Causes of Famine in Bangladesh in 1974 - Case Study Example

Running header: Causes of famine in Bangladesh in 1974 Student’s name: Instructor’s name: Subject code: Date of submission: The immediate causes of the 1974 famine in Bangladesh The well-known Bangladesh famine of 1974 was characterized by mass starvation which began in March 1974 and ended at around December the same year. The food crisis was characterized by immense flooding along the Brahmaputra River and high mortality. The initial warnings of the famine initially began in 1974 with sharp increase in prices resulting in widespread starvation in Rangpur district. The situation got worse when the country was hit by heavy rainfall and devastating floods along the Brahmaputra River (Ahmed, 1981). Furthermore, India refused to corporate with Bangladesh. Rice crops were destroyed and prices rocketed. However, the situation eased in November when foreign aid as well as winter crop arrived. In December, the famine was declared over although excess mortality caused by disease continued into 1975. It is estimated that over 1.5 million deaths occurred during the famine. But what were the immediate causes of the famine? This paper looks at the immediate causes of the famine in Bangladesh that had such devastating effects. The paper states that the famine did not occur as a result of a sudden decline in the country’s aggregate availability of food by such natural disasters as floods but rather, the factors that triggered the famine can be traced to the expansionary economic policies adopted by the Bangladesh government immediately after the country got its independence (Ahmed, 1984). In fact, the paper argues that the famine process started early in 1972 when inflation took off in a country that had always been price stable. By the time this inflation exploded in 1974, a large number of the rural people belonging to the lower middle class had already slid downwards into the poverty trap. Furthermore, the condition worsened when the rural employment opportunities decreased owing to floods and food prices went up by big margins owing to precautionary as well as speculative attacks on the food markets (Ahsan, 1974). The paper concludes that contrally to what many believe the famine in Bangladesh was not caused buy natural factors but by lack of proper policies as well as lack of coordination in the government’s effort to take food to those who most needed it. Immediate causes of the famine in Bangladesh Just like most famines, many factors are thought to have caused the Bangladesh famine of 1974. Some of these factors include flooding, mismanagement of food grain stocks by the government, legislation restricting movement of food grain between districts as well as distributional failure among other causes. However, it should be noted that the 1974 Bangladesh famine was such that thousands of people died out of hunger when food was actually there (Alamgir, 1980). Despite the fact that the government would want to blame it on flooding, it is not flooding per se that caused the famine. The main problem and hence cause of the famine was the mis-governance of the state as well as the populist economic policies. In spite of the adequate food availability within Bangladesh, the administration was incapable of stabilizing the food prices since people had no confidence in government’s ability to stabilize the economy. Flooding The Bangladesh government official position has always been to blame the famine on crop losses from floods. Such natural disasters as floods certainly cause food crisis and unlike droughts, famine damage existing food stocks as well as standing crops. In Bangladesh, the standing Aus crop was extensively damaged in several regions that experienced flooding (Bardhan, 1984). In addition the new aman crops could not be planted in time owing to the floods. The government estimates that 890000 tons of food grain production was lost during the floods hence greatly reducing the amount of food available for distribution to those in need of it. In addition, transportation channels were disrupted while employment opportunities suffered. However, it has been argued that during the 1974 famine, thousands of people died when there was enough food to eat. In fact, research shows that per capita availability of food increased between 1973 and 1974 in the district where famine was greatly felt. It is therefore argued that flooding can not have been an immediate cause of the famine. Furthermore, the floods had not occurred until the end of June while famine actually commenced in March. Therefore, flood damage significantly aggravated the famine but did not cause it. Inflation Despite the fact that the Bangladesh famine occurred in 1974, the food crisis process commenced in 1972 after inflation started in a country that had been price stable before. The country did not have social security provisions while the nominal wage rates were only partly adjusted to the rise in the price levels. Thus, by the time inflation exploded in 1974, most rural people especially in the middle class had already slid down into poverty trap (Barua, 1978). This was worsened by the decrease in countryside job opportunities owing to floods as well as the rising foodstuff prices owing to precautionary as well as speculative attack to foodstuff markets. The inflation in Bangladesh is mainly associated with excess money during the period between 1972 and 1975 (Wright, 2008). The excess money supply resulted from both the supply and demand side of the money market when the growth rate of the nominal supply of money became greater than the growth rate of real income. The major source of the fiscal expansion in Bangladesh during this period included the monetization of budget deficits, credits to loss making nationalized industries as well as the rising foreign exchange reserves from an insignificant level. After inflation was triggered by excessive cash supply, inflationary prospects arose with the government’s failure to introduce efficient inflationary procedures. High inflationary prospects sharply decreased money demand hence generating a volatile inflationary state of affairs throughout or prior to the 1974 