agriculture transformation

8/10/2019 Agriculture Transformation

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NDEPENDENT UN VERS TY,

BANGLADESH

Economy of Bangladesh

EN !!"

Name: Deepita MuhaimenID: 0730149


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Introduction

I chose the topic agriculture transformation in Bangladesh because of its importance both

practically and theoretically. Agriculture plays a pivotal role in Bangladeshs economy and in the lives of

the vast majority of its population. While this crucial sector accounts for about one fourth (19.!" of

Bangladeshs #ross $omestic %roduct (#$%"& and '! of the national employment& it faces serious

challenges posed by lo productivity and the decline of land availability. )he situation is further

aggravated due to global arming scenarios. )he #$% share of individual sub sectors are about 1'! for

crops& '! for livestoc*& +! for fisheries and ,! for forestry.

Bangladesh is the most densely populated country in the orld (9+' person-s *m". )he

per capita arable land is only /./+ ha. In 19/1 an average of ,1 persons inhabited one suare *ilometer.

By 19+1 that number had increased to '1, per suare *ilometer and& in 1900& reached 0,1. By the year

,///& population density as projected to eceed 1&/// persons per suare *ilometer. While there have

been significant achievements is family planning& the population continues to gro at a rate of ,./,! in

the year ,//0& the level of urbani2ation remains lo at ,/!. )his leaves 0/! of the country3s total

population of about 1,/ million to live in the rural areas hich primarily depend on a poorly developed

agriculture for livelihood. )he rapid groth in population ith the decline in cultivable land threatened to

be a big problem for Bangladesh.

At present& Bangladesh has a population of about 1', million. )he total

#eographical area of Bangladesh is about +&/// suare miles. (14'&990 suare

5ilometer" out of hich about 9 million hectares are cultivable land. But every year the cropland is

shrin*ing for human settlement. It is estimated that the groing population pressure ill use up +/ per

cent of the countrys cultivable land by ,/,+.6rbani2ation& industriali2ation and acuisition of land by

the government for different purposes have been causing negative impact on the life and conditions of the


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peasants as ell as socio7economic scenario of the country. 8ast areas of land are also ta*en up by the

mighty rivers of Bangladesh. oreover& land is fragmented every year in rural and urban areas due to

groing population and the la of inheritance. :very person or*ing in the agriculture sector no ons

only an average of /.1, hectares of cropland. According to the classification of land& out of the total area&

' per cent are being used for cultivation hile 4.'0 per cent for rural and urban housing and the rest

includes forest ; cultivable aste land.

In Bangladesh& most of the people living beneath the poverty line are farmers. )hese are the

people to gro the food that feeds us& but they themselves go hungry. )his is mostly because natural

resource tends to an ecessive amount of labor in its etraction. )his causes a misallocation of labor so

that there is a productivity loss.


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Literature:

any studies have been done on Bangladesh agriculture& and the folloing states some of the major

findings and thoughts of economists or*ing in this sector.

Ren Dumont(arch 1'& 19/4=>une 10& ,//1" as a


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$r. ic Chand& :ecutive $irector& Australia Couth Asia esearch Dentre&

Australian Eational 6niversity& presented his paper onEconomic Reforms and the Poor: Unearthing

New Linkages.

$r. Chand argued that causality in groth from agriculture7to7industry could occur through both

production and consumption lin*ages. Fn the production side& groth in agricultural output increased

supplies of ra materials for processing& stimulated the demand for industrial inputs such as fertilisers

and pesticides& pump sets& tractors and agricultural euipment& and raised investment. Fn the

consumption side& higher agricultural incomes raised demand for consumer goods produced by the

manufacturing sector. )hus output& employment& age levels& incomes and investment ere raised in the

manufacturing sector.

