The Public Food Distribution System (PFDS), like in other developing countries, plays an important role in the food and agricultural sector of Bangladesh. Some important roles of PFDS include (a) making foodgrains available to poor households, (b) distributing food during emergencies, (c) providing incentive prices to producers to encourage domestic production, and (d) stabilizing market prices to prevent excessive price rises.
Here is a snapshot of Bangladesh’s PFDS in one table, taken from Banerjee, Darbas, Brown, and Roth (2014),
where Bangladesh’s PFDS is described in four phases. During the first phase (1943-1971), the PFDS system was primarily the “ration system” which was instituted during World War II in major cities of Dhaka, Narayanganj, and Chittagong. By 1970, Bangladesh (then East Pakistan) became the second largest recipient of food aid, which accounted for about 75% of domestic foodgrain supply. So, the first phase of Bangladesh’s PFDS is characterized by heavy reliance on foreign aid for foodgrains as well as low domestic production of foodgrains. Perhaps this was another reason for Bangladesh’s Liberation War in 1971.
In the second phase (1972-late 1980s), Bangladesh, now a new country, intensified the ration system, reflecting the new government’s socialist mindset. Sad to say, due to government mismanagement of foodgrain stocks, speculative hoarding, external political tension and flooding, a famine struck Bangladesh in 1974 causing the loss of 1.5 million lives. The fact that the 1974 famine, like other famines, was not a result of shortage of food led Amartya Sen to develop his “entitlement approach” to hunger and famine.
The third phase of PFDS development (late 1980s to late 1990s) marks a watershed in the history of Bangladesh’s food sector. Bangladesh’s first national food policy and strategy was formulated in 1980, which set itself goals (among others) to achieve food self-sufficiency. Measures were taken to encourage private sector participation in domestic and international markets. But a pivotal moment in the PFDS system was the termination of the rationing system in May 1992, which was not serving those most in need. However, the end of rural rationing didn’t cause any social unrest, thanks to increased domestic production and slower population growth, which kept the market prices of foodgrains in check. Moreover, donors’ involvement in pushing the reform agenda helped government reformers to implement such measure easily.
By late 1990s, government cautious policies were bearing fruit and coupled with the changes in the structure of Bangladesh’s economy (i.e., falling agricultural share to GDP, higher exports to GDP ratio, and persistent remittance inflows), the role of government in foodgrain distribution reduced to a low level in the fourth and current phase (2000 to present) of Bangladesh’s PFDS. Bangladesh’s PFDS today is highly targeted and relies heavily on conditional transfer. What this means is that the bulk of the PFDS operations is left to the market, while government intervenes in emergencies through programs such as open market sales, vulnerable group feeding etc. While most other conditional programs transfer cash to beneficiaries through the banking system. In a future post, I hope to elaborate further on the merits (or otherwise) of Bangladesh’s market-based approach to PFDS.
In conclusion, the rapid (and successful) reform of Bangladesh’s PFDS was the result of an array of good things: stronger political will to abolish the ration subsidy, fruitful alliance between government reformers and donors, higher domestic foodgrain production, slower population and foodgrain demand growth, linking ration price to the procurement price, and other major structural reforms that diverted public attention from the subsidy policy. Undoubtedly, Bangladesh’s success in reducing food insecurity reflects the increasing efficiency of its foodgrain supply management.