Agriculture of Bangladesh

Introduction on Bangladeshi agriculture: An overview

The economy of Bangladesh is primarily dependent on agriculture. About 84 percent of the total population live in rural areas and

are directly or indirectly engaged in a wide range of agricultural activities. Agriculture contributes about 32 percent to the country's

GDP, about 23 percent of which is contributed by the crop sector alone. About 63 percent of the labor force is employed in

agriculture with about 57 percent being employed in the crop sector. 

The scope of modern agriculture has been widened significantly. Although agriculture used to be originally defined as the

cultivation of land for producing crops only, now-a-days, any applied activity through proper utilization of natural resources which

relates to the production, development, preservation, processing, marketing and extension of not only crops but also other

agricultural commodities such as fish, meat, eggs, forest products, etc. is universally accepted within the purview of agriculture.

According to the above definition, crop production, animal husbandry, fisheries, forestry, etc. are integral components of

agriculture. But, crops undoubtedly constitute the largest and most important sector of Bangladesh agriculture.

To live we need food and for food we are depending on agriculture. But in Bangladesh, the production of food is problematic due

to the following reasons:

a. Population growth rate is very high

b. Shortage of cultivable land

c. Elasticity of the demand of rice due to lower income of the people.

For the above reasons the main theme of the agriculture of Bangladesh is to increase the productivity of land because total

production will increase if per acre production increases. Production can be increased by an increment of the amount of land,

which is not possible for us. So let’s look for productivity. There are three ways to increase production by the technology:

1. Natural way: Use of natural resources like cow dung, bulls etc. Production increases slowly but in a sustainable way as the

fertility of land remain same for years.

2. Bio-chemical way: Chemical technology like, fertilizer, pesticides, high yield varieties (HYV) are used along with natural way.

Production increases rapidly but not as sustainable as continuous use of fertilizer will reduce the fertility of the land thus

production will decrease in the long run.

3. Technical way: Use of machines like tractors, power tiller, and modern irrigation equipments etc along with chemicals along

with natural way. Production increases sharply but this is also less sustainable. Still it is argued that the technical way is better than

bio-chemical way as same layer of a land will not be cultivated year after year. Use of machines like tractors will help to cultivate

in different layers in different years which will be better for the lands from the fertility point of view.

Features of agriculture of Bangladesh:

We have already mentioned that there is dualism in the agriculture of Bangladesh with a domination of the traditional system of

cultivation or farming. There are few more features listed below:

a. Undeveloped method of cultivation: In our agriculture still we are following the traditional and primitive method of

cultivation. Where cow dung, bulls etc are used instead of tractors and power tillers. Traditional methods are cheap in

nature and mostly labor intensive. A there is unlimited supply of labor with a low wage in the rural area, the agricultural

farms are using them in the traditional method of cultivation. Subsistence motive of farming also induce the farmers to go

with the traditional methods of cultivation. Moreover, risk avoidance behavior of the farmers makes them reluctant to use

the modern technology.

b. Low productivity: Low productivity is caused by the use of traditional methods of production. It was found that the

growth of the agriculture is only 4.67% which is much less. Contribution of agriculture in GDP is around 17% and this

rate is declining continuously shows the less production of agricultural units in Bangladesh. Low productivity is also due

to the unskilled nature of laborer. Moreover, less use of HYV and pesticides are causing the total output level to be

reduced. Besides, natural calamities like, flood, droughts and cyclone are destructing a huge amount of agricultural output

each year.

c. Heavy dependence on nature: As we are not using any modern techniques in agriculture, we have to heavily depend on

nature for the agricultural decision making. Moreover, the geographical position of Bangladesh shows its more

dependency on nature. We have to wait for a proper rainfall for the production of different crops like jute and tea. For

example, the northern area of Bangladesh is always found output less in a certain time of every calendar year named

‘Monga’. Use of modern technology may help in reduction of heavy dependence on nature.

d. Landless peasants and farmer’s illiteracy: Most of our farmers are landless and cultivating the lands of others (called

Barga). This is simply a wage based system where wage is paid mostly by the product produced in the land. But this

amount is too marginal for the farmers which doesn’t create any surplus thus the farmers always be landless. Moreover,

farmers become discouraged to produce more as they get a small part of the total production. It was practically found that

the productivity of farmers are more in those lands which are owned by themselves compared to the lands where they are

working as daily laborer. Farmer’s illiteracy is another main obstacle in the adoption of new techniques which may add

more value in the production process.

e. Predominance in food crop production: We have earlier mentioned that the Bangladesh agriculture in highly dependent

on crop sector. But the contribution of crop sector is declining sharply shows a problem in the agriculture. For example,

the contribution of agriculture in GDP is only 16.91% and in which 12.19% has come from crop sector. In addition, crop

sector is dominated by the food crops like Aush, Aman, Boro and wheat. Still people are not concentrating on the

investment and development of non-crop sectors like poultry, forestry and fisheries.

f. Subdivision of land: A very common feature of agriculture is backed by the division of father’s land to his many

children. A single land is divided in many parts due to the inheritance rule. Subdivision line (called Aail) are there in

between the lands. A survey shows that a total of 2 lakh metric ton crop production is reduced due to the subdivision of

lands. Moreover, subdivision of land doesn’t permits to go for using the modern technology where economies of scale

could be found if the land size is large. Subdivision of land is making the size of the land small and reduces the chance of

getting economies of scale by using the modern equipments.

g. Disguised unemployment: This is another prime feature of the agricultural sector of Bangladesh economy. A huge

disguised unemployment exists in this sector. Disguised unemployment can be understood with the following example.

