Agricultural Research Management Information System

Home
Research Summary
Search
About Us
- ARMIS
- Brochure
Contact Us
Report
User Request
Data Input
Help
- Operation Manual
  - PDF
  - Video
- Program Area & Commodity
We have reached 37600 number of research entries at this moment.

- Logout

Research Detail

Home
Research
Detail

Supply and Demand Situations for Major Crops and Food Items in Bangladesh

M. E. A. Begum
Agricultural Economics Division, Bangladesh Agricultural Research Institute (BARI), Joydebpur, Gazipur, Bangladesh

Luc D’Haese
Department of Bio-Engineering, Antwerp University, Middelheimcampus G.V.610 Groenenborgerlaan 171, 2020 Antwerp, Belgium

Abstract/ Executive Summary:

This study explored historical food availability/supply and the market demand for food. Secondary data was used for analyzing demand-supply gap. The average growth in rice production was 2.9% per year in 1971/72 to 2008/09, of which 93% was contributed by yield growth. The overall growth rate of area under food grain was 0.3% in 1971/72 to 2008/09. The overall food grain production growth rate is higher than population growth rate from 1971/72 to 2008/09. The own price and income elasticities of rice were -0.108 and 0.199 respectively. It was projected that upto 2021, the annual demand for food exceed the supply of food which were -0.28% for rice and -1.76% for wheat. That implies the demands are greater than the supplies for both crops.

Keywords: Food supply and demand, Price and income elasticities

Location: Agricultural Economics Division, Bangladesh Agricultural Research Institute (BARI), Joydebpur, Gazipur, Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

The present study examines food availability/supply and the market demand for food and their relationship in terms of dynamic balance from the projection at national level.

Methodology:

The study was based on the secondary data from the Bangladesh Bureau of Statistics (BBS), Handbook of Agriculture Statistics, Ministry of Agriculture, Bangladesh Bank (Central Bank) reports, FAOSTAT and other published and unpublished sources. The data used cover the 29 years period from 1980/81 to 2008/09. The non-availability of time series price data prior to 1980/81 is the main reason for selecting the data period from 1980/81. The data are on annual averages because of the lack of monthly data. Descriptive statistics were widely used for reaching the objectives. Projection of food production, requirements and food deficits/surplus situation were also examined by using Ohkawa’s equation. Ohkawa's equation is a very rough estimate of the needed rate of growth in national food requirements. Ohkawa’s equation is also crude because Engel's Law has been verified in a number of studies and showing that over time, the proportion of total expenditures allocated to food declines as income rises. However, most low-income consumers expand a larger share of their budgets to food and also buy significantly more food when income increases. Johnston and Mellor (1961) claimed that growth in food demand by population growth alone is substantial. Population growth and industrialization are the major factors for affecting the demand for food. They also reported that not only are there higher rates of population growth in the developing countries but the income elasticity of demand for food is also considerably higher than in the high-income countries. Mellor and Johnston (1984) have used a "food equation" which views in dynamic balance the relationship between food supply and food demand. The food equation is a race between food and population. McCalla (1994) agreed that in addition to population growth, income growth will also increase the demand for food. There are four different views with regards to the projected trends in production. The conventional view argues the increase in food production must come from increased productivity. The second view is related to the Ohkawa’s equation where rates of population growth are added to rates of income growth modified by the income elasticity of demand for food. Then, this rate is compared to the rates of growth in productivity. The model is, therefore, a projection of two compound growth rates where any deviation from these rates either leads to food deficits or food surpluses. A third view is more pessimistic which state future supply trends will be subject to declining fertilizer use, declining investments in agricultural research and increased environmental pressures. A fourth view as stated by Carruthers (1993) who argues that the traditional model of developed countries supplying the world with manufactured goods and financial services and developing countries providing primary products is not sustainable. He argued that in the long run, developing countries will produce manufactured goods and trade them for food from developed countries. The second view of Ohkawa’s equation which provides a quick and reliable figure to project changes in food demand was adopted for this study. The data requirements for this model are more modest which are available in developing countries like Bangladesh. The basic Ohkawa's (1956) equation is Γ = Γ = Γ + λΓ. In addition to find out the elasticities, it was also estimated the market demand for food which is equal to total demand of food minus total distribution of food. The Analysis is done by using SPSS and Microsoft Excel. The function is estimated following OLS method and the double logarithmic form. The coefficient values indicate the elasticities. The price and income elasticity for wheat has not been estimated but taken from secondary sources.

Source of Information: J. Bangladesh Agril. Univ. 8(1): 91–102, 2010 ISSN 1810-3030

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Domestic food production has an important role to play for food security in Bangladesh. Although the acreage of foodgrain production shrinkage, but production of foodgrain increases due to increase in per acre yield and better management of post harvest losses. The coefficient of rice price elasticity is -0.108 and the income elasticity is 0.199 both are significant at the 10% level. It is shown from the study that the both rice and wheat supply-demand gap is negative which implies the projected change in demand are greater than supply. This analysis showed that increases in production come mainly from yield increases. So, excess demand should be met up by increasing yield.

Knowledge Management: Journal