to industrial and services sectors. There is an urgent need for linking agriculture with industrial and services sectors for enhancing productivity, raising farmer incomes and allow for broad-based structural transformation to take root in developing countries like Bangladesh, India and so forth. Because of insufficient investment in agriculture, distorted market and incentive structures, and missing link with other related sectors have contributed to create a large wedge between farm gate and consumer prices in agriculture during the harvesting season in particular. This became clearly evident during the 2007/08 food price crisis where high international food prices transmitted to national consumer prices almost at the same level, but with limited or no gain to producers. The food inflation, indeed sky-rocketed during this period in almost all countries of South Asia. Bangladesh was badly hit.Now, let me share the policy initiatives and steps taken in agriculture by Bangladesh Bank as its part of un-orthodox developmental central banking. Agriculture being one of the priority sectors of the present government, Bangladesh Bank remains proactive by taking various agriculture supportive initiatives/policies. BB requires all banks, state-owned and private sector owned, local and foreign, to maintain at least 2.5 percent of total assets in agricultural financing. Foreign owned banks are using MFIs as agents in their agricultural and SME financing. BB itself has recently initiated a special scheme of channeling financing for sharecroppers, nearly 60% of them being female. Bank branch expansion into under-served rural areas is also being encouraged, alongside a campaign of opening no-frills bank accounts for poor sharecroppers, day laborers and others in the lowest income brackets, with deposits from as low as Taka ten (equivalent of about twelve US cents). The campaign has been spectacularly successful, with well over thirteen million new bank accounts already opened, a major milestone in financial inclusion. Besides the intended use for receipt of social safety net allowances and farming input subsidies, other payment, receipt and savings transactions are also increasing in these accounts. Available windows compensating for cost disadvantages in promoting inclusive financing include a donor supported low cost BB refinance line against their SME financing, subject to at least fifteen percent of these having been for women entrepreneurs. A government funded interest subsidy is available to banks from BB against low cost financing for growing non-traditional new agricultural produces like spices, oilseeds, pulses etc. BB is going to introduce another special refinance line to provide credit to livestock farmers at bank rate with interest rate subsidy from Ministry of Finance. State owned agricultural banks get occasional refinance from BB against government guarantees. Proactive promotion of agricultural financing is already paying off handsomely, drastically lowering food import needs, one factor behind the recent rapid rise of Bangladesh’s foreign exchange reserves. BB also has a concessional credit line for the tribal farmers in Hill Tracks areas. BB’s all of the refinance lines including bank’s own credit disbursement programs are encouraged to do in open gathering to ensure transparency. Agricultural credit related awareness program: All offices of Bangladesh Bank arrange meeting with the respective bank’s regional head & branch manager regularly to discuss agricultural and rural credit disbursement activities, their achievement status and strategies to achieve the target. Head office of Bangladesh Bank also arranges monthly/bi-monthly meeting with the representatives of all scheduled banks to discuss overall agriculture and rural credit performance.Monitoring and supervision of agriculture and rural credit: a) In order to monitor intensively agricultural and rural credit disbursement and recovery, monitoring cell has been set up in all branch offices including head office of Bangladesh Bank. Representatives of Bangladesh Bank attends the DACC (District Agricultural Credit Committee) meeting on regular basis in order to monitor the agriculture credit disbursement and recovery status. b) Modern technologies are being used for monitoring purpose. All banks were instructed to collect the phone numbers of the agri/rural credit borrowers so that the respective bank officials and the Bangladesh Bank Officials can monitor over phone whether the borrowers are facing any difficulties regarding Agricultural & Rural credit. c) To get hassle free banking & financial services or to get prompt response against customer’s complaint, Bangladesh Bank established Customer Interest Protection Center (CIPC). Farmers can dial 16236 (Hot line number) from any phone devices( Land or Mobile phone)directly to convey their complaints and Bangladesh Bank takes necessary action in this regard.Inclusion of new sector under agricultural and rural credit policy: Oil pump, Vermiposting, seed production etc. might stand as promising sectors for agriculture. Bangladesh Bank is encouraging the banks to provide agriculture credit in these sectors. A project amount of taka about 650 crore, namely Small and Marginal Farmers Agricultural Productivity Improvement and Diversification Financing Project financed by Japan International Cooperation agency (JICA) is under implementation by Bangladesh Bank. This project fund will be disbursed to small and marginal farmers for crops, agricultural equipment and livestock sectors to enhance agricultural production. A refinance credit line of Tk. 2 bill is expected to be launched soon for milk producing cow farms.Way forward: Fulfilling multiple roles will require agriculture to go through radical structural transformation. The current structure of agriculture consisting of a very low share of agricultural value added in GDP with a high share of agricultural employment cannot be sustainable because of widening poverty gap between those in agriculture than those in other sectors. Proper investment, pricing and incentive structure including enhancement of intra and international linkages need to be strengthened so that productivity and profitability of agriculture increase in a sustainable manner and encourage the farmers and the private sector to stay and invest in agriculture. This will ensure food security for a large number of populations engaged in agriculture. The first step for triggering a structural transformation is to remove anti-agricultural discrimination created by trade and other policies that support industrial and services sectors. Despite rapid increases in recent years, South Asia’s agricultural R&D spending is still very low compared with other developing regions around the world. To face the challenges of food requirement in the coming days investment levels not only need to increase, but also be better managed, timed, and targeted to ensure maximum impact on productivity growth and poverty reduction, particularly in less-favored areas. Increased diversification of funding sources will also be necessary. The scientific competence of South Asia’s agricultural R&D agencies is high but as in many developing regions of the world, stronger linkages are needed to connect agricultural research agencies and their staff with the end users of their research to improve the relevance, effectiveness, and efficiency of research outputs. Further efforts to strengthen sub-regional linkages are also needed in order to better utilize limited resources and reduce wasteful duplication.