Assume, ten people are working in a small land and producing 5 ton of rice. So everyone will get half to n of rice. Now if

they see one of their family member is able enough to work in the farm, they will right way employ him. Unfortunately it

will be found that this person is contributing nothing as ten persons were enough for the cultivation of that land. That

means production doesn’t increase with the addition of this extra labor in the firm. Though this person is working in the

farm and seems too be employed, actually he is disguised unemployed as he is not adding any value in the production

process. Finally it would be found that same 5 ton rive will now be divided among 11 person reducing the shares of

everybody compared to previous share of half ton per person. In fact surplus is reducing too for disguised unemployment.

Disguised unemployment occurs due to system that the farmers want that their children should be working in their own

land even if they have an opportunity to do better in non-farm activities.

h. Subsistence agriculture: The motive of cultivation of our farmers is subsistence. Whatever they are producing is

consume by their family. They don’t have marketable surplus in their hand that reduces their level of savings. That’s why

they are unable to adopt any modern technology in the farming.

i. Share-cropping: Initially share cropping was not found in the agriculture of Bangladesh, rather we were dependent on

single crop cultivation round the year. But now farmers are following share cropping like, two crops at a time in the same

land. Some are having fisheries in their cropped land too. But still multi-cropping is not that much popular in our country

due to the illiteracy and lack of information of the farmers, as they think that more crop production in the same land will

reduce the fertility of the land.

Problems in Bangladesh Agriculture and Possible Solutions

We know that the contribution of agriculture without fishery is only 16.9% which is very small for the development of an agrarian

economy. Growth of the agriculture is also too low. In fact the agricultural sector of the economy faces different problems for

which still it’s lagging behind. The total problems of agriculture is divided in three broad categories namely, production side,

marketing side and distribution side problems. Next section will highlight on those problems and their solutions:

A) Production side problem: Production in agriculture is low due to following reasons:

01. Traditional cultivation process: In Bangladesh, still the farmers are using the traditional way to cultivate the land. Though

this is sustainable, this can never guarantee a higher production. Bio-chemical and mechanical methods are available in the

country, but the illiteracy and mainly lack of capital doesn’t permit the farmers to adopt newer technologies. The low productivity

of labor is enforced by low level of technology. The use of family labor and the intensive use of labor in the land result in low

MPL. The family farmers are reluctant to take any risk and this risk aversion behavior feeds back on the reluctance of the farmer to

adopt new and improved technology. So, output and total productivity will be low due to this traditional mode of production based

on low productivity of land and labor. In addition many lands are remaining uncultivated due to non-use of new technologies like

tractors and power tillers.

02. Small farms: Most of the agricultural farms are in small in nature in Bangladesh due to the subdivision of land. We know that

the use of modern technology will be beneficial only if we can use them in large land size. The use of technology never becomes

cost-effective if they are use in small farms. This is the reason why the farmers are unable to use the modern technology in their

small lands. It will in fact increase the production cost thus an increment in the price of agricultural products. In contrast if we

could have the large farms, we could easily go for the technical method which might reduce the cost of production. Bio-chemical

technology is not that much effective in small lands too as the returns to scale in bio-chemical techniques is neutral. Even small

size of farm induces the farmers not to take any risk to go for the multi-cropping system. Farmers only produce one product in

their small farm just for subsistence.

03. Unequal distribution of land and landless farmers: Our lands are unequally distributed and the result is that a small number

of people are holding a large share of cultivable land, whereas most of the farmers remain landless. Problem is the people who are

holding the large share, use their lands either for the non-agricultural activities or go for leasing the lands to the landless farmers

with restrictive contracts. Both are against the production of agricultural output. Those landless farmers who are working in the

lands of large land owner are de-motivated to produce more as those landless farmers will have a small share of the total output

produced. The production could be much higher if those lands could be distributed equally to every landless farmer, which in

practice is impossible.

04. Credit problem: One major problem in this sector was identified as credit unavailability to the peasant farmers. The reason is

collateral behavior of the credit. Commercial banks are reluctant to provide credit to the farmers as the farmers can’t keep anything

as security at the time of taking the credit from the bank. Commercial banks recognize this as risky for them. For more production

in agriculture there is a need of investment in seeds, irrigation, fertilizer, pesticides etc. The farmers are unable to buy the earlier

mentioned goods due to their fewer saving which come from the lack of marketable surplus. In addition commercial banks are not

providing credit to those peasant farmers creates barrier in the production process. Few NGOs are now helping the farmers by

providing micro-credit which is not enough for the investment in the agricultural sector. Ultimately lack of HYV seeds, fertilizer,

and irrigation facility are causing the lower production in the agriculture.

