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6 years ago

Embracing agricultural mechanisation for achieving SDGs

A combine harvester in operation on a paddy field in Bogra
A combine harvester in operation on a paddy field in Bogra

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The sustainable development goals (SDGs) related to agriculture aim at reducing poverty and hunger to zero level, achieving decent work and inclusive growth, responsible consumption and production, and addressing climate action. One of the strategies is to double agricultural production per acre by 2030, for which further mechanisation of agricultural processes, particularly harvesting and packaging, is a must.

 Just within about four and a half decades after independence, Bangladesh is now considered to be the role model for inclusive and sustainable development in the world. Our agriculture sector has played a crucial role behind this success. In 1972, we were producing only 10 million metric tons of food-grain annually, and today that has almost quadrupled to over 38 million metric tons. Because of this massive increase in production, we now have been able to ensure food security of 160 million people. Agriculture is important in terms of employment as well. While the number of people employed in this sector has been decreasing gradually, still over 40 per cent of our people directly depend on this sector for income. If we consider the indirect employment and economic activities related to agriculture, then the figure may go above sixty per cent.

Along with these achievements, there are also certain challenges ahead. For example, to attain the SDGs we need to double our per acre agricultural production by 2030. But our cultivable land is decreasing at a rate of 0.74 per cent per year. Since 1976, one million hectares of our agricultural land have been lost to rural and urban infrastructures. Agricultural growth is needed not just for feeding our own people; it is also needed for achieving the desired level of export income. For that, agricultural growth has to be 4 to 4.5 per cent (now it is 3.8 per cent). And this is possible if we can add more value to agriculture through desired processing. It has also been proven that agricultural growth is more effective for poverty reduction compared to non-agricultural growth. A study has shown that a 1 per cent increase in per worker GDP of agriculture sector results in 0.39 per cent reduction in poverty (whereas, this reduction for similar growth in non-agricultural sector is only 0.11 per cent). Hence it is evident that there is no alternative to increasing productivity of agriculture to attain the national macro-economic objectives. And for this reason, developing medium to long-term strategies for agro-mechanisation is the call of the hour.

AGRO-MECHANISATION: The point to be noted here is that, massive agro-mechanisation is already taking place in Bangladesh. In alignment with the existing realities, the farmers are mechanising their operations and the government and non-government actors are also doing their best to accelerate the processes. Power tillers (two-wheel tractor) and four-wheel tractors are being widely used for cultivating land. Pump machines are also very much popular for irrigation. Even the solar powered irrigation systems are replacing the diesel powered ones (emphasis of the government and non-government actors in this regard has also been significant). Currently 700 thousand power tillers, 35 thousand tractors, and over 35 thousand deep tube-wells are in use in Bangladesh. Both pull and push factors have worked behind this commendable expansion of mechanised agriculture. The pull factors include scarcity of labour due to employment opportunities elsewhere, increase in average wage, and higher profit potential of mechanised agriculture. The push factors are: availability of machines, local manufacturers/importers marketing machines at affordable price, government support, and nation-wide promotional activities of the manufacturers/importers. Yet, there are some challenges on the path of sustaining the growing pace of agro-mechanisation in Bangladesh. For example, majority of the farmers are small holding ones. Hence, sometimes it is difficult to use or apply latest machines and technology in these farms. Secondly, due to lack of capital, sometimes the poor and marginal farmers cannot afford to acquire the latest machines and technologies. And above all, farmers often lack the knowledge about modern agriculture. Consequently, they are not confident about the use of latest machines and technologies.

However, some innovative interventions are already being implemented to overcome these challenges. The Metal Group is implementing one such intervention in Jhenaidah district with support from USAID. They have set up sales and service centres for modern agro-machinery in each of the upazilas of that district. Farmers buying machinery from those centres are enjoying subsidies (it addresses their capital deficit). These machineries are manufactured or imported by considering the realities of Bangladesh. So the size of the land being small is not a problem anymore. Additionally, to enhance awareness about modern agro-machinery among the farmers, numerous awareness raising initiatives (including field demonstrations) have been undertaken and the early positive outcomes are already visible.

