Assessing the Level of Comparative Advantage for the Boro (Dry) Rice Production in Bangladesh: A Time Series Analysis

Mohammad Islam,Md Sarkar,Mohammad Rahman,Md Rahaman

doi:10.5455/jbau.69174

Abstract

This study aims to investigate whether Bangladesh has a comparative advantage in producing rice in the long run for the Boro season. With that view, we estimated “Domestic Resource Cost (DRC)” as an indicator of comparative advantage using the time series data. Data were obtained from the food situation database, published by the Food Planning and Monitoring Unit, Ministry of Food, Peoples’ Republic of Bangladesh. The analyses show that Bangladesh has a comparative advantage in modern rice production in the Boro season at import substitution. DRC values for Boro season are less than 1 in all the periods (2010/11 to 2019/20) except 2018/19. The sensitivity analysis shows that all the indicators pertinent to this particular analysis strongly influence DRC values. The government and policymakers should focus on price spread between the wholesale to retail levels, the border price of rice at the farm gate level, and the border prices of rice, urea, TSP, and MoP of farm gate level to achieve a long-run comparative advantage. Research efforts need to be prioritized for developing new varieties, especially for the Boro season with higher yield potential.

Highlights

Agriculture is the mainstay of the Bangladesh economy, while rice is considered the most important food crop (Islam et al, 2020; Rahaman et al, 2020a; Siddique et al, 2017; Rahman et al, 2015)
The present results indicate that the value of domestic resources used in producing per ton of Boro season rice in Bangladesh is less than the import cost
The study findings indicate that Bangladesh has a comparative advantage in modern rice production in the Boro season at import substitution

Summary

Introduction

Agriculture is the mainstay of the Bangladesh economy, while rice is considered the most important food crop (Islam et al, 2020; Rahaman et al, 2020a; Siddique et al, 2017; Rahman et al, 2015). Bangladesh agriculture is transforming from a traditional to a modern system In this transformation process, the rice sector has the most strategic importance, as it is the staple food source for the whole population and the primary source of livelihood for 16 million farm households (Kazal et al, 2013; Rahaman et al, 2020c). Domestic production of rice is considered sufficient even surplus to meet the existing demand having policies to achieve self-sufficiency in food grain supply. These policies, include fertilizer subsidies and price support programs. After achieving food self-sufficiency, the government's major concern is to maintain stability in food prices, which relates to the costs of production and behavior of price transmission and market integration across the horizontal and

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Conclusion