05. Bad irrigation system: Water is one of the most important components in agriculture. A good irrigation system can help the

farmers to be facilitated in the production process. But it was found that the irrigation system in our country is not that much well

improved to support the total sector. Irrigation is a matter of huge investment that the poor farmers can’t support. It was found that

still 21% of our total cultivable land is out of irrigation due to less government investment on that sector. Farmers are not getting

proper flow of water thus hinders the production process. We all know about the Ganga Barrage which is just hampering the

production of agriculture of that part of Bangladesh either by extra flow of water causing flood or by making the lands dry when

the barrage is closed. Proper irrigation management system is important.

06. Lack of fertilizer, seeds and pesticides: Some of our farmers are now adopting new technology where there is use of modern

seeds, fertilizer and pesticides. Unfortunately they are not getting enough support to get those mentioned goods. Government has

given the fertilizer distribution system in the private sector which has made the distribution of fertilizer more unequal. Inflation is

quite evidenced in that sector due to weak distribution of fertilizer. HYV seeds are only available in the district headquarters or in

the accessible areas not everywhere. The price of pesticides is too high and beyond the capacity of the landless farmers. All the

above mentioned barriers are creating problem in the higher production of agricultural out put in Bangladesh.

07. Natural disaster: Due to non-use of new technology, our agriculture still depends highly on nature. Every year flood and

drought is common feature in Bangladesh. We know that our agriculture is highly dependent on crops and especially on Aush,

Aman, Boro and wheat. Flood causes a huge destruction on the mentioned crops thus reducing the total kevel of output. It was

found that flood destructs about 20% of our total agricultural output every year. The destructive impact of draught can be observed

in the northern part of the country every year known as Monga. At that time farmers can’t produce anything and become jobless.

08. Poverty and illiteracy of farmers: Poverty of the farmers induces them not to use any modern technology to produce more.

Moreover, lack of formal education makes them superstitious in using modern techniques. They don’t like to take risk by using the

modern facilities. In addition, lack of technical knowledge is another barrier in using the modern technology to produce more in

that sector by the farmers.

Production side solutions: Following are the suggestions to overcome the production related problems of the agriculture:

01. Modern cultivation process and technical development: The productivity of any factor depends on the type of technology

used. Now the traditional methods used to grow traditional crop varieties yield lower output per unit of land compared to modern

crop varieties grown by the modern method. Modernization of agriculture is probably the most important solution against the

production related problems. Government has to support the maximum in such respect as the farmers can’t buy those capital

intensive technologies initially. Financial sector should be reformed in a way that the farmers can get enough credit in flexible

return policy to buy those modern equipments. Formal and technical education should be provided to the farmers to use those

technologies properly. Government and NGOs are to play the vital roles in such respects. Information about the new techniques

should be making available to the farmers. Better distribution of fertilizer and HYV seeds are important too.

02. Easy credit system: Government needs to take step regarding reform of the financial sector which will facilitate the farmers to

get credit for investment in an easier way. Large credit should be given to the farmers at a lower interest rate and in an easier

payment schedule. NGOs should be providing more and large amount of credit that will help the farmers to buy and use the new

techniques. In addition to credit, technical assistances should be provided to the farmers.

03. Development of the irrigation system: As private sector will not be willing to invest in this sector, government has to take

initiative for the same. If necessary, government can go for collaboration with donor agencies in the irrigation system

development. A better flow of water should be maintained by a formal and better irrigation system in the country. Cooperative

farming may help in such respect too where many farmers can invest all together for the development of irrigation system in their

own area.

04. Fertilizer distribution: Fertilizer distribution was privatized by the government which didn’t add any value to the farmers.

Rather artificially created shortage uplifts the price of fertilizer. More private agencies should be given permission to import and

distribute the fertilizer in rural area. A monitoring body headed by government official should be there. Government should stop

providing subsidy to the fertilizer producers in Bangladesh and should use that money to import the fertilizer because; it was found

that fertilizer can be imported at a lower cost than producing that in the country.

05. Land conservation: Multi-cropping is supported in such respect. It was seen that the lands are loosing their fertility as same

crop is produced round the year in the same land. Share cropping and multi-cropping ideas should be implemented so that different

product will be produced and the fertility of the land can be conserved. Proper use of fertilizer should be ensured to protect the

land as well as the water bodies.

06. Agricultural training for the farmers: This is the most important task we need to perform. Illiterate farmers should be

provided agricultural training so that they can know how to use the land, how to use the fertilizer and also the use of modern

technologies. Farmers should be convinced that the newer technologies will increase the production in the land. Moreover, training

regarding marketing and distribution of the agricultural products should be provided to the farmers. Timely information

distribution should be ensured by the government.