?e also argued that causality in groth from manufacturing7to7agriculture operates through

higher employment& ages& and incomes in manufacturing. )hese led to increased demand for

agricultural products. )hus groth in manufacturing output led to higher output& employment& age

levels and incomes in agriculture and might stimulate increased investment in agriculture. )hese

relationships ould be stronger if the location of manufacturing as rural based and if it as supported

by public investment& particularly in physical infrastructure lin*ing manufacturing locations ith rural

mar*ets. In this process& epanding availability and variety of consumer goods in rural areas might also

act as a stimulus to the aspirations of rural producers and thus indirectly lead to further epansion of

agricultural production provided profitable opportunities eist. )his again as all the more li*ely if

transaction costs of mar*eting ere loered in rural areas ith improvements in infrastructure& and if

manufacturers of consumer goods target groing rural mar*ets.


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$r. ic Chand finally argued that absolute poverty could be reduced more speedily in the

future provided direct reforms are implemented hich ould encourage faster groth rates of

agriculture and of labour intensive manufacturing.

ore rapid groth in each sector ould not only increase employment and age levels ithin

the sectors but ould strengthen unidirectional groth relationships beteen the sectors. )o the etent the

incidence of bi7directional relationships could be increased& synergistic groth of both sectors as

possible& further enhancing the groth contributions of each sector. )he addition of the contribution of

strong sectoral interrelationships could significantly raise the overall groth rate of the economy.

According to ahbub obbani& Calah 6ddin Ciddiuee& Courovi Gaman& and ?iroshi Ea*amura&

faculty members in Chinshu 6niversity& for a developing country li*e Bangladesh& self sufficiency ill

remain the *ey focus of food production strategy& in order to meet food deficiency. Bangladesh

agriculture is no in the process of transforming from subsistence farming into commercial farming.

Bangladesh has no entered into the :uropean mar*et of eports for vegetables and other high value

crops. )his process opens a vista to private sector investment in the areas of production of high value

crops& seeds (esp. hybrid seeds"& agro7processing enterprise etc. An investigation by


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4"


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" Agricultural mechani2ation

J" %est management

0" #reater co7ordination beteen the government& E#Fs and private sectors

9"


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sufficiency in food production. ?oever& due to eather conditions the production of rice and heat

fluctuate greatly& forcing Bangladesh to import food from the international mar*et or turn to international

aid. Bangladesh imported 1. million tons of heat (mainly from the 6nited Ctates" in ,/// in order to

meet the demand in the local mar*et.

>ute& often called the @golden fibre@ of Bengal& is the main eport7earner for Bangladeshi

agriculture& as Bangladesh remains the orld3s second7largest producer of jute (after India" and the

orld3s largest eporter of fiber. >ute is traditionally used for the fiber of carpet bac*ing& burlap bags&

cheap paper& and various other purposes. Its importance for the Bangladeshi economy comes from the

fact that almost ' million farms are involved in jute production. In 1999 Bangladeshi eport earnings

from jute amounted to 6CM++ million& ith the country producing J,/&/// metric tons of jute& although

this is about one7third of the jute production of the middle of the 190/s. )he decline in jute production is

attributed to declining orld prices for this crop and to farmers sitching to other crops.

)able 1HAgriculture of Bangladesh at a glance( Agriculture census ,//0"H

C. Eo. $ata Item Eational 6rban ural

1 )otal $elling?ouseholds ,0&J/ '&'1+ ,+&''+

, Agricultureabor

?ouseholds

0&9,J J0 0&049

%ercent of )otal?ouseholds

'1.14 ,.'+ '4.9/

' ?ouseholds ithno on land

4&4JJ 1&,,1 '&,+


1+., '.0' 1,.04

4 )enant?ouseholds '0&410 4/ J&9+0


,9.' 1'.0 '1.'9

+


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?ouseholds

?ybrid Boroice Dultivators

,&JJ+ +/ ,&J,+

%ercent of


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Data Analysis

Overall decline of agricultural shares in GDP

In 19J/& Bangladesh3s agricultural sector consisted& mainly rice and jute. ice is the staple food in

Bangladesh and dominated three7 fourths of the total cultivable land. ice as also a major source of

income and employment fir the foreign echange that helped the finance of development activities. )he

groth in the agricultural sector centered on the groth in the increase in rice production. But gradually&

the overall share of agriculture in #$% is declining.

