Country’s prominent business leaders said Wednesday immediate and effective actions are needed to keep the prices of basic food items at an affordable level to help the poor survive and re-start their livelihood in the aftermath of the current flood. In a joint statement, leaders of 14 chambers and trade associations said if the food prices continue its present increasing trend, ordinary people, especially the vulnerable group, “will confront extreme difficulties to meet their daily minimum needs, not to speak of rehabilitating themselves”.
The signatories to the statement included President of International Chamber of Commerce (ICC)- Bangladesh Mahbubur Rahman, President of the Federation of Bangladesh Chambers of Commerce & Industry Mir Nasir Hossain, President of the Metropolitan Chamber of Commerce & Industry, Dhaka Latifur Rahman, President of the Dhaka Chamber of Commerce & Industry Hossain Khaled, President of the Chittagong Chamber of Commerce & Industry Saifuzzaman Chowdhury, President of Foreign Investors’ Chamber of Commerce and Industry Masih Ul Karim, President of Bangladesh Garment Manufacturers & Exporters Association Anwar-ul-Alam Chowdhury, President of Bangladesh Knitwear Manufacturers & Exporters Association Md. Fazlul Hoque, Vice-Chairman of Bangladesh Association of Banks Muhammad A. (Rumee) Ali, President of Bangladesh Textile Mills Association Abdul Hai Sarker, President of Bangladesh Association of Publicly Listed Companies Samson H. Chowdhury, President of Bangladesh Jute Mills Association Bangladesh Employers’ Federation Kamran T. Rahman, President of Bangladesh Agro Processing Association Maj. Gen. Amjad Khan Chaudhury (Retd.) and Acting Chairman of Bangladesh Insurance Association Nizamuddin Ahmed.
The statement said the decision to increase interest rate came at a time when the devastating flood caused damage to corps and vegetables worth about Tk. 6.0 billion, seriously affecting 0.7 million farmers, while an area of 441,240 hectares of agricultural land went under flood water as estimated by the Ministry of Agriculture. “Bangladesh has emerged from a food deficit country to a near self-sufficiency mainly due to the resilience and hard work of the farmers and the supportive policies adopted by the successive governments,” it said.
The agricultural sector grew at 4.5 per cent in FY2006, which was 2.2 per cent in FY2005. Due to flood losses, Asian Development Bank has already revised downwards its earlier projection of 3.2 per cent growth in agriculture in FY2007, it said adding: “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.”
“We consider the above policy is certain to harm the core of our economy — agriculture — much along the same line as it happened to our ‘golden fibre’ – jute,” the statement added. Over the last two decades, the policy reforms in agriculture, it noted, have contributed towards increased food production leading to substantial reduction in dependence on imports at higher and fluctuating prices.
“The present flood has badly damaged paddy and other agricultural crops in the country. Anticipating shortages, the government has decided to import 50,000 tonnes of food grain at a higher price compared to local and international prices”, the statement pointed out. “It is our considered opinion that the impending decision by Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) to charge higher interest rates on 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,” it said.
Charging higher interest rates (increasing from 8-12 per cent) at this critical juncture, the statement noted, will raise 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 Wood prescriptions for upper adjustment of gas as well as fuel prices will lead to further increase in the cost of overall production process including major agricultural input – fertiliser, thus adding ‘insult to injury'”, the business leaders observed in their statement.
“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 agricultural credit at a time when they need more support than anytime before,” the statement added. The business leaders said that the United States (USA) and European Union (EU) as well as other industrialised nations including a few other advanced developing countries are highly subsidising their agriculture to keep their farmers continuous interest in food production as well as to protect them in the wake of international competition from developing countries.
“Similarly, some of the emerging economies are also taking measures at lowering their interest rates and providing other fiscal incentives 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 said.
The business leaders welcomed the “pro-active decision”, taken by the government, to address the crisis created out of the flood for free distribution of fertiliser and seeds. “The proper implementation will help in overcoming the sufferings to a great extent”. “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 3.0 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 business leaders strongly opposed the decision of increasing interest rate on agricultural credit by Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) and urged the government “not to implement such a self-defeating decision at this critical juncture of our economy”. “In our opinion, the decision should be other way around; interest rates for the farmers should not be increased from the existing level of 8.0 per cent, if not decreased further,” the statement said.
Moreover, they should be provided with all inputs at an affordable price to increase crop production, it added. ” 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 statement concluded.
