The Financial Express

Smallholders need intensive care

| Updated: January 04, 2021 20:54:46

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The agricultural sector of Bangladesh has shown phenomenal performance in terms of crop production and yield growth, crop diversification, reducing subsectoral growth asymmetries, rapid rise in cropping intensity and adoption of High Yielding Varieties (HYVs) etc. Consequently, we have achieved a right to voice and rejoice a lot over those successes. But do we ever think of the extent to which agricultural progress has been able to improve the lot of the farmers, particularly the small ones that are known as smallholders? Are we really concerned about smallholders of our country? Do we have sufficient data on their livelihood? How do they finance their economic activities?

Smallholders refer to those farmers who hold small sizes of land. In Bangladesh, farm households owning or operating farm sizes of 5 decimals to 249 decimals are called smallholders. This definition differs from country to country. Landholding per household is small but their contribution is bigger than that of medium and large farmers. Since we do not have current data, we have to depend on the report of Agriculture Census 2008 for an indicative scenario. Small farmers or smallholders occupy more than half of the country's gross crop area, and of production volume.  Presumably, this situation is likely to persist even today.

Agriculture census is the source of comprehensive data on agriculture, farming population and their activities. Such a statistical  task  is carried  out  at an interval  of at least 10 years, Henceforth,  data   have to be  assumed  with some  logical basis  to do any  analytical and investigative work until a new census report is obtained. The latest agriculture census that took place in 2019 has been completed but the final report is yet to be published. However, the preliminary report on the census is now available.

The census aims at fulfilling some objectives. One of such objectives (set by the surveying authority) of any agricultural census is to provide data for formulating government policies and programmes for the benefit of small and marginal farm households. But the agricultural census reports are found  not to incorporate data on some vital aspects of smallholders such as  their income-mix, consumption, investment  and cost of  farming, financing, assets and liabilities based on different farm sizes, economic activities undertaken, location, tenancy status etc. Thus, it is not possible to satisfy the aforesaid objective of the census   due to data insufficiency. Household Income and Expenditure Surveys conducted on regular basis cannot act as a suitable and alternative source of analytical as well as categorical data regarding   smallholders' livelihood.

As per the preliminary report of Agriculture Census 2019, the total number of farm households is 16.6 million (Table-1). The proportion and the strata of small farm households are still unavailable. The findings of Agriculture Census 2008 reveal that smallholders account for 84.39 per cent of total farm households. This proportion of smallholders may be used to estimate the present number of smallholder population. The estimate has been shown in the Table 1. So we can say, Bangladesh has now around 14 million households identified as smallholders. Farm sizes also vary among several strata of smallholders. The 2008 census unveils that   farmers with a land size of less than 50 decimals  have the highest ratio (33.15 per cent) while  only 19.28 per cent of small farm households  possess a farm size of 150 to less than 250 decimals.

A sample survey carried out in 2014 (Source: Table 3.8 of author's doctoral thesis) demonstrates that smallholders represented 80.41 per cent of total sampled farm households (rural area). More than 59 per cent of them were found non-viable in the sense that they were unable to restore farm investment and repay loan after meeting annual family expenditure out of income from farm and non-farm sources. HIES 2016-based Table-2 portrays data also proving the financial hardship suffered by the majority of the smallholders. It is observed from the table that monthly income level of only 7.56 per cent of smallholders is slightly greater that monthly expenditure level.

As regards the data in Table-2, it may be pointed out that income accounting of farmers' paddy is not appropriate. The majority of our farmers are mainly paddy growers. Government-set rice price is used to calculate farmers' crop income. Few farmers get the government-set procurement price which is higher than the actual market price. As a result, income of the most of the farmers is overestimated. Besides this, previous debts and unexpected outflows of fund are not considered.

Table-3 shows a declining trend in the number of loanees in the category of small and marginal farmers. Access to credit (2019-20) may be calculated at 16.82 per cent against 14 million of smallholders. The rate of access compared to accounts opened (medium and large farmers also included ) is 23.20 per cent. The majority of smallholders cannot but resort to MFIs and money lenders on the conditions of higher cost of fund and unreasonable repayment reschedule.

The documents of Bangladesh Bank's Agricultural and Rural Credit Policy and Programme for several fiscal years state that every year Bangladesh Bank disburses necessary amount of credit to marginal and small farmers including sharecroppers of the country through different banks. Smallholders need credit not only for farm and non-farm activities, but also for family maintenance. This necessity of funding is not taken into account. Besides, the net credit flow to the farmers is very insignificant as fresh disbursement is made after the borrowing farmers repay the previous dues. Then the small farmers are forced to meet their funding deficit from non-banking sources.

Field observation is that most of the smallholders require government-sponsored intensive care in lieu of generalised focus to combat the constrained circumstances. They must be assisted, on case-by-case basis, with an offer of pragmatic mix of farm and non-farm activities and required size of credit. A new financing approach should be developed to match the needs of the smallholders' viability. Policies and programmes to improve the quality of their livelihood ought to be based on field surveys on regular basis. Steps need to be taken to revise data designing in future census as well as sample surveys as we must know the smallholders in detail to ensure adequate arrangements for their upliftment.

Haradhan Sarker, PhD, is ex-Financial Analyst, Sonali Bank and retired Professor of Management.

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