I will focus on the investment opportunity in storage capacity for food security to cover my future demand and also managing crisis. It also relates the demand and supply in the food market to control the price within reasonable level. Of course not only lack of storage capacity is involved in price hiking but there are many reasons behind this issue, in this case I will only focus on investment opportunity in food storage infrastructure development and its relevant facts. It is also related with the import and export of food from Bangladesh. However, continuous investments are needed to stimulate the efficiency of these expanding food grain markets, as even small reductions in margins can lead to enormous benefits for producers as well as consumers. Various interventions and investments are further needed to assure that Bangladesh can successfully meet the challenges of produce on and marketing of high-value products, especially relating to food quality and safety. (Minten, et al, 2010)
As long-term solutions to the food price crisis are sought, it is important to understand the root causes of the problem. The crisis was triggered by a complex set of long- and short-term factors, including policy failures and market overreactions. One important factor in the crisis could had been the entry of significant financial resources into futures markets, including food commodity markets, which could have contributed to a price spike during the first six months of 2008. It is important to note that still there is no common agreement among experts on this and there is significant discussion around the possibility that channeling financial resources through commodity futures markets may have triggered the food crisis and in particular the role of speculators in the crisis.
Establishing theoretical and especially empirical linkages between future prices and spot prices is not easy, and testing causality is even more complex (Sanders and Irwin, 2010). The rain fed and dry land regions support a large Varity of cropping patterns in addition to price wheat, due to greater risk involved (Yadav et al., 1998) Simultaneously, this destocking was a rational response to falling grain prices. The simultaneity between stock levels and price expectations—emphasized in the theory of the supply of storage (Brennan et al., 1958). As analyzed by (Rashid and Saloman , 2010) the costs of holding a metric tonne of food varied from US$20 to US$46 in these countries. The countries that need reserves most are generally those least able to afford the costs and oversight necessary for maintaining them. The private sector is better financed, better informed and politically more powerful, which puts it in a much better position to compete than most of the governments that would be managing these reserves.
To conceptualize with the previous researchers study, it indicates that storage of foods and grains are interrelated with the price movement as well as future demand fulfillment. In the crisis time this stored food will support the demand with the sustaining price level. Investment and development is requiring in all sector including storage facilities to improve the food and grain supply demand. Cost of storing is also impacting the price. So store planning must be designed such a way so that price will be reasonable (Rashid and Saloman , 2010).
From the theoretical and conceptual framework, my hypothesis will be like that as a developing country like Bangladesh where; food security is a great factor in the economic impact. I also think that supply and demand of food is related with the price volatility in the market. It is also related with the sufficient stock level which is dependent on storage capacity.
I will cover the scenario of Bangladesh, where food storage issue as well as economic factor will be discussed.
Material and Method
To develop my hypothesis to result and finding it requires different types of variable to do my analysis. Variable include: Farmer, Store owners, Middleman, local agricultural administrators. Use of method to do the study, exploratory observation, samples observation from the above mentioned variable and use statistical tool to do the interpretation of the variables and its relations.
Data Gathering Procedure
Data will be collected from the farm land, as well as markets, as well as regional agricultural representative through informal questionnaires survey.
B Minten, A. Z. M. S. Alam, U. K. Deb, A. Z. K. Kabir, D. Laborde, M Hassanullah, K. A. S. Murshid, AGRICULTURAL MARKETING, PRICE STABILIZATION, VALUE CHAINS, AND GLOBAL/REGIONAL TRADE. Bangladesh Food Security Investment Forum, 2010
Brennan, M. J. 1958. “The Supply of Storage.” American Economic Review 48(1): 50–72.
Rashid, S., Lemma, S. 2010 Strategic Grain Reserves in Ethiopia. Institutional Design and Operational Performance. Forthcoming IFPRI discussion paper.
Sanders, D. R. and Irwin, S.H. 2010 A speculative bubble in commodity futures prices? Cross-sectional evidence. Agricultural Economics 41: 25–32.
Williams, J. C., and B. D. Wright. 1991. Storage and Commodity Markets.
Cambridge: Cambridge University Press.
Yadav, R.L., B.S. Dwivedi, K.S. Gangwar, and K. Prasad 1998. Overview and Prospects for Enhancing Residual Benefits in Rice and Wheat Cropping System in India, Oxford and IBH Publishing Co Pvt. Ltd. ICRISAT, 207-225