:ngles la states that as income rises& food consumption does not increase in the same proportion. As a

result& most people in Bangladesh living belo the poverty line are farmers.

1" By :ngles la it shos that share of agro in #$% ill continue to decline. It indicates that

people ill have to move out of this sector.

," Co people ill have to move into industry and service sector

'" %rebisch thesis states that terms of trade deteriorates in rural areas compared to urban areas. )he

price of agro products in actually decreasing in real terms. N financial repression( high interest

rate" O deteriorating term of tradeP transfer of assets from rural areas to urban areas.

Another factor responsible for the poverty among farmers and the decline of agro share in #$%& is

capitalism. Dapitalism leads to a decrease in cost (economies of scale" and hence an increase inproduction. Cince most crops are cultivated outside the cities and in rural areas& economies of scale is not

possible as rural area can not underta*e massive production& or any production ecept cottage industry&

because there are not enough people in rural areas. )he lac* of people ma*es it impossible to enjoy

economies of scale& and scope and neither of these are possible in cottage industries.


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Cectoral shares of #$% in Bangladesh at current prices(as !"

CourceH BBCHCtatistical Kearboo* 190 )able 11.+& 199 )able 11./+& ,//0

Agriculture Drops


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Rural to urban migration

In recent years& Bangladesh has also seen an eplosive go groth of urban population fuelled by

never7ending and increase in migration rural of or*ers to the urban areas. $espite the green revolution&

the rural areas cannot offer jobs to the young people of today ho have come to epect ealth. )hey

have come to urban areas in large numbers to loo* for jobs that are not available. )he ?arris7)odaro

migration model eplains this nicelyH

euilibrium real age (rural" P epected urban age

:pected age P age Q probability of employment

%roblem ith modelH does not consider factors behind productivity difference and age differenceR

assumes that rural and urban age ill be same. It does not recogni2e the productivity differential oing

to high density of infrastructure in the cities ith economies of scale& scope and nearness.

Bangladesh eperienced a rapid groth in urbani2ation since 191. )he proportion of urban population

increased gradually from +.,! in 191 to ,/! in 1991 ith an average groth of about J! per. year.

Inability of rural economy and agriculture to absorb the groing population& a drastic fall in the

availability of arable and cropped land& landlessness& fall of real income pushed rural people to migrate to

the cities. 6nfortunately majority of the recently migrated people could not be provided ith good job in


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the formal sectors and accommodation in the cities and most them are living in urban slums. )he urban

areas epanded in an

unplanned ay ithout

adeuate infrastructure and

public amenities and facilities

including housing& ater and poer supply& sanitation& aste disposal rather increasing air and ater

pollution in the city areas.

ural to urban migration in Bangladesh

CourceH population census ,//1 table '.

Year

Both

Sex Male Female

1984 4.29 3.82 4.81991 5.62 4.29 5.73

2001 11.98 11.67 12.13


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)he overall performance on the agriculture sector in recent years can be noted in the folloing tableH

CourceHBBC& Ctatistical yearboo* 190& 9&,//0

Fverall trendH

Agriculture Drops


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)he non =crop agriculture sectors are forestry fisheries and livestoc*. )he dramatic groth in the

non7crop agriculture sector becomes visible since the late 190/s& stirred by the accelerated economic

groth. )he high income elasticity of demand for the non7 crop agro products as highly visible in the

late 199/s. )he groth in the crop sector as accelerated to 4.' percent compared to 4./ percent for the

late 199/s and complete stagnation in the early 9/s. An important point to note that ould have

implication for changing strategies and policies for promoting and sustaining future development is that

agriculture sector is no much more diversified than at the time of independence. )he share of livestoc*&

fisheries and forestry in agriculture value added as nearly ,/ percent during 19J'7J4 by 1990799 they

contributed 4, percent to agriculture incomes.

