Landless tenancy in rural Bangladesh  

Abdul Bayes   | Published: November 16, 2018 22:32:39

The Research Almanac 2018 of the Bangladesh Institute of Development Studies (BIDS) was unveiled recently at Lakeshore Hotel. Dr Mashiur Rahman, economic affairs adviser to the Prime Minister graced the occasion as chief guest while KAS Murshid, Director General of BIDS, chaired the inaugural session.

The academic session kicked off with a paper by Dr Binayak Sen (Research Director).  The title of the paper, 'Rise of Landless Tenancy in Bangladesh' deserves special attention against the backdrop of two earlier hypotheses, as espoused by eminent scholars, of home and abroad in the 1970s. First, it has been argued that with green revolution making farm operations profitable in Bangladesh, the share of land under tenancy is likely to decline. Second, paripassu the decline of land under tenancy, importance of owner-operated farming will rise as profit seekers would take back lands from tenants.  Third, the group of landless tenants, specially the so-called "pure tenants" will become a "vanishing tribe" with gearing up of the green revolution. They will be knocked out on their failure to face expensive package of green revolution. However, drawing heavily on books by Mahabub Hossain and Abdul Bayes (2009,2018) and also supplemented by HIES data for few years, Binayak Sen attempted to test those hypotheses. The HIES data are not comparable to 62-village data at the levels but they seem to point to the same trend, argues Sen.

Let's look at the findings presented by the author. To the contrary of conventional concerns about equity, land under tenancy in rural Bangladesh shot up from about one fourths of cultivated land in 1988 to about half in 2014. The rise has been monotonic to indicate that about half of the total cultivated land falls under tenancy, in one form or other. En passant it needs to be mentioned here that, during the same periods, land under modern varieties peaked to four-fifths of the cultivated land. Thus despite green revolution making farm operations more profitable, land under tenancy has in fact gone up rather than declining. Second, presence of the landless households in the tenancy market increased a few folds.  Considering pure tenant and tenant-owner as landless and the relatively poor segment of the rural society, half of these households are in tenancy market compared to one-fourths in 1988; land under this group increased from one-fifth to half during the same period of time. Third, instead of going up as espoused by earlier hypothesis, the share of pure owner declined from 56 per cent of farms in 1988 to 38 per cent in 2014. Fourth, the 'vanishing tribe" seems to have merged as thriving tribe!. The proportion of pure tenants in the market rose from mere 14 per cent in 1988  to 29 per cent in 2014 and the share of cultivated land  under their command shot up from 7.0 per cent to 21 per cent.  More importantly, in earlier periods, nobody would prefer pure tenants to rent-out land as they did not have  minimum farm establishments like draft animals, ploughs etc. But with the passage of time, mechanisation solved the problem of draft animals and micro credit took care of accessing mechanisation and other inputs.

Not only tenancy market grew thicker over time, it also witnessed a radical transformation in the forms of contractual arrangements. In 1988, most of the cultivated land under tenancy was operated under sharecropping system- exploitative and inefficient as argued by Adam Smith and Alfred Marshall. It is inefficient because the tenant has to surrender half of the additional output thus discouraging to reach optimal point; it is exploitative because, the owner takes away half without sharing rising costs of inputs. As could be gleaned from 62-village survey, land under sharecropping constituted 42 per cent of cultivated land compared to 72 per cent in 1988. On the other hand fixed-rent system went up from 22 to 38 per cent, and mortgage from 6.0 to 20 per cent. By and large, the transformation has been from exploitative and inefficient to a relatively more efficient and equitable market-oriented system. Needless to mention here that sharecropping system still dominates in agro-ecological backward zones. In favourable areas, tenants have become more risk-lover from a more risk-averse situation. The shift has possibly  been contributed by the growth of non-farm activities, borga chasi loan, microcredit etc.

The equity effects of the tenancy market are worth pondering. The bulk of the "rented-out" land is supplied by the 'large and medium' land owners (about three-fourths) while the bulk of the "rented-in land" is concentrated in the landless and functionally landless categories -about four-fifths.  However, we can possibly presume, the growth of the tenancy market is both a cause and effect of a tightened labour market and hence rising wages.

The moot question is: where do tenants get land from? First, the supply of  land in the tenancy market increases on the heels of heightened importance of non-agricultural income. Second, costs of monitoring and supervision could have contributed to the expansion of the market. Third, even medium and large farms are renting out on the wake of a wane in family labour.

Binayaek Sen reckons that traditional theories based on 'old' production function no longer holds true in rural Bangladesh.  Of late, landless tenant households can ease capital constraint through accessing microfinance. They are also not constrained by the lack of complimentary non-land inputs since  the growth of labour-saving technologies in harvesting and threshing help a lot. Thus access to mechanised service markets  and microfinance, migration to cities  -- all tend to increases probability of being tenants enabling them  to pay cash rent. However, access to salaried jobs as well as human capital accumulation discourages tenancy for both landless and all tenants.

The researcher concludes by saying that "the agricultural route of upward mobility via landless tenancy must be recognized as equally potent route as the non-farm  route for uplifting the landless households out of poverty". While one would agree with the observation made by the researcher, one would also expect some policy prescriptions - what reforms need to be made for making the market function better for the landless, the concomitant change in rural power structure and implications etc. These are apparently missing but seem to have been shelved for the future.

Abdul Bayes is a former Professor of Economics at Jahangirnagar University.

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