Covid-19 Fallout: World Bank suggests trade measures for Bangladesh in order to avoid food security crisis

20 May 2020 7:28 AM
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Disruptions in informal trade between Bangladesh and India may have an immediate impact on food security

The World Bank has suggested Bangladesh to make certain trade responses in order to avoid a food security crisis owing to a prolonged Covid-19 pandemic. 

The Covid-19 health crisis can bring about a food security crisis in Bangladesh if proper measures are not set up, warned the Bretton Woods Institution in another of its recent policy notes.

“This global pandemic may cause breaks in food supply chains, food shortages and food price spikes in Bangladesh and a broader range of countries,” the World Bank policy note stated.

However, it said, trade policies can be an essential instrument in the management of the coronavirus related food security issues.

“Trade responses such as for example eliminating tariffs, refraining from imposing export restrictions, and facilitating trade flows can play an essential role in maintaining usage of and reducing the price of essential foods.”

As the pandemic spreads and its own financial impact deepens, the World Bank has proposed several measures to address food security concerns in Bangladesh.

It said, maintaining food security will demand special attention to ensure: (i) functioning grocery stores and value chains (domestically and internationally); (ii) maintain purchasing power (social protection measures) of the rural and urban poor, like the large informal sector; and (iii) safeguard production of the next agricultural season (input and labor supply).

Although at this time, trade-related disruptions seem less acute than domestic supply chain disruptions, border closures may pose short-term food security challenges in Bangladesh, World Bank cautioned.

“Connectivity and logistics challenges in importing countries such as Bangladesh make a difference the option of essential foods,” said World Bank, discussing an April report that indicated space for storage exhaustion at Chittagong because of disruption in normal transportation routes during nationwide shutdown.

In addition, it indicated that disruptions in informal trade between Bangladesh and India may have an immediate effect on food security in Bangladesh specifically for the poor.

Along with these, logistics costs in Bangladesh are saturated in most sectors, including foods which range from about 10% of sales (for dairy) to almost 50% of sales (for horticulture). Congestion and delays are pervasive problems across the country from roads to seaports and land ports.

According to a youthful World Bank estimation, if congestion on the roads was eliminated, logistics costs would be at least 7-35% lower, according to the sector. Bangladesh’s logistics system is fragmented regarding both infrastructure and services.

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The World Bank said trade restrictions make a difference import-dependent essential foods such as for example wheat, sugar and edible oils in Bangladesh. 

“While Bangladesh is self-sufficient in rice production, the united states is largely reliant on imports of other essential items such as for example wheat and sugar. Furthermore, around 90-92% of demand for edible oil is met through imports.”

World Bank suggests Bangladesh to consider following trade responses - 

Measures to facilitate trade: Recent measures implemented by the National Board of Revenue to expand customs assessment at ports to lessen congestion and waive storage charges for containers during the national shutdown could be complemented with additional interventions to sustain and improve the efficiency of logistics.

For instance, implementation of a “National Single Window” to automate and integrate all key processes and procedures linked to the application, submission, processing, payment and clearance of trade related permits, licences, certificates and declarations. 

Although Bangladesh has phased out mandatory pre-shipment inspections (PSIs), it could get rid of all voluntary PSIs for essential foods. A focus on automation and electronic procedures can facilitate the distancing between traders and border officials furthermore to bettering logistics efficiency. 

Removing import tariffs: Bangladesh can remove import tariffs and taxes on key food products to increase the option of essential food products.

World Bank recommended that lowering prices for staple foods such as for example cereals, sugar, meats and nuts can be achieved at a relatively reduced fiscal cost.

Avoid trade restrictions: World Bank said Bangladesh could work with neighbouring countries on a cooperative trade initiative to avoid imposing trade restrictions including export bans or taxes on critical food staples.

As part of the recently launched Saarc emergency initiative for Covid-19, Bangladesh may lead a regionally coordinated response in order to avoid export restrictions to lessen the cost and increase the availability of key foods in the region.

Furthermore, the World Bank suggested, Bangladesh could work with Southeast Asian neighbours such as for example Malaysia and Indonesia (the primary source countries for Bangladesh’s imports of edible oil and palm oil) to get rid of existing trade restrictions and prevent lengthy and costly requirements linked to trade licenses and permits.

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