B) Marketing side problems: Farmers are facing problem in marketing the agricultural output even if they are producing more in

some areas. Lack of formal marketing system deprives the farmers from getting the surplus from the market. Following marketing

side problems were identified in agriculture:

01. Existence of exploitative middle man: Farmers are unable to generate surplus due to the exploitation of the middle man who

hide the price information to the farmers. It is not possible for the farmers to get information about the demand and supply and the

price of the agricultural products in different markets. Moreover, farmers don’t have their own distribution system to distribute the

product in different markets. This gives a chance to the middle man to exploit the farmers. These middle men are buying the

products at a lower price from the farmers and making good profit by selling them at a higher price to the markets. In fact the

farmers are loser in such respect as they are not getting enough and can’t save which may help them to invest more in the next

calendar year. This exploitative system is reducing the surplus of the farmers and keeps them in the same poverty level.

02. Imperfect information about the market: Farmers don’t get the information about the market properly. Government is

unable to provide that information to the farmers. Farmers don’t know the current market price of the agricultural products due to

unavailability of the information. Sometimes imperfect information becomes more problematic for the farmers. Farmers are

illiterate thus don’t read newspapers and have less access to radio and TV due to poverty deprive them in getting perfect

information about the markets. Farmers don’t get the information about the price of fertilizer and other inputs that also exploit

them in buying those inputs.

03. Bad infrastructure: Bad and undeveloped infrastructure is another prime reason against the betterment of agriculture. Most of

the agricultural products are perishable. That’s why a timely distribution is required for them. Unfortunately bad and undeveloped

infrastructure creates barrier in such respect. Undeveloped roads and bridges creates problem in the delivery process. As the

farmers know that they can’t deliver them timely, they have to sell them at a lower price to the middlemen who have better

distribution facility.

04. Problem in reservation: There is shortage of cold storage in the rural areas for which the farmers can’t preserve their output

in a better way. Many agricultural products become expired before they are sent to the market due to problem with proper

reservation in cold storage. The number of cold storage is very small and moreover the cost of reservation in those cold storages is

quite high that the farmers can’t effort. All these are creating problems in the marketing of agricultural output in Bangladesh.

Marketing side solutions: Sooner solution of the marketing side problem is required for the better marketing of the agricultural

product in time. Following suggestions can be taken:

01. License for agents: Middlemen should be given license to do the business from the government. There should be a price list of

the agricultural products with the middlemen and the farmers will sell their products to only licensed agents at the government’s

given price. This will reduce the level of exploitation of the farmers. Licensed agents may be salary based workers of the

government who will be monitored by the Deputy Commissioners. That means the total marketing system will be controlled by the

government. In private sector the same system can be implemented by commission-based activity.

02. Cooperative farming for better marketing: Cooperative marketing where many farmers will be working together is another

very good solution of the marketing related problems. In this case many farmers can form a cooperative farm and can buy vehicles

like small trucks and vans to distribute their products to the district markets. This will eliminate the middlemen in the distribution

process. Moreover, the cooperative farming will encourage the farmers to abolish their dividation line in the lands to use modern

technology. Better information can be collected through this process which will reduce the level of exploitation.

03. Development of the storage system: Government needs to invest to build new storage system in the rural areas of

Bangladesh. Even private sector can come forward in such respect as this business is profitable. Ultimate policy should be to build

more cold-storage so that reservation system will develop.

04. Better distribution of information: Farmers are deprived of more surpluses due to the information gap. This is totally the task

of the government to provide timely perfect information about the price of the products in the different areas of Bangladesh. This

will help the farmers to make decision regarding the distribution of their output in the areas where the price is high. Agricultural

development department should take steps like miking in the rural areas about the price of the different markets.

05. Stability in the price of agricultural products: Price stability in the agricultural products is important for better security of

the farmers. In fact again government has to take step in such respect. For example, government should buy the extra products if

supply is more than demand so that price will not go down. At the time of less production the government should supply the

initially reserved outputs so that price will not go up. All these will help the price level to be stable in the agriculture. In addition

government needs to protect the sector from the problem of price syndication.

06. Proper marketing network: It will be established to facilitate timely marketing of agricultural commodities. To this end,

development programs will be taken up to promote processing of agricultural commodities and ensure fair prices of crops to both

the growers and the consumers.

- The Department of Agricultural Marketing will be restructured with the provision of required manpower for its smooth

functioning. A separate institution named ‘Agriculture Price Commission’ will be established for preparing adequate marketing

programs, giving proper guidelines and implementation of marketing activities along with strengthening of the Department of

Agricultural Marketing.

C) Distribution related problems: Beyond production and marketing side problem, we are facing distribution side problem too.

Some of those are listed below:

01. Sectoral production: Different agricultural goods are produced in different areas in abundant. In one area one good is

produced and supplied at a higher volume whereas this product is less in supply in other areas. This sectoral production creates

problem in the total distribution process thus the price goes up. On the other hand this sectoral production problem could be solved

if the transportation system is developed. Undeveloped infrastructure and higher cost of transportation cause a distortion in the

demand-supply and pricing mechanism. Moreover, extortion in transportation causes the price level to go up.

02. Differences in purchasing power: Purchasing power is different in different areas of Bangladesh which induces the farmers

to distribute the products in the high income areas to earn more profit. It can be seen that high purchasing areas like the

metropolitan cities get better products than the rural areas. All these differences are quite evidenced in the agricultural sector of

Bangladesh.

