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Entitlement Failures and Famine Economics

The floods gave the Minister for Food a reason to recalculate the food gap to at least three million tons, up from an already alarming 1.7 million tons (Alamgir 1980,129). But was it because there was not enough food that people starved? This point is unresolved. Sen notes that crop production of rice and wheat was higher in 1974 than in 1971-3 or 1975, and that the worst affected districts (Mymensingh, Rangpur, and Sylhet) saw increased output in the year of the famine: '[w]hatever the Bangladesh famine of 1974 might have been, it wasn't a FAD (food availability decline) famine' (Sen 1981,141). Yet looked at closely, the picture is mixed: Alamgir argues that production was one thing, availability quite another. Regional differences, decimated infrastructure, and fears about forcible procurement meant food was unevenly available. Smuggling to India was probably a major factor in uneven food availability and price rises, so that 'one cannot altogether reject the hypothesis that the 1974 famine in Bangladesh was partly caused by foodgrain availability decline' (Alamgir 1980, 239).

Economists may not agree on the role played by food availability, but they agree that people could not command the available food. This is the foundation of Sen's entitlement theory, and it is no surprise that this theory cut its teeth on the famines of this region—these were episodes in which the human misfortunes of natural events were compounded by the failures of markets and public authorities to respond. Sen argued that many famines occurred not because food was unavailable, but because people suddenly lacked entitlement to it—because they could not exchange labour for food or wages, or because other entitlements—public relief or charity—were unavailable. Why people suddenly lose their entitlements is a larger question, and one which Sen, neither a political scientist nor a sociologist, has answered less well (Devereux 2000; Dowlah 2006).

Wages and prices explained the economics of lost entitlements: real wages were hit hard by the floods, particularly because labour-intensive jute production was down that year. Agricultural wage labourers, the hardest-hit group, saw their real wages decline by 40 per cent between 1969 and 1974, and the wage in rice equivalent by 60 per cent (Alamgir 1980; Osmani 1991). The real agricultural wage declined by 43 per cent in the year between the monsoons of 1973 and 1974 alone (Alamgir 1980, 311).

While the floods may have triggered a sudden drop in wages, it was probably longer-term decline and overall poverty that led to people starving in such large numbers (Ravallion 1997). This sudden drop came on top of an extended period of declining real wages, the result of a fast-growing rural population, the decline in the jute trade (global factors again), and new 'Green Revolution' technologies. Osmani takes a long view, explaining that the asset base or endowments of people facing famine had been eroded so substantially over such a long period of time that they had little with which to cope when the floods came, prices rose, and wages and work were suddenly entirely inadequate for feeding families:

[I]t is possible to argue that entitlement failure in 1974 turned out to be as precipitous as it was mainly because of severe entitlement contraction that had occurred in the preceding years, partly through natural calamities and partly through the destructions and dislocations caused by a prolonged war of liberation. The destruction of assets (houses, cattle, etc) caused by these events was a direct dent in the 'endowment set', especially for the rural people. Endowment contractions of this kind must have accentuated the gravity of the famine.

(Osmani 1991, 332)

The sharp rise in the average rice price (see Figure 5.1) raises questions, particularly as food shortages appear to have been highly localized. But like declining real wages, the food price rises in 1974 came on top of an extended period of inflation, at least some of which was rooted in inflationary pressures from the global economy (Hossain 1999). The wholesale price of coarse rice ranged from (in prices per maund/37kg in Bangladesh taka) the high 30s to the high 40s from 1968 until 1972, when it rose to nearly 80, reaching 105 the next year and peaking at 223 at the height of the famine period (Alamgir 1980, 260). Like the sharp decline in real wages, the spike in food prices does appear to have been connected to the floods—not because they caused food shortages, but because of expectations that they could.

Rice price rises in 1974 (in Bangladesh taka) Source

Figure 5.1. Rice price rises in 1974 (in Bangladesh taka) Source: Calculated from Alamgir (1980, 260, Table 7.1).

Why then did prices spike in 1974? Public opinion was strongly behind the explanation that illegal speculative hoarding and smuggling were at work. The Prime Minister himself said that 'a group of sharks, hoarders, smugglers, profiteers and black-marketeers were trading on human miseries' (from The Bangladesh Observer, 23 September 1974, cited in Ravallion 1985, 15). A generalized suspicion of the grain trade and strong support for food commodity market regulation in Bangladesh comes from the belief that sudden food price spikes are the result of speculation and other 'sharp practices' through which food markets are manipulated, by well-connected businesspersons, to profit from dearth; these views continue to be an important part of the popular political ideologies (or moral economy) of food crises.[1] In 1974, fears of speculation were most likely true. Evidence indicates that grain traders speculated that prices would rise far higher than they eventually did, because of exaggerated predictions of massive crop damage from the floods (Ravallion 1985; Del Ninno, Dorosh, and Smith 2003; Quddus and Becker 2000).

(Note the further tragic effects of 'crying wolf' about the floods.) This speculative behaviour built on years of feared food shortages, brought to a head by the steep drop in public food stocks at the end of 1973, after six consecutive bad harvests from 1971 to 1973, and 'a drastic reduction in public distribution... [which led to] the collapse of confidence in the government's ability to stabilise the price situation in the coming months' (Islam 2003, 223). Prices started to rise in March, well before the floods.

Smuggling also played a role, but how significant cannot be established. One study that compared rice prices on either side of the border concluded that the differentials were not big enough to signal large-scale smuggling, but its findings were critiqued on methodological grounds, and smuggling is believed to have taken place on a very large scale.[2] The army's diagnosis—that smuggling on a scale that threatened national security happened because politicians not only turned a blind eye but also turned a profit—almost certainly helped rationalize the series of military coups a year later (Mascarenhas 1986). And the personal interest that the Deputy Chief of Staff (later President) Zia Rahman took in this matter says something about the impact of the famine on firsthand witnesses (Islam 2003). As we will see, food security, or the avoidance of food-price shocks, became a priority in the Zia regime. The economists could not prove it, but smuggling on a large scale probably contributed to the famine, enabled by political support at the highest levels. Food prices dropped dramatically after Sheikh Mujib's assassination, when private grain traders and dealers dumped stocks to avoid being caught for smuggling or hoarding, in recognition of the fact that they had lost their political protection (McHenry and Bird 1977).

  • [1] This dates at least to the famine starting in 1943, but may pre-date even that famine. Suspicionof the grain trade and its role in creating 'artificial' famines (that is, those not caused by aggregatedeclines in food availability) is probably found further afield than Bengal, but it appears to have aparticular power in this area because of its history. For anthropological and sociological accounts of'moral economy' understandings of the grain trade in this part of Bengal, see Greenough (1982);Greenough (1983);Hossain and Kalita (2014);Hossain and Jahan (2014). Participatory research in1979 found that people who had experienced famine made detailed analyses of the local politicaleconomy of foodgrain marketing, including its impacts on the poor and connections with politicalpower (BRAC 1992).
  • [2] Alamgir was among those who argued that it was possible, indeed likely, that smugglingcircuits started not in border districts, which were policed, but in more central areas, andtransported by riverboat. When the borders were effectively closed in 1975, the rate at whichdomestically grown foodgrains were absorbed into the national economy (i.e., not smuggled toIndia) improved (Alamgir 1980, 237). McHenry and Bird make a similar point with respect to theprice of rice after 1975.
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