Early recovery hope fades as agri budget spending inadequate

Sluggish implementation of the 2020-21 farm budget does not go with the government announcement of agriculture as the second highest priority after the health sector, and a recovery roadmap riding on farming.

For instance, the country aimed at boosting agricultural production through farm mechanisation to ensure food security against the backdrop of a pandemic-induced crisis. But the project is still at the initial stage while there is no progress in the construction of 195 growth centres in rural Bangladesh to ensure fair prices for farmers.

Moreover, despite having a 22% allocation of the annual development programme (ADP) in the current budget, agriculture – the largest employment sector in Bangladesh – could spend only 59% of that in ten months of FY 2020-21.   

Officials of the Ministry of Agriculture claim most of the development projects could not pick up pace due to inadequate disbursement of budget allocations, pandemic-led movement restrictions, and a lack of adequate implementation measures.        

But success in distributing the Tk5,000 crore refinancing scheme for farmers has been encouraging.      

Before the 2020-21 national budget, economic experts advocated putting emphasis on agriculture to counteract a pandemic fallout and for overall economic recovery.  

Finance Minister AHM Mustafa Kamal in his budget speech said, one of the key priorities for the post-Covid-19 economic recovery plan was to keep up the momentum of agricultural production.

The finance minister allocated a Tk 9,500 crore subsidy for the agriculture sector in the FY 2020-21 budget. He also announced a Tk3,020 crore project to promote farm mechanisation.  

In addition, the minister said they raised the target for government procurement of rice and paddy by 2 lakh tons to make sure farmers get a fair price for their produce while keeping the retail rice market stable.

A Tk5,000 crore refinancing scheme was announced to make farm loans easy for farmers. Another refinancing scheme of Tk3,000 crore was also announced for small-income farmers and traders in the agriculture sector.

For poor farmers and Bangladeshis returning from abroad to the rural production and service sectors, a total of Tk2,000 crore was also kept aside to be disbursed by Palli Sanchay Bank, Probashi Kallyan Bank, Karmasangsthan Bank, and the Palli Karma Sahayak Foundation.

The budget allocated 22% of the total ADP, or Tk 22,489 crore, for agriculture, rural development, and rural institutions.

Of all the budget supportive mechanisms for farmers, only the Tk5,000 farm loan refinancing scheme stands out, where disbursements reached around Tk4,000 crore up until April.

ADP spending only 59%

The government allocated around Tk22,000 crore for 82 agricultural projects in the current fiscal year. Until April, agriculture could only utilise and spend 59% of the allocation in ten months of FY 2020-21.   

According to the agriculture ministry, the Department of Agricultural Extension (DAE) is now implementing the top 27 projects. The DAE spent 42.75% of the allocations until March.    

DAE Director General Md Asadullah said low spending does not mean that work is suspended.    

"There are several infrastructural developments which do not add up to the spending until bill submission. But the works is now ongoing and the projects, hopefully will spend the allocation by June," he told The Business Standard.     

With 23 projectss, the Bangladesh Agricultural Development Corporation (BADC) has the second highest project allocation from the agriculture ministry. BADC spending was 54.78% until March.       

The Bangladesh Institute of Nuclear Agriculture (BINA) ADP spending stood at only 22.86% till March.     

Farm mechanisation also faces doubts

The DAE is implementing the Tk3,020 crore farm mechanisation project — the largest work of the agriculture ministry for the current fiscal year. Under the project, 51,300 agri-machinery will be distributed by 2025.    

This year's target covers distribution of 5,776 combine harvesters, reapers, and rice transplanters, which is 11% of the total project to be completed by 2025. The machinery will be supplied to haor region farmers with a 70% subsidy and other farmers on a 50% subsidy.

For this year's mechanisation, the government has already disbursed Tk208.86 crore.

The project began in April this year, and 1,666 harvesters, 21 rice transplanters, and 470 reapers have been distributed until mid-May, which falls below this year's target.     

Project officials said machinery distribution was delayed due to the pandemic, but they are optimistic about spending the funds by June.      

Contacted, farm mechanisation project director Benazir Alam said, "We will be able to attain this year's target, but performance could have been better if we were not delayed by the pandemic."

He told TBS that the distribution will speed up in the coming years.

Only the refinancing schemes of farm loans stand out   

Of the budget support measures for the farming sector, only farm loans from the Tk5,000 crore refinancing scheme have proved to be successful in implementation.   

The government has distributed Tk3,936 crore in loans from the package to pump operating capital into the agricultural sector till April this year.

Central bank officials said they will be able to disburse the remaining amount in the last two months of the current fiscal year.

Put the highest emphasis on farming: Experts

Economic experts have proposed the upcoming budget should prioritise agriculture, health, and employment to offset the pandemic-led crises.

Dr Ahsan H Mansur, executive director of Policy Research Institute (PRI), said there is no alternative to increasing agricultural production to sustain the country's economic growth, ensure nutrition, and food security.

"The agricultural sector plays a prominent role in this current year's GDP growth. The government should have developed farming as the leading sector for recovery by maximising budget utilisation. But it has failed," he commented.

The PRI executive director said initiatives should be taken to ensure fair prices for farmers, apart from increasing food production, farm mechanisation, and subsidising fertilisers and seeds.

To do so, he recommended forming a national price commission comprising rural farmers.

In addition to increasing allocation for agriculture in the next budget, he advocated for capacity enhancement of the implementing agencies.