Foodgrain markets and policy In the aftermath of the 1998 flood

Working Paper
[FMRSP Working Paper No. 7]

According to official estimates, this year’s prolonged flood in Bangladesh caused a projected 2.2 million MT rice production shortfall (0.3 mn MTs of aus and 1.9 mn MTs of aman). Rice market prices have risen to import parity with India, providing the incentives for private traders to import about 8 lakh MTs through official channels since 1 July. Given the expected poor aman harvest, rice prices are likely to remain at import parity at least until the boro harvest of 1999. Fortunately, rice supplies in India appear to be adequate, as the kharif rice harvest is projected at 70.8 mn MTs, down only 2 percent from 72.5 mn MTs in 1997. Provided Bangladesh government policy encourages and does not inhibit private trade, and the Indian government policy and rice production permit rice exports at prices near current levels, the private sector in Bangladesh is likely to import another 1.0 to 1.5 million MTs of rice by May, 1999. Wheat prices in Bangladesh have risen along with rice prices, but are likely to fall substantially as government distribution of wheat through Food for Work and other channels increases early in 1999. Thus, foodgrain supplies appear to be adequate and rice prices in the next six months are likely to remain approximately equal to or only slightly higher than prices in early 1998. Nonetheless, the flood has increased food insecurity for millions of households who have lost assets and lack employment opportunities. Government policy in the coming months need not focus only on food transfers, but should aim at raising food entitlements (ability of households to acquire food) through providing employment and incomes in cash or kind.

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Date and language
Jun 1999
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