Distribution side solutions: Based on the distribution related problems, following measures can be taken:

01. Open market operation by the government: Government should buy the extra products if supply is more than demand so

that price will not go down. At the time of less production the government should supply the initially reserved outputs so that price

will not go up. All these will help the price level to be stable in the agriculture. Government can also introduce food support

programs like food for work at the time of higher price of the agricultural products. This support from the government will provide

a security to the farmers and thus will encourage them to produce and distribute the goods in a better way.

02. Land distribution among the farmers: We have already mentioned that many of our farmers are landless. Government

should take step in such respect to better distribute the lands to the farmers with easy leasing system. Government can lease their

Khas lands to the farmers for 99 years that will make a better distribution of lands among farmers. Moreover, distribution of

government owned haors and water bodies will also encourage the development of the fishery sector.

03. Government’s steps towards solving the problems: We have repeatedly mentioned that the agriculture is a big sector in any

economy and as the return from agriculture is lower than that of industry, government has to take steps for the development of

agriculture. Mainly the development of infrastructure should be the prime focus. So far government took different steps in solving

the problems of agriculture. Some of them are listed below:

a. Subsidy for agricultural development: Government is providing huge subsidy on agriculture. It was suggested by the

economists and policy maker that, it is wise to provide subsidy o agriculture not on subsidy because we can import the fertilizer at

a lower cost than the subsidy we are providing on that. Subsidy of the government is used in fertilizer, irrigation system, storage

system, land conservation, HYV invention, agricultural research etc. 1200 crore taka is allotted as subsidy for fertilizer, electricity

for agriculture and for agricultural assistance. This value is continuously increasing. Moreover 30% cash facility is provided to the

export of agricultural goods. In addition 25% subsidy will be provided on the import price of the fertilizers.

b. Irrigation development program: Government has taken integrated irrigation development program for the development of

agriculture by setting up more tube wells and pumps in the rural areas. Following table will show the area under irrigation by the

government programs in Bangladesh.

Table: Total amount of land irrigated (In Hector)

Irrigation system 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

1. Above-land            

Major irrigation 422656 469575 492666 571243 548347 605570

LLP 645053 647300 761439 764300 766153 838377

Local methods 224172 222000 182240 176280 175200 107000

Total by above 1291881 1338875 1436345 1511823 1489700 1550947

2. Underground            

Deep tube well 522066 524330 581599 583692 583692 654189

Non-deep Tube well 2645474 2673944 2747098 2756558 2778557 3159899

Others 46902 86906 62518 58122 44397  

Total by underground 3214442 3285180 3391215 3398372 3406646 3814088

Total land under irrigation 4506323 4624055 4827560 4910195 4896346 5365035Source: Economic Review-2006, pp. 69.

c. Invention of HYV: In the new agricultural policy government is concentrating on increasing productivity of land through

invention of HYV. Government has included private and other NGOs in this regard. Moreover, agricultural research institutions

like BADC, BRRI etc were given extra allotment for agricultural research process.

d. Credit system restructuring: Government is increasing the amount of credit in agricultural purpose. In 1991-92 the total credit

for agricultural purpose was 798 crore taka and that has become 2851.29 crore in the year 1999-2000. this credit is mainly given to

the subsistence level farmers. In the year 2004-05 a total of 4956.78 crore taka was disbursed from a targeted amount of 5537.91

crore taka. A total credit of taka 5542.21 crore was disbursed in the year 2005-06 by Bangladesh Krishi Bank, Rajshahi

Agricultural Development Bank, four government commercial banks, BRDB and Bangladesh Cooperative Bank.

e. Rent withdrawal: Government has withdrawn rent of up to 25 bigha to encourage the people to invest more money in

agriculture. But to get this facility the land should be under cultivation.

f. Land distribution: Government has distributed Khas land among the landless farmers with the joint effort of NGOs. Moreover,

according to new rule, a person can hold a maximum of 100 bigha of land. The remaining land will be distributed among the

landless farmers.

g. Fertilizer distribution: Government has privatized the fertilizer distribution process already. Fertilizer Monitoring Cell is

established which is headed by the Deputy Secretary. Moreover, Post Landing Inspection team was formed to ensure the better

quality of fertilizer to the farmers.

Review of Previous Agriculture Sector Policy Reforms

The ministry has undertaken successfully a number of policy reforms in the past for which it has received considerable recognition

both within government and its development partner. Agriculture sector, by this time has already achieved the cherished and

desired long term goal of self sufficiency in the production of rice. The major success of the ministry is its unquestioned success in

spurring the growth of crop agriculture while saving considerable amount of local currency through eliminating the subsidies on

fertilizer and also allowing private trade in fertilizer, minor irrigation equipment and seed sector. Structural adjustments started

with the liberalization of different agricultural input delivery systems of public sector, such as-

(a) Liberalization of trade in minor irrigation sector and encourage the private sector for supply of minor irrigation equipment's of

the country. This happened gradually in steps with the removal of restriction of import of small diesel engine in1986-87 followed

by the withdrawal of duty on such imports in 88-89.The subsidy on DTW were removed in 1992and BADC-the government

organization was removed from the procurement and distribution of minor irrigation equipment. These reform measures had a

tangible effect on increasing the demand for irrigation equipment and consequently the rate of increase in area under minor

irrigation.