famine (Bose, 1972). In fact, research shows that prior to the government and the citizens knew of the monetary roots of inflation. The public information played a crucial role in generating high inflationary expectations. However, instead of the government making efforts to stabilize the economy by dampening inflationary expectations, it popularized the myth that smugglers and hoarders of food grains were behind the scarcities of food grains and other essential goods. Inflation in Bangladesh increased sharply from 1971 because of a number of reasons. First, during the independence war, there was disruption of economic activities. Then there were floods in 1974 which lowered food crop production by about fifteen percent (Bose, 1973). Research also shows that here was a sudden explosive growth in monetary supply occasioned by the abandonment of the monetary conservatism of the Pakistan era. The money supply increased by 71 percent in 1972 and then by 16 and 18 percent in the next two years. Beside the increased money supply, there were also large quantities of counterfeit currencies which sowed the seeds of high inflation. Such monetary expansion created a situation of too much money chasing too few goods (Hossain, 1996). The result was building up of inflationary expectations as the citizens lost confidence in their government’s ability to stabilize the economy. This sharply decreased money demand hence creating a volatile inflationary state of affairs by the time the 1974 famine occurred. The high inflation is associated with the sharp increase in prices of food. This coupled with hoarding and smuggling greatly contributed to the 1974 Bangladesh famine. The increase in relative food prices This table shows relative food prices in Bangladesh between 1973 and 1975. 1972 1973 1974 1975 January February March April May June July August September October November December 104.8 104.1 107.3 109.1 109.9 106.9 105.9 102.3 100.6 100.8 100.5 99.3 99.6 107.4 104.5 105.2 113.0 104.4 105.1 104.3 101.4 102.1 103.9 103.8 107.8 107.8 112.2 118.3 121.9 122.3 122.8 119.1 116.2 113.7 110.1 107.3 107.6 108.9 106.4 106.6 105.8 83.7 101.0 N/B the figures are given in 100(FPI*CPI) where FPI is the food price index for the middle level government workers while CPI is consumer price index for the middle level government workers. As seen in the table above, there was a rise in the relative price of food during 1974.It is a widely accepted fact that this rise in the relative price of food during 1974 was the immediate cause of the famine in Bangladesh. This was despite the fact that per capita food availability was superior in 1974 compared to the previous years. At the official level, the rise in prices of food during 1974 is explained by four reasons (Islam, 1977). First, floods caused heavy losses of food Crops and raised their prices; secondly, there was a shortage of foreign exchange and the government was unable to import food grains to fill in the food gaps created by the floods. Thirdly, the USA government decision to cut off food aid for political reasons during the crucial month of 1974 leading to speculative hoarding and hence food crisis. Fourth, global food prices increased sharply hence causing the domestic food prices to also increase. However, this explanation is not sufficient. First, there was more food in 1974 than the preceding years and hence the destruction of food by floods was not sufficient to lower food availability to levels that would lead to increased food prices. Secondly, it is not explained why the balance of payment crisis developed (Cagan, 2003). In addition the US government made the decision to withhold food aid when the country was already experiencing famine. It is for this reason that the official causes of increased food prices is not acceptable. On the contrally, the rise in food prices was caused by the following factors. a) Hoarding of food grains The real food grains demand and supply in the market was the determinant of the food prices during and before the famine. On the demand side, a number of factors were behind the precautionary and speculative demand for food grains (Chadha, 1999). These include economic uncertainties in the midst of high inflation, deteriorating law and order situation, massive corruption and lack of confidence of the people in the government’s ability to stabilize the economy. Hence, consumers bought more food grains than they needed as a precautionary measure hence leading to increased prices due to the high demand. It should however be noted that only the rich were able to afford the high prices of food grains. The poor remained without food due to the increased prices (Etienne, 1977). On the other hand, suppliers also hoarded large quantities of food grains in anticipation of sharp rise in prices of food. The suppliers were mainly people with political connections who used their influence to make fortunes at the expense of the poor masses. Thus there was very little food offered in the market while its demand was very high. b) Smuggling of food grains Along with the precautionary and speculative hoarding of food, there was massive smuggling of food grains to India since Bangladesh gained her independence (Islam, 2001). With time, this dwindled the food stock and partly caused the food crises by the time famine occurred. c) Politics of food aid The food aid to Bangladesh withheld by the US government for political reasons during the vital period of food crisis was a contributing factor to famine. This is because the cutting of food aid at the time when the country was devastated by flood raised inflationary expectations and caused economic uncertainties which induced the precautionary and speculative hoarding of food grains. However, while this could be a contributing factor to the increase in prices, it is an exaggeration to claim that cutting off 20000 tons of food aid was the prime cause of famine (Lifsculttz, 1974). In fact, the process of famine started when inflation took off in 1972 owing to undisciplined monetary and fiscal policy. In addition, deteriorating law and order situation and the increased growth in black money were linked to smuggling and hoarding of food grains (Lifsculttz, 1975). By the time famine struck Bangladesh, the situation was so explosive such that there would be little difference to the suffering rural poor even if the food aid had not been interrupted. d) Balance of payment crisis One of the major causes of the famine is said to have been the government’s inability to import food grains owing to foreign exchange constraint. Therefore, the government could not be able to meet the deficit in food supply (James, 2001). This raised the prices of food owing to increased demand despite low supply. However, Bangladesh balance of payments crisis was purely as a result of in disciplined economic policies. The abhorrently overvalued actual exchange rate as a result of high inflation as opposed to that of her trade partners fashioned an untenable trade deficit. With inadequate capital inflows, sustained trade deficits dwindled its foreign exchange reserves. Thus the government’s inability to import food during the 1974 famine was not a random event that happened in 1974 but was a consequence of bad economic policies and a fixed exchange rate arrangement put in place in 1972. Agricultural wages and unemployment The Bangladesh famine of 1974 was largely a rural phenomenon in the sense that the burden of food grain intake deficiency per capita and excess mortality fell primarily on the weaker sections of the population. The victims mainly included the assetless rural poor including wage laborers, transport workers, village craftsmen and small traders (James, 2005). The wage laborers became victims when their wage incomes decreased sharply owing to the decline in wage rate as well as employment. This decrease in wage employment is illustrated in the table below which shows the percentage decline in employment of hired laborers between July and October 1973 and July and October 1974. area Land owners Landless laborers All villagers All area 5.0 18.7 4.6 Famine area 33.9 34.5 24.5 Non famine area -7.7 6.4 -2.4 In addition, the sharp increase in food prices greatly lowered the food purchasing power of their wage incomes (Ravallion, 2005). The decrease in employment levels was caused by a series of supply shocks. The supply shocks had a cumulative adverse effect on farm and non farm activities. One of the shocks was the country wide flood which damaged major crops hence lowering employment opportunities for wage laborers. Furthermore when the economic condition began deteriorating, the rich experienced the pressure of actual economic stress (Mundell, 2001). They hence reacted by using family labor more intensively which would have otherwise been done by laborers in a bid to cut cost. This lowered the demand for wage labor. In addition, most non-essential and non farm activities were differed to wait for the economic conditions to improve. On the other hand, the sharp rise in food prices increased the supply of wage labor since more people offered wage labor for sale as a survival tactic. In addition, new labor offered by children, women and the old entered the labor market (Novak, 2003). In other words, decline in wage rates as well as employment caused the famine since the poor didn’t have much to purchase food whose cost had already increased sharply. Politics of food distribution Famine can be made a greater tragedy when the government of the famine stricken country does not act as an honest distributor of the food available to the needy. This is the case when the government presiding over a famine fails to remain above the politics of food distribution. This is made worse if during the crisis, politicians in power serve their own interests by sharing resources with the groups that need them least for survival. For instance, since the existing state machinery was located in urban areas, the urban residents were generally sheltered at any cost hence making famine a rural phenomenon (Quddus, 2004). This was the case with the Bangladesh government. The government’s food crisis relief attempts were inadequate and unorganized and the government was inadequately prepared to face he challenge. Most food surplus famers indeed benefited from the crisis. The government did not make any efforts to purchase food from surplus farmers through the existing levy system. The government’s domestic food procurement program was a dismal failure. As such, a lot of people died due to starvation despite the fact that there were people holding surplus food. When the crisis hit Bangladesh, the urban foodstuff politics was given priority at the expense of the suffering rural people. The government cared less what happened to the rural community but it ensured subsidized food to all urban people on a priority basis through the rationing system (Rahim, 1977). The government’s political objective behind the continued food rationing became obvious in the way it conducted food grains distribution during the famine. In addition, food rationing was inherently a corrupt system. Owing to the fact that there was a big difference between ration prices and market prices most ration dealers, urban dwellers and political touts used the rationing system as a cash cow. Even when government’s food stock was reduced to minimum, there was proliferation of bogus ration cards to households that were nonexistent (Ravallion, 2003). When foodstuff prices started increasing sharply in the market, all those connected with food rationing made a profit. In fact when the famine started, the rationing policy became too disordered to trace leakages. For instance, almost half of all food rations allocated to the rural poor always ended up missing or in the hands of smugglers and hoarders hence making ration dealers the most fortunate people. Conclusion The paper has concluded that the famine was not caused by sudden decline in the aggregate food availability by natural disasters. The famine process started in 1972 when inflation took off and by the time inflation exploded in 1974, many people had already become poor. The conditions worsened when rural employment opportunities sharply declined due to floods while food prices rose sharply owing to precautionary and speculative hoarding of food grains. 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