"ommerciali#ation$ moneti#ation and mechani#ation

In terms of employment& Bangladesh still consists of mostly farmers. Agriculture is a subsistence

occupation. %eople produced hat they could consume. Eot much buying and selling.


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)he serious scarcity of draft poer necessitates the use of mechanical poer for agricultural

production. )he govt. has therefore attached a special importance to agricultural mechani2ation. )he

folloing steps are being ta*en by the govt. to promote agriculture mechani2ationH

1" In order to reduce dependence in draft poer& efforts ill be made to gro farmers interest on

mechani2ation as ell as provide credit facilities.

," %roduction and import of agricultural machines is specially being encourages so the farmers can

procure machines from the mar*et according to their choice and convenience.

'" achinery or*shops and industries engaged in agricultural mechani2ation activities ill me

provided ith appropriate taes- duties facilities for the import of ra materials. )his is epected to

*eep price ithin purchasing capacity of farmer.

echani2ation in agro production process has been recogni2ed as a potential contributor for

advancement in rural economies through rural income generation. ost farms no use machine for

land preparation of potatoes (J,!"& folloed by Boro rice (+!" and aman rice (+!". Irrigation is

mainly dependent on the poer7operated pumps.

)he effects of mechani2ation areH

Increase yield per unit of land and hence to increase in cropping intensity through timeliness of

cropping

Increases yield through improved ater control& better soil preparation and better harvesting and

post7 harvesting processing.

educed cost of cultivation and add value to production.


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Irrigation

Dhemical spraying

?us*ing and milling

Non%farm sectors of rural areas

A significant development in the rural economy relates to changes in livelihood systems

and epansion of rural non7farm sector. In Bangladesh& the labor force gre at a much higher

rate than the population and demand for labor. $uring 19171991& the total population increased

from +/.0 million to 111.+ million = an increase of 1,/ percent = hile the labor force gre from

1.9 million to +1., million = an increase of ,/' percent. In terms of employment& agriculture

as the largest sector and recent employment generation has ta*en place mostly in the informal

sector. ()his indicates a groing informali2ation of the labor mar*et. "

In rural areas& dependence on agriculture for livelihood shos declining trends& ith increasing

importance of rural non7farm activities.

Table 3: Annual Growth Rates of GDP

(%ercent"

Item 1!"#1 1!"#1$ 1$#1% 1

A' GDP "'" 3' "'% ('"

1. Agricultural #$% ,.' ,./ 1., 4.0

,. Eon7agricultural

#$%

+.J +., .+ +.9

)' Per *a+ita:

1. #$% ,.+ 1.9 ,. '.0

,. Agricultural #$% /.4 /.1 (7" 1.1 ,.4


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A.#$% groth.

In 199J& percent of the earning members of rural households ere dependent on agricultureH

,0 percent in farming activities and '+ percent as agricultural labor. Fnly 4 percent ere

involved in other agriculture e.g. fishing or livestoc* raising as principal occupation. )he non7

agricultural activities engaged '4 percent of the rural households. )hese activities comprised

petty trade& shop *eeping and business& trade and transport and other non7farm activities. In the

case of rural poor households& nearly J1 percent ere dependent on agriculture& of hich 4J

percent or*ed as agricultural labor. )he average monthly per capita income from non7

agricultural activities as higher compared to agricultural occupationsH 10 percent for all rural

households and 11 percent for poor households. )he average per capita income of poor

households& in both agricultural and non7agricultural occupations& as substantially lo.

)he epansion of non7farm sector has& hoever& not led to much increase in per capita income.

)he labor force has increasingly been pushed out of agriculture into lo7productivity self7

employment activities in the non7farm sector. In 199+-9& more than J9 percent of those

employed in the informal sector or*ed as Sunpaid family or*ers or ere Sself7employed


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(BBC 1990b". When non7farm activities supplement farm employment& even a lo return

increases household income.