(b) Privatization of trade in fertilizer with an objective to transfer the fertilizer management and distribution services exclusively in

private sector; Imports of all fertilizers are now being done by private sector except urea. The private sector is not restricted from

importing urea. All fertilizers are being distributed through private sector dealers through their network. The Government is

providing no subsidy on fertilizers at the farm level and is selling all fertilizers at full cost pricing. The government has issued the

revised Fertilizer Control Ordinance in 1995 in consultation with private sector and IFDC for quality control and regulation of

fertilizer prices. This has led to the increased availability and wider adoption of chemical fertilizer at the farm level and economic

activities in rural areas have also increased manifold due to the withdrawal of government from fertilizer distribution.

(c) Liberalization of trade and foreign exchange for enhanced participation of private sector in Agricultural machinery of

agriculture business. The Government has been continually reviewing conditions affecting competitive trade and taking action to

remove barriers.

(d) Liberalization of production, processing, distribution and import of seeds to ensure the participation of private sector seed

dealers in seed industry development. The private sector is now allowed to import any improved germless for research and

development and to develop its own facilities for producing foundation seeds. They are also allowed to import and sale seeds

except five notified crops (rice, wheat, sugarcane, potato and jute). As regard to notified crops, there are procedural formalities to

be observed by the private sector before any import. Private sector has now taken up programs for production of hybrid rice seeds

in the country.

(e) Import of agri-machines, including power tiller, was liberalized - resulting in the positive effect on import of power tiller. The

area under power tiller utilization also grew at about 3.5% per annum after introduction of the liberalization policy.

(f) Structural changes were also made in food supply and management system. Open Market Sale (OMS), procurement of food

grains from the farmers at market prices, abolition of rural rationing system and allowing import of food grains by the private

sector were the measures so far implemented.

Present Agricultural Policy Reform

Crop Production Policy: Although the intensification of food grain production, especially rice-based production system is

apparently profitable from the farmers’ point of view, this approach has appeared to be harmful in protecting the land productivity.

At present, rice covers about 75 percent of the cultivated land in Bangladesh. Area coverage by other crops are as follows: pulses

(4.64%), wheat (3.92%), oilseeds (3.77%), jute (3.71%), sugarcane (1.23%), potato (1.11%), fruits (0.84%) and vegetables

(1.39%). The production system dominated by a single crop (i.e. rice) is neither scientific nor acceptable from the economic point

of view. It is, therefore, necessary to increase the cultivation and production of other crops. However, considering the increasing

demand for food grains and with a view to ensuring food security, production of rice will continue to get priority in the food grain

production programs. In order to increase rice production, supportive programs will be taken to raise per hectare yield through the

use of modern technology and improved cultural practices along with the increased use of HYV seeds.

In Bangladesh, only 4.14 percent of net cultivable land remains as current fallow which means that there is hardly any scope for

increasing cultivable land. Currently, cropping intensity is around 185 percent. Thus, the only possible option for increasing

agricultural production is to increase both the cropping intensity and yields simultaneously. In this respect, policies adopted by the

government are to:

take supportive programs for inter-cropping in a field instead of single cropping; and 

take appropriate measures in reducing the gap between potential yield and farmers’ realized yield of different crops to

raise the present level of production significantly.

Crop diversification is one of the major components of crop production policy. For the overall development of crop sector,

special emphasis will be given to crop diversification program under the crop production policy. The government policies in

this respect are as follows:

Area under wheat has meanwhile reached at 0.8 million hectare. Given the potential for expanding wheat acreage, efforts

will continue to encourage farmers to grow more wheat.

The production of maize has shown prospective results in last two years. Maize has also gained popularity as human food

side by side with the poultry feed. Public sector procurement of maize has been introduced like rice and wheat in order to

encourage farmers in maize cultivation. The efforts for increasing area and production of maize will be strengthened.

The program for increasing area and production of other crops, e.g., potato, pulses, oilseeds, vegetables, fruits and spices

will gradually be extended under the crop diversification program.

Production of different cash crops including jute, cotton will be increased and efforts will be made to expand their

multiple uses.

Special development programs will be taken with a view to increasing production of potential crops suitable for the

coastal areas and the hill tracts.

Seeds Policy: At present, only a small portion of the required quality seeds for different crops is supplied by the Bangladesh

Agricultural Development Corporation (BADC). Rest of the seeds are produced, preserved and used under private management,

especially at the farmers’ level. Government has already declared the National Seed Policy with the objective of promoting seed

industry in the private sector. In pursuance of the seed policy, government has revised the Seed Act of 1977 and also formulated

seed rules in the light of the Seed Act (Amendment) 1997. In this respect the government will follow the policies mentioned

below:

In the light of the prevailing seed act and seed rules, the government will retain the opportunities already provided to the

private sector for production, import and marketing of seeds side by side with the public sector.

