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The Financial Express

Rural economy and agriculture - powerful drivers of poverty reduction

Muhammad Shafiullah and Faridul Islam | Published: January 29, 2017 20:31:58 | Updated: October 24, 2017 07:30:13


Rural economy and agriculture - powerful drivers of poverty reduction

The rising demand for vegetables led to a rise in price, which allowed farmers to get higher returns, compared to low-incentive rice. Rise in profitability contributed to the boom. The United Nations Food and Agricultural Organisation (FAO) credited Bangladesh for posting the highest year-on-year increment in vegetable production, falling behind only Uzbekistan and Nepal during the first decade of the 21st Century. Data suggests that vegetable production has more than doubled in just over a decade, making Bangladesh one of the fastest-growing vegetable producers in the world. The growth in recent years has been from the use of better seeds and technologies, compared to those in the 80s and early 90s, rather than extensive land allocation to vegetable. The recent growth was due to policy support, farmers' adoption of hybrid seeds, home gardening, and off-season and all-season vegetable cultivation.
Some of the most grown vegetables in Bangladesh include aubergines, tomatoes, cabbages, cauliflowers, water gourds, pointed gourds, ridge gourds, bitter gourds, ash gourds, snake gourds, teasel gourds, sponge gourds, pumpkins, lady's fingers, cucumbers, radishes, beans, carrots, spinach, red amaranth, stem amaranth, yard long beans, drumsticks, and arums. Many of them are rich in vitamins A, B, C, E, and K, folic acid, calcium, phosphorus, iron etc.
Nevertheless, rice and other cereals occupy over 75 per cent of the country's 8.5 million hectares of arable land, leaving little for vegetable. For a land-scarce country where most farmlands are allocated to rice, it is presumptuous to expect growth in vegetable production from acreage expansion. It will need cultural changes - that is move from a heavily rice-centric dietary habit to a healthier combination of vegetable and protein (plant and animal sources). That can happen only gradually, however.
The widening gap between vegetable production cost and the prices consumers pay, can be blamed on illegal tolls and extortion by intermediaries, which will act negatively in achieving further growth in the sector. Noting that the farmers sell vegetables at quite reasonable prices in the countryside, they get pricey by the time they are sold in the urban markets, much due to the intermediaries.
The vegetable sector has several aspects, which require further attention. Emphasising on the off-season vegetable production is part of the efforts to diversify the rice-reliant agriculture in Bangladesh. Farmers who produce tomatoes, and other high-value crops during the hot and humid 'kharif' season coincide traditionally with rice. They see dramatic improvements in their crop output, land productivity, profitability, and net income. A report points out that against yearly seed requirement of 4,500 tons, local firms and public institutions meet 30 per cent of vegetable seed demand, 15 per cent is imported and the rest are from seeds saved by the farmers. A praiseworthy development is the effort by the local well-known seed companies, like Lal Teer and ACI. They produce and market high quality seeds domestically. They used to import seeds but now they have established local R&D hubs. Amid an outcry over hybrid seeds late in the 1990s, the then government permitted import and local production of hybrid seeds. The policy presaged a new era in setting the stage for a huge growth push in vegetable production, which is ongoing. This remarkable progress was noted in the literatures published by the Taiwan-based World Vegetable Centre. They mentioned the contribution and roles of non-government organizations like BRAC and Hellen Keller International and the like, in promoting and giving training on vegetable farming and home gardening.
It transpires that farmers have now acquired the knowledge to utilise every available inch of land to produce vegetable. This is what the Japanese widely practise. Any land available around, in city or rural areas, is put to agricultural crops. Farmers now engage themselves in production practices like hydroponics, fertigation, terracing, roof gardening, and even floating gardens. It may be noted that in 2015, the FAO declared Bangladesh's unique hydroponics production system - vegetable cultivation on floating beds created on water bodies with aquatic weeds as base - a 'Globally Important Agricultural Heritage System'.
Bangladesh's agriculture sector has been through major improvement in terms of productivity and output growth over the past 40 years. The progress is a tale of success in achieving food security despite frequent natural disasters and population growth. The nation had seen the face of the worst human misery - famine! And yet, the foodgrain production, for example, more than tripled between 1972 and 2014, from 9.8 to 34.4 million tons. With one of the fastest rates of productivity growth in the world since 1995 (averaging 2.7 per cent per year, second only to China), Bangladesh's agricultural sector has benefited from a sound and consistent policy framework backed up by substantial public investments in technology, rural infrastructure and human capital.
However, this has happened despite a declining share of the sector to the country's GDP. Bangladesh has thus far done well in achieving such remarkable growth in land, labour, and total productivity in agriculture. We should not be oblivious of the fact that productivity growth depends on capital-to-labour ratio (capital used per worker) and technology although improved capital can capture part of technological progress. There have been some changes in a positive direction, but more is needed, albeit gradually. The country's economic strategy ought to include a blueprint of how we will move forward.
Farming in Bangladesh continues to be largely traditional - characterised by primitive methods, rather than modern approaches with an appropriate level of mechanisation. The intermediaries' influence continues to be considerable and is a part of significant price gouging, as observed during the country's high- profile festivals - Pahela Baishakh, Eid-ul-Fitr and Eid-ul-Azha. Importantly, the country's agriculture is less competitive compared to neighbouring India, Thailand, and Vietnam, which are competing hard to export agricultural goods. Perhaps this is due to low productivity relative to the comparable economies despite remarkable growth over the years. Combined with loss of arable land - due to climate change (increasing salinity in the south and severe droughts in the north) and building of industry, infrastructure (roads and highways), and excessive emphasis on urbanisation and house-building etc. - these produce a corrosive chemistry for this important sector of the economy. Moreover, water shortages in the dry season due to unresolved river-related disputes with neighbouring India add only to complicate the matters further. Needless to say, the challenges to a sustainable agricultural growth are numerous.
Bangladesh's rural economy and specifically agriculture, has been powerful drivers of poverty reduction since the 2000s. Indeed, progress in the agricultural sector accounted for 90 per cent of the reduction in poverty between 2005 and 2010.More than 70 per cent of Bangladesh's population and 77 per cent of its workforce lives in rural areas. Nearly half of all Bangladeshi workers and two-thirds in rural areas are directly employed in agriculture, and about 87 per cent of rural households rely on agriculture for at least part of their sources of income. Growth of agriculture has the potential to cut rural poverty further.
Faster and more inclusive, and comprehensive strategy for rural growth with emphasis on job creation will require greater agricultural diversification along with a more robust rural non-farm enterprise development. A shift in production from rice to high-value and higher-nutrition crops will significantly reduce malnutrition, trigger more rapid growth in incomes, and create more and better on-farm and non-farm jobs, especially for women and youth. Such policy appears highly relevant in a severely land-constrained economy. As part of a difficult battle, it may be hard to win without significant and adequate government support.
Investment in expanding the rural non-farm enterprises (RNFEs) is a parallel priority for Bangladesh. RNFEs can make households more resilient to climate shocks through income and livelihood diversification schemes. In addition, they can be a potentially powerful source of employment generation, especially for youth and women through more efficient and competitive value chains, which must occupy the front seat. Perhaps, this might be a better path for Bangladesh to pursue its agriculture sector in a bid to overcome mounting challenges in an increasingly globalised world; insuring food security and at the same time continuing with the country's rapid development strategy.
Dr Muhammad Shafiullah is an Assistant Professor at the University of Nottingham Malaysia Campus. muhammad.shafiuallah@edu.my
Dr Faridul Islam teaches Economics at Morgan State University, USA.
faridul.islam@morgan.edu

 

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