The government of Bangladesh has also been implementing a project for a few years that provides subsidies to farmers who buy agro-machineries. Under this project, 30 to 70 per cent subsidy is provided for 7 types of agro-machinery including reaper, combined harvester, and rice-transplanter (the highest rate of subsidy is 70 per cent for the marginal farmers of Haor areas). Priority lists of applicant farmers are prepared at the upazila level; and once the allocations are received, these are disbursed accordingly. To ensure the quality of the machinery bought, a national level technical committee prepares a list of manufacturers/ importers. Due to this project, the farmers from remote areas like Char and Haor are being especially benefited. Apart from this, to ensure better participation of the private sector in agro-mechanisation, the government is providing fiscal incentives. Only 6.0 to 7.0 per cent import duty is imposed on agro-machinery importers.

Alongside the public and private sectors, the financial sector of Bangladesh has the potential to play a significant role in agro-mechanisation. We must remember that the capacities of the government and international aid agencies to provide grants and subsidies are limited. On the other hand, the banks and other financial service providers of the country can bring forth a market-based solution to this problem. They can take up initiatives that complement the government and private sector. For example, all farmers or farmer groups in the priority list prepared at the upazila level do not get the subsidised machineries. The banks can provide special loans to these left-out farmers. This can be a good example of 'public-private partnership'. The latest 'Agriculture and Rural Credit Policy and Program' of Bangladesh Bank has especially encouraged loans for agro-machinery. Often small holding farmers cannot afford to buy and use modern machineries. So this policy has encouraged loans for those who let other farmers use such machineries on a rental basis. It has also promoted extension of loans to small groups of marginal farmers.

Like all other sectors of the country, the growth of the agriculture sector and agro-mechanisation will have to be led by the private sector, and the role of the banks is undoubtedly important in this regard. Here are some recommendations on how the banking sector can contribute to agro-mechanisation -

  • Under any refinance scheme of Bangladesh Bank, the commercial banks take the money at 5 per cent interest rate (bank rate) and then distribute it to customers at 9 per cent interest. If this bank rate could be reduced from 5 to 4 per cent for agro-machinery, then commercial banks would have additional incentive to provide more loans for agro-machinery at a lower interest rate through the refinancing program.
  • The latest 'Agriculture and Rural Development Policy and Program' of Bangladesh Bank includes a directive to disburse 10 per cent of the total loan for fish culture. If a similar directive existed for promoting agro-machinery, that would have tremendous positive impact on agro-mechanisation.
  • With a view to promoting spice cultivation, the Bangladesh Government has been providing 6 per cent interest subsidy through Bangladesh Bank and providing low interest (only 4 per cent) credit for spice cultivators during the past few years. This has revolutionised spice cultivation in Bangladesh; on the one hand the cultivators earned significant profit, and on the other hand the spice import was reduced by a significant extent. In a similar manner, low interest credit for cattle rearing households has also been facilitated. If such facilities could be ensured for agro-machineries, this would have helped agro-mechanisation to a great extent.

In 1988, the average age of our farmers was only 35 years; but today it has increased to 48 years. This implies that the vast numbers of youths are no longer interested in agriculture. But the youths are the driving force of our economy. It is through agro-mechanisation that we can regain the interest of youths in agriculture. We must not forget that there is no alternative to agro-mechanisation to attain our macro-economic objectives. For that, the private sector has to lead from the front, and the financial sector must provide strong support. The government can create an enabling environment through necessary policies.

Only then will the private sector come forward to invest in agriculture. But the private sector must also have adequate access to sustainable finance, which the central bank of Bangladesh has been pushing for nearly a decade. Yet, the implementation of the agricultural credit policy formulated by the central bank needs to be further improved. In particular, the new entrepreneurs involved in diversified modern agriculture, including livestock development, deserve to be facilitated through necessary financing support for adopting desired technology. A committee is now busy preparing the national policy on agricultural mechanisation. Hopefully, the committee will take note of some of the above-mentioned policy suggestions while finalising the policy.

Professor Dr. Atiur Rahman is an eminent economist and a former Governor of Bangladesh Bank.

[email protected].

 

 

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