Appropriate mechanism will be devised to improve the technical skill of the private sector with regards to seed treatment,

seed preservation at specific moisture level and seed storage management so as to ensure the highest quality of seeds.

The act of favorable policy preparation, technical supports, training, etc. will be strengthened in order to encourage

private sector participation in seed development and seed preservation.

Improved technology-based seed production, seed multiplication and related farm activities have been declared as

industrial enterprises in the present industrial policy. For the development of seed industry this policy will be continued and

adequate government support will be provided.

In addition to the production and marketing of seeds in the public and private sectors, the policies  relating to seed

production and seed preservation at the farmers’ level will continue so that the farmers can easily use good quality seeds. The

government has, meanwhile, taken initiative for strengthening the activities of BADC in this regard. Necessary steps will be

taken during the Fifth Five Year Plan period to raise BADC’s seed distribution program to the extent of ten percent of the total

demand.

Already introduced seed buffer stock system will continue to ensure the normal supply of seeds of major crops at the time

of natural calamities or any other disaster.

The conditional opportunity that has already been given to the private sector to import hybrid rice seeds for increasing

rice production will be further consolidated on the basis of performance analysis. But, special care will be taken to ensure that

the private sector produces hybrid seeds locally and that the hybrid seeds offer higher yield and more financial benefits to the

farmers on a sustained basis.

At present, Seed Certification Agency (SCA) is the only legal authority to certify seeds. With a view to increasing supply

of quality seeds, private sector agencies participating in the seed production programs will be allowed to market their

"truthfully labeled seeds" side by side with the government agencies. The Seed Certification Agency will have the legal

authority and responsibility to closely monitor the entire seed labeling and certifying process of the respective private sector

organizations. The Seed Certification Agency will take membership of the International Seed Testing Association (ISTA) so

that the opportunities for exporting internationally standard seeds are created.

Fertilizers Policy: Chemical fertilizer is one of the main inputs required for increasing crop production. The expansion of modern

agricultural practices together with intensified cultivation has led to an increasing demand for fertilizers. It is, therefore, necessary

to ensure timely supply of fertilizers to match the demand. As a result of unbalanced use of fertilizers, the fertility of land is

declining on the one hand and the potential yield is not achieved on the other. In this respect, it is extremely important to adopt and

implement such policies so as to encourage the farmers in using balanced fertilizers and at the same time protecting the soil

fertility. As a broad principle of fertilizer use, a sustained increase in the productive capacity of land and its preservation in the

long-run will get priority over the immediate yield improvement. In order to strengthen fertilizer management, following policies

already adopted by the government will be continued:

Steps already taken to popularize the use of granular urea as a means of reducing excessive use of urea fertilizers will be

strengthened.

The rules on 5-grades already introduced by the government in order to ensure the use of blended fertilizers will remain in

force.

Enforcement of concerned rules and regulations will be strengthened in order to ensure good quality of fertilizers at the

farmers’ level.

Appropriate programs for training, field demonstration, publicity, etc. will be extended further so as to encourage farmers

in using balanced fertilizers. 

The use of organic manure, bio-fertilizers and compost will be encouraged. Measures will be taken to upgrade agricultural

extension, training and motivational work at the farmers’ level so that the farmers can follow suitable cropping patterns to

maintain the natural balance of soil nutrients.

Production, importation, sales and distribution of any fertilizer harmful to soil environment will be banned.

Distribution system of fertilizers in the private sector will continue. But, the public sector will import fertilizer, if

necessary, to ensure its supply and availability in time.

The District and Thana Committees already formed by the government will continue to monitor fertilizer distribution at

the farmers’ level.

The present practice of fertilizer buffer stock system will continue.

Realistic steps will be taken to ensure the use of phosphatic and potassium fertilizers as well as various micro-nutrients. The use of

DAP (Di-amonium Phosphate) fertilizer, already introduced by the government, will be encouraged in this regard.

The Soil Resources Development Institute (SRDI) will be strengthened and soil testing programs will be started in five-year phases

based on soil and Agro-ecological Zones (AEZ). Besides, the use of existing ‘Soil Health Card’ will be further extended for

improving soil quality.

Future Agricultural policy

As price of rice and jute has fallen, the farmers are discouraged to produce more rice now. Now our agriculture is shifting towards

demand management policy where we are trying to create additional demand of the agricultural products by taking some

marketing and pricing strategies. Even we were thinking about to export rice. Following are the new and future agricultural policy

of Bangladesh:

1. Price support policy: Government is encouraging the farmers to produce more by buying the additional or extra supply

beyond the total demand to stabilize the market price.

2. Export: Trying to expand market as our cost of production is low due to cheap labor.

3. Crop diversification: Government is encouraging the farmers to produce cash crops as the price of the food crops are

going down. Side by side we are encouraging to have more poultry and cattle production.

