The country’s top business leaders have expressed their fear that the government’s current lender-dictated policy towards agriculture ‘is certain’ to plunge the entire sector towards destruction, much like as has happened with the once-flourishing jute sector. ‘We consider the … policy is certain to harm the core of our economy — agriculture — much along the same line as it happened to our “golden fibre” — jute,’ claimed the top executives of 14 trade bodies in a press statement released on Wednesday

The business leaders strongly suggested that the government should provide agriculture subsidy to keep farmers interested in food production and to protect them from global competition, as well as revise its stance on increasing interest rates on agricultural loans. They argued that the US, the EU and other industrialised nations highly subsidise their agriculture sector ‘to keep their farmers interested in food production as well as to protect them in the wake of international competition from developing countries’. Some emerging economies are also taking measures to lower interest rates and provide other fiscal support both for agriculture and industry ‘to be competitive in a globalised market place’.

‘On the contrary, we, in Bangladesh are doing the reverse without considering the ground reality and the consequences that the nation will face after this devastating flood,’ the statement read. The business leaders opposed the decision to increase interest rates on agriculture by the Bangladesh Krishi Bank and the Rajshahi Krishi Unnayan Bank at a time when the agriculture ministry reported that standing crops, jute, vegetables and seedbeds worth Tk 591.29 crore on about 1.10 lakh hectares of land in 56 districts have so far been damaged by the ongoing floods.

‘It is unfortunate that on the one hand we urge the farmers to produce more, and on the other, discourage them by increasing interest rates on agriculture credit at a time when they need more support than anytime before,’ the statement read. The government has anticipated food shortage and decided to import 50,000 tonnes of food grain at a higher price compared with local and international prices. In this situation, increasing interest rates might ‘create havoc’ for the government to overcome the current damage to food grain production, the statement read.

‘… the impending decision by BKB and RAKUB to charge higher interest rates for agricultural loans reportedly under pressure from the World Bank will boomerang and is likely to create havoc for the government to overcome the current damage to food grain production. ‘Charging higher interest rates (increasing from 8-12 per cent) at this critical juncture will increase the cost of food production and will add further fuel to the already rising rate of inflation. It may also be recalled here that Breton Woods prescriptions for upper adjustment of gas as well as fuel prices will lead to further increase in the cost of over-all production process including major agricultural input — fertiliser, thus adding insult to injury.’

The businessmen added, ‘Bangladesh emerged from a food deficit country to near self-sufficiency mainly due to the resilience and hard work of the farmers and the supportive policies adopted by successive governments. ‘The agricultural sector grew at 4.5 per cent in FY2006 … Due to flood losses, [the Asian Development Bank] has already revised downwards its earlier projection of 3.2 per cent in Fy2007 and we apprehend that this will further decline and lead to a higher food deficit, if the government continues its policy of accepting outside prescriptions devoid of ground reality.’

The business leaders iterated their ‘strong opposition’ to the interest hike calling the decision in ‘self-defeating’. ‘In our opinion the decision should be the other way around; interest rates for the farmers should not be increased from the existing level of 8 per cent, if not decreased further. Moreover they should be provided with all inputs at an affordable price to increase crop production.

‘Side by side, we reiterate our earlier recommendation for lowering the interest rates for all investments to remain competitive in a free market; as has been followed by a number of countries including our neighbours.’ The 14 top office bearers of trade bodies also questioned the rationale of heeding to lender diktats when their contribution to the economy has been reduced significantly.

‘Time is now ripe to think as to how long we should continue with our present dependency on “donor advice” for the meagre foreign assistance which has declined to less than 3 per cent of GDP, the major share of which is credit and has to be repaid by the poor people of Bangladesh. ‘Moreover, we should also ask a relevant question: how much of this assistance is really available and can be used to meet our priority needs of development?’

The press statement was signed by Federation of Bangladesh Chambers of Commerce and Industry president Mir Nasir Hossain, International Chamber of Commerce, Bangladesh president Mahbubur Rahman, metropolitan chamber president Latifur Rahman, Dhaka chamber president Hossain Khaled, Chittagong chamber president Saifuzzaman Chowdhury, foreign investors’ chamber president Masih Ul Karim, garment manufacturers’ association president Anwar-ul-Alam Chowdhury, knitwear manufacturers’ association president Md Fazlul Hoque, banks’ association vice-chairman Muhammad A (Rumee) Ali, textile mills association president Abdul Hai Sarker, publicly listed companies’ association president Samson H Chowdhury, jute mills association president Kamran T Rahman, insurance association acting chairman Nizamuddin Ahmed, and agro processing association president Amjad Khan Chawdury.