The paper is an attempt to describe the emerging pattern of seasonality in foodgrain prices, especially those of coarse rice, in Bangladesh in the 1979s and 1980s, as also to establish some of the more important factors which may explain the former. It is found that seasonal spreads in wholesale prices of rice and wheat have steadily declined through the 1970s and, for wheat, into the 1980’s. The compression of the seasonal spreads is found to be very conspicuously due to an elevation—to the extent of 8 to 10 percentage points—of the belly of the price curve and, to a comparatively smaller extent, due to a lowering of the seasonal peaks. Second, foodgrain procurement programme and the decentralized location of mechanized ricemilling capacity have contributed to the raising of seasonal price floor. Since at any rate wholesale prices (which we have used) and grower prices are bound to display very high degrees of correlation, it stands to reason to say that procurement programme has succeeded in raising growers prices in the small number of districts and months that are really decisive in determining the countrywide price level. In assessing the effectiveness of procurement programme one had better not use annual ratios between growers-to-procurement prices, but use monthly ratios. Computing monthly growers-to-procurement prices engenders a different view of the efficacy of the procurement programme than when annual ratios are used. Our disaggregated examination sustains the thesis that procurement programme has raised the growers-to-procurement price ratios quite conspicuously in harvest months. Hence we posit that the performance of the procurement programme explains a good deal of the elevation of the bottom of the seasonal price movement, and that therefore it sheds critical light on the causes of evolving price seasonality of foodgrains in Bangladesh. This conclusion can be made quite irrespective of whether one looks at current or trend grower-to-procurement price ratios.

The study is based on data collected from 496 farm households covering 16 villages of Bangladesh in the year 1982. It attempts to estimate marketed surplus of paddy and identifies market participants by size of farm. It also examines the determinants of marketed surplus. The gross and net marketed surplus of paddy in the study area have been estimated to be 28 and 11 per cent of total production. The net surplus is generated by 47 per cent of total farms in the sample. The two most important factors found to affect the marketed surplus were per capita production and prices of paddy.

This paper has studied the basic interrelationships in the public foodgrain distribution system in Bangladesh. To this end, the aggregate price model developed by Raisuddin (1979) earlier was reestimated using more recent data covering the period, 1972/73 to 1983/84.  This was subsequently used to analyse the impact of different production scenarios on market price of rice and also to explore how the market price of rice and foodgrain consumption are influenced by policies related to ration price, ration quota, and the share of rice in total ration distribution.The impact of a production shortfall in a “bad crop” year was observed to be quite severe as a ten per cent shortfall in foodgrain production from the “normal” level resulted in about sixteen per cent increase in price of rice (wholesale, coarse variety) in the open market. Also, it was observed that a five per cent shortfall in production would lead to about nine per cent increase in market price of rice. The empirical analysis further showed that an eight per cent reduction in ration offtake brought about through an increase in ration price by Tk. 40/md. resulted in a price increase of about 2 per cent in a “normal” crop year. Also, it was observed that a reduction in the share of rice in total ration offtake from 35% to 20% resulted in a price increase of only 2.2%. Furthermore, if rice is completely substituted by wheat in ration distribution, this policy would lead to about five per cent increase in price of rice in the open market. 

Instability in foodgrain production is generally attributed to weather variables, not an unreasonable assumption in the context of large, traditional agricultural systems. The diffusion of the new seed-fertilizer-water technology has introduced a new element to traditional agriculture. Its impact on instability to data has not been great. A higher rate of adoption and diffusion of this technology, however, is likely to generate further instability, so that it is important to recognize this potential hazard and attempt to remedy certain unresolved problems associated with it in Bangladesh, if costly adjustments are to be avoided.

The benefits of agricultural growth from land based development programmes in general, are unevenly distributed, tending to by-pass the marginal farmers and the landless. In theory, the indirect benefits from growth, operating through various expenditure-inequality. First, the income and employment generated by these linkages is mainly located in the rural areas. Secondly, the kinds of non-farm goods and services induced by agricultural growth area typically produced by small labour intensive enterprises. Household surveys in Bangladesh and elsewhere confirm that the landless and small farmers earn a major portion of their income from rural non-farm sector.Given the importance of the linkages recognized in the literature, and the recent experience of moderate agricultural growth in Bangladesh this paper tries to assess the extent of such linkages in the country by analysing the pattern of consumption expenditure and the investment behaviour of different groups of rural households.