36. The Documents No STAT/FOOD/5 entitled “Collection and Use of Marketing Statistics for Food Policy in Sri Lanka” and STAT/FOOD/6 entitled “Price Stabilization, Government Intervention and the Need for Development of Agricultural Statistics - Bangladesh Perspective” were presented to the Experts.
37. Document No STAT/FOOD/5 was presented by Mr. L.P. Rupasena. The Experts were given an overview of the importance of marketing statistics for food security in the context of market economy and global economy. The marketing statistics were used in Sri Lanka for monitoring food supply, tariff adjustments, formulation of price policies and market news service. The inadequacy of the available market statistics and the need for improvement were also explained.
38. It was reported that agricultural sector still played a significant role in the Sri Lanka’s economy despite significant structural transformation that took place since 1977 after the economy was liberalized. It contributed 20 percent to the Gross Domestic Product (GDP), 25 percent to the export earnings and 40 percent to the employment. About 65 percent of the country’s population were largely dependent on agriculture for their livelihood. Similarly, food consumption in Sri Lanka remained at a high level. An average consumer spent nearly 70 percent of his expenditure on food. As regards to food marketing, the private sector dominated. The government reduced its intervention considerably after implementation of open economic policies and its contribution was reduced to less than 5%.
39. It was reported that in a country like Sri Lanka, where the food bill in the consumer expenditure was significant and there was no healthy competition in the market, the government had to play a critical role to establish an efficient and effective food production and distribution system in order to ensure food security. To meet this goal, government had to formulate food policies, for which marketing statistics were required.
40. The Experts were informed that three organizations, namely Hector Kobbekaduwa Agrarian Research and Training Institute (HARTI), Department of Census and Statistics (DCS) and Central Bank of Sri Lanka (CBSL) were mainly involved in collection of marketing statistics. All three organizations had given highest priority to collection of prices. In fact, DCS and CBSL collected producer and retail prices only. Methodologies adopted by the three organizations were similar, using personal interviews. HARTI and DCS used their own staff in collecting prices while CBSL collected prices using the government teachers.
41. It was further reported that marketing statistics were used for food policy in three ways. First, the Sri Lankan government especially policy markers used marketing statistics for monitoring food supply situation, tariff adjustments, formulation of price policies and market news Services. The government set up the Marketing and Food Policy Division (MFPD) known as Market Research Unit (MRU) at the outset in the HARTI in 1978 to provide timely and accurate data and information to the National Food Policy Committee (NFPC) and to the Cost of Living Committee.
42. These two committees were combined and set up as the Food Security Committee in 1994. These committees met regularly to monitor food supply situation and made necessary recommendations, if necessary. For instance, the committee recommended tariff reduction to encourage imports when food prices were high. Market statistics were also required to maintain the minimum price support programme for rice and other 12 commodities including pulses, onions, potatoes and maize. Market prices in the domestic and international markets and cost of production were used in calculating minimum prices. In addition both government and private organizations used price information to fix their buying and selling prices.
43. The government had given a high priority to establishing market news service (MNS) for agricultural commodities in order to increase farmer’s bargaining power in pricing, to develop a market driven production programme and to ensure effective food distribution system. MFPD of HARTI was responsible for collection and dissemination of market information. Institutional strengthening of MFPD was undertaken in 1994 with the UNDP/FAO project, entitled Market Intelligence and Food Information Project. With this new improvement MFPD was able to establish effective MNS for Sri Lanka. Daily and weekly prices were broadcasted by government and private radio stations and telecasted by television stations. Also prices could be obtained by fax and telephone free of charge. A hot-telephone line was available for users since 1996. Price information was also available in weekly and monthly bulletins. It was found that price information was widely used and hence the private organizations were now interested in sponsoring the broadcasted/telecasted prices on air.
44. The other area where marketing statistics were applied was construction of price indices, which were widely used in formulation of food policies. The two most popular indices were consumer price index and producer price index. DCS and CBSL were involved in compilation of price indices.
45. The three organizations were involved in collection of producer and retail prices covering both regional and national levels. This type of duplication work could not be justified when compared to resource constraints and was detrimental to the credibility of results when users found considerable differences on the same data collected by different organizations. It would be more efficient to concentrate resources in one place to undertake collection and compilation of marketing statistics. In relation to methodology, some improvements seem desirable. Producer prices should be collected at least once a week. Due to too much attention given to cost factor, supervision was poor. This affected accuracy of data.
46. It was reported that the coverage of marketing statistics was inadequate. Too much attention had been placed on price collection on domestic market. None of the organizations maintained statistics on marketing cost, wastage, market levies, market arrivals and traders’ profile. Since Sri Lanka’s economy had been already linked with the world market under the globalization process, market information on the international market was also required. Since market statistics included both quantitative and qualitative information, harvesting patterns, harvesting months, crop failures due to epidemics and natural disasters, data on quality of products and consumer preferences should be collected at regular intervals.
