The current outbreak of the novel coronavirus, according to the UN secretary general, is the biggest challenge the world has experienced since the World War II.
It is also being said that Covid-19 might bring an unprecedented economic recession, considering its widespread economic consequences. Many economists already compared the crisis to the Great Depression of the 1930s.
A number of countries, developed or developing, have carefully designed bailout packages to minimise the negative consequences of this pandemic. Of course, the first and foremost task of any government at this critical time is to ensure human health and safety.
Yet, economic concerns equally demand careful interventions by the states as economic consequences may only exacerbate human sufferings both immediately, as well as in the long run.
Like others, Bangladesh too has initiated a number of immediate measures to address economic concerns stemming from this virus crisis. These include a $8 billion bailout package to ensure that the economy rebounds and expected growth is also achieved.
The primary targets of this bailout package are industries, the service sector, and the small and medium-sized enterprises. In addition, public expenditure is also being directed to feed and meet the basic needs of the country's labourers and the extreme poor.
It is also praiseworthy that the government has taken a timely decision to procure 11.5 lakh tonnes of rice and six lakh tonnes of paddy during the current boro season.
As per the announcement, rice and paddy will be procured for this season at Tk36 per kg for boiled rice, Tk35 per kg for non-boiled rice (atap rice) and Tk26 per kg for paddy, while wheat will be collected at Tk28 per kg.
The success of this initiative depends hugely on its proper and timely execution. Similarly, more concrete initiatives for the country's rural economy also need to be taken with immediate effect.
The duration of Covid-19 as well as its overall consequences cannot be predicted very accurately at this stage. Despite this limitation, it is expected that this pandemic may not impact the health of most people in Bangladesh, but the economic crisis is already affecting millions of people across different sectors of the economy.
Most importantly, both the country's industrial sector and service sector are already experiencing huge negative consequences. It is expected that these two key sectors may see reduction in their value additions to GDP.
It is also expected that with the current looming crisis, most of the export-oriented industries in the country may experience reduction in their export orders, and thus the possibility of a large-scale labour layoff can become a reality as some of the most-affected countries are major importers of Bangladeshi products and their import demands may see a sharp fall in coming months if the pandemic continues for a few more months.
The service sectors may also see a similar trend.
In this crisis moment, the country's rural economy, including the broad agriculture, and the rural small and medium enterprises, can play a crucial role. The following immediate measures are thus suggested to be taken for the country's rural economy at this critical time to minimise the ongoing coronavirus-related economic impacts:
- Providing quality seeds: Our traditional dependency on self-preserved seeds system is breaking down with time and farmers now depend much on purchasing seeds from markets. Because of the ongoing lockdown, many farmers are finding it difficult to collect quality seeds for the Kharif crops (pre-Kharif or Kharif 1). This includes seeds for vegetables, spices, fruit plants, cereals and other commercial crops. It is extremely important that quality seeds are made available to all farmers through appropriate channels (e.g. BADC) in this crisis time.
- Providing fertilisers and pesticides: Like quality seeds, making fertilisers and pesticides available for farmers will be essential for a successful Kharif season. As most of the traditional sources of fertilisers and pesticides are now closed due to coronavirus pandemic, farmers may find it difficult to collect and use them in time. Thus, the government should ensure access to adequate fertilisers and pesticides of all types for all farmers and in all areas of the country. The role of BADC can be crucial here.
- Access to loans: Unfortunately, our banking system is not a farmer-friendly one. Small and marginal farmers often find it much difficult to access credits from the formal system. The government should immediately take necessary steps to start releasing the Tk5,000 crore stimulus package announced for the agriculture sector. This stimulus package is a timely initiative considering the need of extending loan supports to the agriculture sector at this critical time. Moreover, labours expected to be released by the formal sectors, those facing difficulty in getting enough opportunities in the informal sectors and also many of the migrant returnees losing their jobs due to Covid-19 may finally end up getting themselves engaged in agriculture and other rural economic activities. The target groups under this package i.e. the small and medium farmers, poultry and dairy sectors are often the ones who are deprived from such facilities from formal sources. Now, the government must ensure that the target groups are well-informed about this loan facility and also getting access without much hassle. Any possibility of bank officials charging bribes or middlemen acting in between may end up making this stimulus package rather a loan burden for the loanees.
- Launching returnee migrants loan scheme: A special loan scheme can also be launched targeting those migrants who may come back to Bangladesh after losing their jobs in foreign countries due to coronavirus-related economic recession in the coming months. These people and their hard-earned skills and experiences can be used if they can be engaged in some economic activities. Thus, such a loan scheme may help them getting engaged in some economic activities. Returnee migrants' skills and potentials need to be evaluated carefully for extending this loan.
- Providing uninterrupted irrigation service: For the irrigated crops, there is a need to ensure smooth and uninterrupted supply of power and wherever necessary, diesel for irrigation services. We need to ensure this service in this critical time.
- Making special agriculture markets: Farmers during this current lockdown period may find selling their crops a real difficulty. Local administrations can take initiative to create "special agriculture markets" for the perishable crops, vegetables, and fruits etc. As most of marketplaces in rural or semi-urban areas are currently empty, and if proper safety measures can be ensured, such marketplaces can be converted temporarily into special agriculture markets for a certain period.
- Outsourcing urban jobs to rural areas: If the current pandemic continues for a few more months, selected urban jobs with limited investment requirements can be temporarily shifted to rural areas, but again safety issue needs to be ensured. This may not only ensure some level of supply of those goods and services to the demanders, but can also create income opportunities for many temporarily unemployed people.
- Effective government procurements: As timely announced, the government's rice, paddy and wheat procurements should be made with utmost care this time. No real growers should be deprived of getting due benefits. If needed, two different prices can be announced for this season's food grain procurement – one that will be offered to the growers/farmers and the other for the traders/mill owners. This may help the real growers get the offered incentives.
Our agriculture and other rural economic activities may not contribute quite insignificantly in terms of their GDP contributions. Yet, they have huge potentials.
There are positive changes that are happening in these sectors in recent years and we need to ensure that coronavirus pandemic is not affecting these sectors' vibrancy.
Against the anticipated recession caused by the global coronavirus outbreak, these sectors in Bangladesh can be nourished and supported by taking appropriate and timely initiatives to reap the benefits of their potentials.
The author is Associate Professor of Environmental Economics, Dhaka School of Economics.