4. Increment in allotment: Government is continuously increasing the amount of budget for agriculture.

Government steps in Agricultural Modernization /Mechanization:

The serious scarcity of draft power necessitates the use of mechanical power for agricultural production activities. The government

has, therefore, attached special importance to agricultural mechanization. To encourage the use of machines in agriculture, testing

and standardization restrictions have already been withdrawn in the free market distribution system. As a result, the use of

agricultural machinery has increased significantly and immense potential is created for further increase. In order to accelerate the

current trend of agricultural mechanization, various facilities including exemption of import duties on agricultural machinery have

been provided and the same will continue.

The following steps will be taken to promote agricultural mechanization:

The type of agricultural machines or the level of mechanization needed in any region depends on the socio-economic

condition of the people, number and quality of draft animals and availability of agricultural labor in that region. Measures will

be taken to collect and publicize these information through the mass media in order to attract private investment in this sector.

In order to gradually reduce dependence on draft power, efforts will be made to grow farmers’ interest on mechanization

as well as to provide credit facilities. To achieve this goal, information relating to increasing potential demand for and profitable

investment in agricultural machinery will be publicized through the mass media so that the private sector can play an active role

in creating a competitive market. 

Despite increasing use of mechanical power in agriculture, the use of animal power will continue in future depending on

the socio-economic conditions of the farmers in different regions. Therefore, improved ‘power delivery system’ (meaning

delivery of energy from the shoulder of the draft power to the agricultural implement) will be evolved through research so that

the scarce draft power can be utilized more efficiently.

Production and import of agricultural machines will be specially encouraged so that the farmers can procure machines

from the market according to their choice and convenience. Machinery workshops and industries engaged in agricultural

mechanization activities will be provided with appropriate taxes/duties facilities for the import of necessary raw materials. This

is expected to keep the machine prices within the purchasing capacity of the farmers.

To speed up the process of agricultural mechanization both producers and users of machines will be provided with

necessary credit supports.

Use of machines, which are usually expensive, is not often affordable by the individual farmers. In order to popularize

mechanization in addition to the use of draft power, farmers will be motivated in purchasing or taking lease of agricultural

machines through the cooperatives. Formation of such self-motivated cooperatives will be encouraged and necessary supports will

be extended to mechanized cultivation based on cooperatives.

Agricultural Holdings in Bangladesh

In Bangladesh most of the agricultural holdings are small. Though it is said that, we have some large forms; that is actually for

biased definition of agricultural holding. If compared with the developed countries, most of our forms are marginal in size having

less production. Probably that is the main reason for which mechanization was not implemented in BD agriculture. for example ,

average size of land holding by farmers in Bangladesh was 1.43 hector and .91 hector in 1960 and 1985 respectively .that means

average holding of land is declining , reflecting that BD has mostly small agricultural holdings. Still we are dividing the total

holdings in two groups:

1. Small farms: Agricultural holdings whose area size is from 1-21/2or less than that is characterized as small farms. Following

are the features of small farms:

Traditional cultivation method for subsistence

Mainly family based laborer

Use of land as many time as possible

In dry season laborer work in non-agri sectors.

Avoidance of modern technology.

Use home produced inputs.

Marketable surplus is almost zero.

Advantages: Following are the advantages of the small farms

Least capital investment

Productivity of holdings remain fertile

Level of waste is low due to own supervision

Intensive cultivation by owners’ provide maximum production by labor

Use of local invention.

Disadvantages:

small holding thus no mechanization causing less production .

no division of labor , so no specialization .

no competition among farmers

zero marketable surplus thus less contribution in GDP

for credit only land is used as mortgage which results to a landless farmer

no share cropping , rather one-crop production .

Side by side some other problems are seen in small sized agricultural farms. Like

Problems of investment

Zero use of HYV

Credit unavailability due to their uncertainty in repayment

In efficient use of labor in absence of technology

Problem of mechanization due to diseconomies of scale and lack of investment.

Marketing and distribution problem is there.

2. Large farm: Agricultural holdings having area greater than 3 hector (3+) is called large farm.

Characteristics: following features are observed:

Mainly hired labor and few family labor

Mainly capital intensive /use of technology

Take marketing initiatives to sell the products produced

Use of HYV and bio-chemical technology

Advantages: Large farm is supported for the following reasons:

contribution in GDP is more

division of labor provides specialization thus maximum production

encourage to mechanization

production cost is low due to economies of scale

more capital and labor ensures more production ‘diversification of crops

more employment is possible too

Disadvantages: Some people are against large farm as:

it is capital intensive

hired laborer are less intensive to produce more

if laborer are inefficient , loss is ultimate result

no intensive cultivation rather extensive one .

Comparison between small and large farm:

1. Production in large farm is high due to its intensive capital. But as Bangladesh lacks capital, better go for smaller one.

2. In large farm, workers don’t get incentives to work efficiently as they are wage based. But in small forms they provide

maximum as full will be consumed by them.

3. In small farms, we can observe intensive cultivation which reduces risk .but in large farms, extensive cultivation may increase.

4. Large forms can create employment but level of skill is high in small sized farms. For lower skill due large farms could not use

modern technology.

5. Initially production cost is low in larger farms than the smaller one. But use of machines and fertilizer gradually reduce the

fertility, which will increase the cost of production.

6. Use of machines can even reduce the employment in large farms