Enabling agricultural business

Helal Uddin Ahmed | Wednesday, 30 October 2019

There has been gradual worsening of the hunger situation globally over the past three years. Around 11 per cent or 821 million, of the world population were found to be undernourished in 2017. Over 150 million children are now estimated to be affected by stunting.

All these point to a downward trend in the agriculture sector, which caters to food security needs. Agriculture plays a crucial role in alleviating poverty, as it generates income for around 80 per cent of the world's poor. Sustainable agricultural development expedites growth in manufacturing and services sectors by means of dynamic linkages between the farmers and urban consumers.

In recent years, transformation of agriculture sector in developing countries has been characterised by productivity improvements and greater degree of commercialisation. However, productivity and yields growth have been slow in many countries due to dearth of high quality inputs like seeds, fertiliser, technology, training on better farm practices and access to market and finance.

Governments have a vital role to play in enabling agricultural development through enacting laws and regulations that positively influence cost of production and determine benefits the private sector can accrue from trade and investments.

It is in this backdrop that the World Bank (WB) has been publishing the report 'Enabling the Business of Agriculture' since 2015. The indicators used in the study measure progress and identify regulatory obstacles to market integration and entrepreneurship development in the agriculture sector. The latest report measured these indicators in 101 countries between July 1, 2016 and June 30, 2018 and found wide disparities among countries and continents with regard to strength of regulations and efficiency of their implementation.

It is estimated that there are about 570 million farms globally, which employ around 28 per cent of the workforce and include a majority of the rural poor. Farmers have to manage numerous on a daily basis, but regulations often fail to support them and even create hindrances. The eight indicators measured by the WB study were: supplying seed; registering fertiliser; securing water; registering machinery; sustaining livestock; protecting plant health; trading food; and accessing finance.

For farmers who want to sell their produce in local, regional or international markets, availability of registered or certified seeds as well as their quality is of crucial importance. This indicator has been measured by time and cost to register a new cereal variety and quality of the seed regulation. Similarly, without a well-managed fertiliser registration system, registered fertilisers may not be widely accessible to farmers, which in turn may not ensure their quality. This indicator has been gauged from time and cost to register a new chemical fertiliser and quality of the fertiliser regulation.

Regulations affect farmer's access to water, a critical resource, which is often a source of risk for them. This indicator has been measured by requirements for access to water information and opportunities to participate in water resources management decisions.

Use of machineries may be needed when adequate labour is not available for planting, tending and harvesting. Investment in agricultural machinery becomes less viable for farmers when the registration process becomes costly or time-consuming. This indicator has therefore been gauged from time and cost to register a two-axle, four-wheel agricultural tractor.

For those farming livestock, the regulation of animal feed and veterinary medicinal products plays a vital part in ensuring quality inputs for grooming of livestock. This indicator has been measured by quality of regulations for manufactured feed and veterinary medicinal products. Farmers have to rely on stringent phyto-sanitary regulations that provide for swift pest identification, reporting and quarantine. This indicator has been judged by quality of regulation.

Barriers to trade prevent farmers from increasing sales of their produces, but doors to higher trade volumes can be opened up through streamlining of the regulatory processes. This indicator has been gauged by time and cost of obtaining documents for trading agro-goods and quality of regulation system. Lastly, the indicator 'accessing finance' has been measured by examining laws and regulations related to it.

Among the 101 countries surveyed, Bangladesh has been ranked 75th by the World Bank for scoring 44.47. However, India (62.23), Sri Lanka (50.16), Nepal (48.97) and Pakistan ((48.87) have better scores in South Asia.

This only shows that there is much room for improvements in agriculture sector despite repeated claims of food self-sufficiency by government leaders. Bangladesh was however credited with undertaking two reforms -- a new seed act and phyto-sanitary certification -- that helped farmers do business in agriculture.

Bangladesh's worst scores were in supplying seed (18.52), securing water (20.00) and trading food (43.66), whereas the best scores were in protecting plant health (60.00) and accessing finance (60.00).

'Enabling the business of agriculture' scores reinforce the view that agricultural growth has a positive impact on lifting the rural populace out of poverty. This also indicates that countries with better regulations experience greater food security, and efficiency gains from higher productivity translate into better incomes for peasants and more rural employment. All these lead to the conclusion that a supportive regulatory environment enables farmers to generate food surplus and commercialise their agricultural produces, thereby helping millions to come out of poverty trap.


Dr. Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly.

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