Budgetary allocations for agricultural subsidies fail to benefit farmers, as although the government has increased allocations for agriculture drastically, funds for agricultural services have decreased over the past couple of years.
  
The government’s basic means to aid farmers have remained fertiliser subsidies and electricity rebate. The agriculture minister, MK Anwar, admitted on Sunday that the 20 per cent electricity rebate did not benefit farmers. However, he thinks ‘the fertiliser subsidies do benefit the farmers’.
  
Since middlemen run electric pumps and exact a fixed rate from farmers depending on the quantum of land, the rebate does not benefit the target group, he said. ‘It is useless and I have notified the finance ministry in this regard also.’
  
MA Sattar Mandal, an agricultural economist at the Bangladesh Agricultural University, says subsidies should be well targeted; otherwise, there will be the chance for misallocation, as is happening.
  
The government has to provide support to the agriculture sector as a whole and only then will its benefit reach the farmers, he said. It is regrettable that in Bangladesh all governments provide subsidy only for fertilisers and they do so only to protect their political interest, said Sattar. ‘The market should be allowed to function better to ensure the benefits of subsidies.’
  
New Age has found that although the government subsidises urea by about 60 per cent of the international price, its rates increase by up to 46 per cent between the factory gate and the crop field. Each 50-kilogram bag of urea costs Tk 240 but farmers buy it for Tk 340-350.
  
Price of imported fertilisers, subsidised by up to 25 per cent, also appreciate by the time it reaches the farmer through multiple layers of middlemen and traders from the importer. The prices of these fertilisers — triple super phosphate, muriate of potash and di-ammonium phosphate — increase by up to 44 per cent between the importers and the farmers. A 50kg bag of TSP costs Tk 820 at the dealer level whereas the price is Tk 606 at the importer level. The same amount of MOP costs Tk 750 at the dealer level but Tk 521 at the importer level.
  
Amid widespread complaints that fertiliser do not benefit farmers, a parliamentary standing committee formed a one-member committee to take action against ‘cliques that were plundering the agricultural subsidies’ on July 26, 2005.
  
Farmers are hardly aware of the amount of subsidy. They contend that whatever subsidies there are do not work towards their welfare while dealers and retailers reap the profits during peak seasons, exploiting an artificial crisis.
  
The retailers and dealers, on the other hand, make allegations against each other. Dealers say they are regulated by the government but there is apparently no control over the retailers.
  
Retailers claim that dealers are obligated to sell fertiliser to farmers at retail prices but rarely adhere to regulations. According to the regulations, every district administration, in cooperation with agriculture officials concerned, forms a committee and decides on a fixed retail price for each upazila. This fixed price is supposed to be ensured through routine monitoring. But these rules are seldom implemented.
  
‘Every dealer has some 10-15 retailers who may buy from a dealer as much as they need by using different names. But the BCIC [Bangladesh Chemical Industries Corporation] rules permit sales of only 10 sacks to a particular retailer which is often violated,’ said Abdul Hannan, a retailer of Natun Hatkhola in Jhenaidah.
  
A dealer buys 50kg urea from the mill gate at Tk 240 and eventually it sells for Tk 340-350 at the retailer level, he said. Generally, the allocation for subsidies is retained by the finance ministry, which releases the funds upon a recommendation of the corporation based on estimates of ministries and departments concerned.
  
According to sources, this process is riddled with bureaucratic red tape since the recommendation makes its way to the finance ministry through the Prime Minister’s Office. A delay at any stage of the process could result in a shortfall of fertilisers that are required to be imported.
  
This lack of adequate supply, coupled with stockpiling, creates a fertiliser crisis of as was the case during the last boro season. Urea demand in Jhenaidah was 61,134 tonnes while the government supplied only 38,500 tonnes, said Jahangir Hossain, a BCIC dealer of the district.
  
As for the budgetary allocations for agricultural services, even the topmost officials of the agriculture ministry have no clue. According to them, the entire authority to dedicate funds for certain heads rest entirely with the finance ministry.
  
A top official said the agricultural ministry had no autonomy whatsoever in deciding its allocations and thus was fairly in the dark as to the amount of budgetary allocation.
  
Asked about the reported autonomy of the ministry whereby officials would be able to set their own budget, the official said, ‘It is absolutely bogus. There is no such [autonomy]. The entire exercise is conducted by finance ministry.’
  
Although the ministry submitted a recommendation, none of the officials were certain of how much would be implemented by the finance ministry.
  
The budget for agriculture increased 90 per cent and administrative outlay by almost 200 per cent in 2004-05. But the outlay for agricultural services declined by about 10 per cent.
  
The ministry’s budget increased another 100 per cent in the budget for the current fiscal. Seventy-seven per cent of that was dedicated to administrative expenditure while services declined by another three per cent. Agricultural extension, a crucial service for farmers, saw its budget decrease by 34 per cent.
  
With increasingly higher retail costs of agricultural inputs and low prices of agricultural produce, farmers are gradually becoming marginalised. MK Anwar admitted that farm input costs are much higher in Bangladesh than neighbouring countries. ‘Our farmers pay much higher price for fertilisers, irrigation and energy compared to those in the neighbouring countries,’ he told New Age.
  
In Punjab of India, farmers spend $47 for producing a tonne of paddy, $58 in Thailand and $63 in Vietnam, while Bangladeshi farmers produce a tonne of paddy for $89. According to a report of Unnayan Onneshan, a research organisation, rice farmers alone incurred a loss of Tk 9,100 crore in 2004-05.