Review of Agriculture Sector Policy Reforms

The ministry has undertaken successfully a number of policy reforms in the past for which it has received considerable recognition both within government and its development partner. Agro sector, by this time has already achieved the cherished and desired long term goal of self sufficiency in the production of rice. The major success of the ministry is its unquestioned success in spurring the growth of crop agriculture while saving considerable amount of local currency through eliminating the subsidies on fertilizer and also allowing private trade in fertilizer, minor irrigation equipment and seed sector. Structural adjustments started with the liberalization of different agricultural input delivery systems of public sector, such as -

(a)      Liberalization of trade in minor irrigation sector and encourage the private sector for supply of minor irrigation equipment's of the country. This happened gradually in steps with the removal of restriction of import of small diesel engine in1986-87followed by the withdrawal of duty on such imports in 88-89.The subsidy on DTW were removed in 1992and BADC-the government organization was removed from the procurement and distribution of minor irrigation equipment. These reform measures had a tangible effect on increasing the demand for irrigation equipment and consequently threat of increase in area under minor irrigation.

(b)      Privatization of trade in fertilizer with an objective to transfer the fertilizer management and distribution services exclusively in private sector; Imports of all fertilizers are now being done by private sector except urea. The private sector is not restricted from importing urea. All fertilizers are being distributed through private sector dealers through their network. The Government is providing no subsidy on fertilizers at the farm level and is selling all fertilizers at full cost pricing. The government has issued the revised Fertilizer Control Ordinance in 1995 in consultation with private sector and IFDC for quality control and regulation of fertilizer prices. This has led to the increased availability and wider adoption of chemical fertilizer at the farm level and economic activities in rural areas have also increased manifold due to the withdrawal of government from fertilizer distribution.

(c)      Liberalization of trade and foreign exchange for enhanced participation of private sector in Agricultural machinery of agriculture business. The Government has been continually reviewing conditions affecting competitive trade and taking action to remove barriers.

(d)      Liberalization of production, processing, distribution and import of seeds to ensure the participation of private sector seed dealers in seed industry development. The private sector is now allowed to import any improved germplasm for research and development and to develop its own facilities for producing foundation seeds. They are also allowed to import and sale seeds except five notified crops (rice, wheat, sugarcane, potato and jute). As regard to notified crops, there are procedural formalities to be observed by the private sector before any import. Private sector has now taken up programs for production of hybrid rice seeds in the country.

(e)      Import of agro-machines, including power tiller, was liberalized - resulting in the positive effect on import of power tiller. The area under power tiller utilization also grew at about 3.5% per annum after introduction of the liberalization policy.

(f)       Structural changes were also made in food supply and management system. Open Market Sale (OMS), procurement of food grains from the farmers at market prices, abolition of rural rationing system and allowing import of food grains by the private sector were the measures so far implemented.

Besides, structural adjustment, programs were also undertaken in public sector simultaneously which are as follows : 

a) In order to improve and provide the need felt extension services to the farmers at the grass root level, agricultural extension services were strengthened through introduction of "Agricultural Support Service System" in accordance with the provisions of New Agricultural Extension Policy (NAEP); and

(b) In order to conduct uniform and coordinated research activities, agricultural research system was strengthened following the provision of National Agricultural Research System (NARS) through bringing ten primary research institutes under it with Bangladesh Agricultural Research Council (BARC) at the apex.

The process of structural adjustments in agriculture sector has been still going on in Bangladesh. The observed structural adjustments like liberalization of investment in minor irrigation sector, privatization of trade in fertilizer, liberalization of trade and foreign exchange have already started to effect favorable impact in the agriculture sector. It is expected that such favorable trend will continue to prevail in future also.
Major Policy Directions In order to realize the objectives and targets of the FFYP (1997-2002), the Government will pursue the following major policy directions with a view to making the country self-sufficient in food production and ensure dependable food security for all.  an appropriate policy framework for sustainable development of farm mechanization and commercialization of agriculture; the agricultural research institutes will strengthen research in order to render full support for augmenting breeder seeds of new variety; decision to restructure BADC has already been taken by the Government which has considerably been downside, BADC will continue to support private sector development; increased use of organic and bio-fertilizers in association with the popularization of the use of DAP, blended fertilizer (NPK) and urea super granule (USG) will be pursued with a view to reducing pressure on urea and improving soil fertility; establishment of an appropriate institutional system to ensure the availability of agricultural credit in time.

Agricultural Development Strategy The present Government has accorded highest priority to the agriculture sector. The commitments in this respect are reflected in the National Agriculture Policy (NAP)of 1999 , that includes :

(i) timely supply of agricultural inputs at affordable prices, (ii) appropriate action plan for agricultural credit and marketing of agricultural products, (iii) Government support to agriculture, (iv) priority for the development of agro-based small and medium industries, (v) Enhanced rate of private sector- participation in different sectors of agriculture i.e. seeds, fertilizer, agro-machinery and also in establishing agribusiness. (vi) Agricultural Mechanization (vii) Pest Management (viii) Greater coordination between the Government, NGOS and Private sector (ix) Food based Nutrition (x) Environmental Protection in Agriculture and finally involvement of Women in Agriculture. Bangladesh Agriculture is now in the process of transformation from subsistence farming into commercial farming. Meanwhile, Bangladesh has already entered into the European Market for export of vegetables and other high value crops. This process opens a vista to private sector investment in the areas of production of high value crops, production of seeds (especially hybrid seeds), of chemical and blended fertilizers, agro-processing enterprises, etc. The policy reforms that have taken place offer greater scope and opportunities for private sector participation and a suitable environment towards promoting agro-business and investment.