47. It was also mentioned that a wealth of time series of price information was available at HARTI, DCS and CBSL, but very little analysis had been carried out yet. No attempts had been made to analyse trend, seasonality, cycling and irregular behaviour of price series. Another area that needed to be improved was price forecasting which was required for future planning. It was also important to calculate the terms of trade for agriculture to get an understanding about purchasing power of the rural dwellers.
48. The marketing surveys provided valuable inputs for food policy, but very few studies were available. Although discussion was going on to reduce post-harvest losses no detailed studies were undertaken yet. Similarly many criticized middlemen indicating that they exploited farmers, but no studies had been undertaken to test this hypothesis. Also demand analysis was required to understand factors affecting consumer demand. In this regard, demand elasticities were vitally important in formulating food policy. It was pointed that marketing statistics was a valuable input in formulating food policy in the open economy where the government had to play a facilitating role.
49. The Experts noted the utility of marketing and price statistics for food policy. The market statistics were useful for policy makers, traders, consumers as well as producers. The coverage, quality and scope of marketing statistics needed to be improved. In particular price data should be collected from areas prone to food shortages.
50. The Experts recommended that studies should be undertaken on use of marketing statistics for forecasting of prices. The need for uniform tariff policy was also stressed as an important issue.
51. Document STAT/FOOD/6, entitled “Price Stabilization, Government Intervention and the Need for Development of Agricultural Statistics – Bangladesh Perspective” was presented by Mr. Ruhul Amin. It was reported that part of food security policy in many developing countries was the stabilization of prices at levels that were low enough for consumers but high enough for producers. He related that, to ensure short-term food security, the Government of Bangladesh (GOB) used government monopolies to influence food grain prices. For the long-term, increasing production would be the policy to ensure access by all citizens to adequate food.
52. It was reported that price stabilization measures were required to counter price instability arising from shocks in the domestic supply of foodgrains. In Bangladesh natural calamities like floods, droughts, and cyclones were common phenomena which created wide food gaps. At such times, prices soared high. On the other hand, at times of good harvest, prices may even go much lower than the producers’ cost of production. Price stability was also important for the consumers because high prices hurt the poor households. With respect to production, stable prices helped to reduce risk to the farmers and encouraged them to improve production planning.
53. In Bangladesh, experience had shown that political stability depended on the stability of market prices of foodgrains. Over the years two types of price fluctuation were observed: one was annual and the other, seasonal. Prices were more stable in the eighties compared to the seventies and the nineties. Two methods of studying fluctuations, the moving average approach and linear trending were described.
54. The Experts were informed that various strategies were used for price stabilization in Bangladesh. Among others, the following strategies were used: (i) public foodgrain distribution, (ii) domestic procurement of foodgrains and (iii) encouragement of private imports of foodgrains. The GOB open market sales operated at times when market prices of foodgrains tended to increase. It also operated safety net programs at times of crisis. Domestic procurement was designed to protect the farmers at time of harvest from sharp fall in prices. In Bangladesh, the private import of foodgrain which were allowed since 1992, had helped to augment foodgrain supply at time of shortfalls. The private sector had proven to be very efficient in doing importation.
55. Mr. Amin mentioned that domestic procurement and distribution by public agencies were the most important instruments for short-term price stabilization while imports were used to deal with year-to-year fluctuation. Financing problems constrained these operations. The government allocation was not sufficient to cover the actual scale of operation, both in distribution and procurement. Subsidy elements increased over time which had created problems for the government from time to time.
56. It was also mentioned that there was a need to develop and improve the agricultural statistics system because agriculture played a vital role in the national economy of a developing country. In Bangladesh 30% of the GDP came from agriculture which also employed 60% of the labour force. Reliable estimates of the upcoming crop could furnish critical information for all the private agents operating in the market. It also helped the government to plan better. Updated information and forecast of market situation could help to prevent food crisis. The early warning system and GIS may help estimate acreage and forecast yield rates.
57. It was related that determining the type of statistics to be collected was a crucial decision that needed to be taken in consultation with different departments of the government and the private sector. An important concern was that the time series data being generated should be consistent with those collected by other agencies and other countries.
58. The Experts agreed that the importance of price stabilization could hardly be overemphasized. The economy was changing rapidly with the change of technology. The foodgrain production had increased overtime and the pattern of seasonal fluctuations of foodgrain prices had also changed. In this context, the needs for developing and improving agricultural statistics would assume an added significance in the years to come.
59. Mr. Amin emphasized the need for measures to ensure timely information. In particular he proposed and the Experts agreed that to ensure reliable and timely agricultural statistics, countries should use modern computing and processing facilities, if they had not yet done so.
60. In the discussions which followed, the Experts sought an elaboration on the comparison between the operation of the private sector and that of government with regard to importation. The private sector was noted to be more efficient because it was unhampered by bureaucratic red tape and they used government statistics wisely. On the subject of measuring fluctuations in prices, the Experts recommended that the use of autocorrelation be pursued as an alternative to the two approaches presented.
