The Consequences of Import of Rice and Wheat on Food Production and Food Inflation in Bangladesh

Abstract

This paper uses data from 1975 to 2013 to analyze the impact of food imports on food production and inflation of Bangladesh. Unit roots test, co-integration test, error correction model as well as Ganger Causality test have run among three variables such as food production (FP), food import (IM) and food inflation (IN). There is no co-integration between food production (FP) and food import (IM). On the other hand, food import and food inflation are found co-integrated in the long run. But using Ganger Causality test we find unidirectional causality between LNP and LNIM. Ganger Causality test did not show any unidirectional causality between LNIN and LNIM. Government policies and strategies are highlighted regarding food production to show the position of government in this issue. Finally recommendations are made to have fruitful food production pattern as well as most efficient use of food import.