Education and urbani#ation

:ducated people go to cities - educated people constitute the largest stoc* of capital of a modern

commercial nation. )o get a job in the city& because of the high level of competition& education is

essential. :ducation euali2es opportunity and liberali2es the culture and political system. It brings about

institutional euilibrium. :ducation also promotes gender euity and caste assimilation. With education&

efficiency and productivity increases. As more and more people get education& they ill move to the

cities from rural areas in search of jobs ith comparatively higher ager than in the rural areas.

Donseuence of education on fertilityH 6rban girls ant to finish studying and or* for a hile

before they settle don ith a husband and children. )his delays child bearing and by the time the girl

settles don& more or less 1/ years of child bearing age has passed ta*ing ith it the opportunity to have

to J children.

?igh cost of childbearing - fertility reduction.7 urban parents ant to ma*e their children fit for

urban life by giving them proper education& healthcare facilities and other privileges in life. )his is costly

both in terms of time and money. )hus urban parents have less children. )hey focus on Tuality instead of

uantity.

ConclusionH


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After thousands of years of very little noticeable groth& the economy of Bangladesh began to

gro at fast pace since the mid 199/s& at a rate nobody ould have imagined possible. )hough the

traditional economy began to gro sloly since the beginning of the ,/ thcentury ith the advent of the

railays& and ith some amount of industriali2ation& the economy began to gro at a faster pace after the

end of colonial domination in 194J& hen the7then %a*istan government undertoo* various planned

efforts to achieve development. A notable achievement in the %a*istan era (194J719J1" as the

beginning of green revolution& coupled ith a health revolution that spread antibiotics and other

medicaments idely to bring about drastic declines in mortality. )his meant that the population began to

gro very fast.

Bangladesh as in desperate need of foreign aid and the donor community did not li*e the idea of having

to *eep giving aid.

)hen a series of events created an economic revolution. Cince the mid 199/s& the economy pic*ed

up steam and by ,//+ reached groth rates in ecess of +!. )his has led to transformations in almost all

spheres of economic activity. It has also struc* at the root of traditional culture and politics& stirring up

severe political unrest and confrontation& an outburst of frantic efforts to create ne social institutions

especially non7government organi2ations (E#Fs" and may have engendered a militant fundamentalist

bac*lash against the rapid encroachment of ideas alien to the traditional rural society.

)he agricultural sector as the traditional sector that eisted for thousands of years& ith very

little change in orientation or structure or productivity. It as largely subsistence oriented& based on

family farming ith some amount of paid or*& and used traditional technology. Its technology as

dependent on muscle poer of people and farm animals (cos and horses". Dottage industry as an

appendage of the agricultural sector& and survived for thousands of years ith very little epansion in


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productivity or social prestige. )raditional smiths and potters& eavers and cobblers and carpenters and

such others ere minorities ith little social influence on the overhelmingly peasant7centered economy.

Agriculture as the bac*bone of the economy& contributing to nearly all the income& ith little from

industry and service sectors. Indeed& the cottage industry model as even more limited in terms of

servicesH barbers or fishers or ferry carriers or peddlers ere often single person& at most ith some

family tradition in the occupation.

)he old structure has changed beyond recognition& beginning ith the green revolution in the mid sities

and then the financial transformations in the mid nineties leading to increasingly commerciali2ed

agriculture.

)here is significant transformation of the subsectoral structure of agriculture. )he e production of

staple food grains (rice" as dominant before the transformation began& but no fisheries have gron

significantly faster& and commercial poultry sub sector has shon remar*able groth. )he dairy

component of the livestoc* subsector remains small oing to paucity of gra2ing pastures& and yet

Bangladesh is one of the densest habitats of cattle& ith about ,/ million cos. )he forest subsector has

largely stagnated& especially ith the rapid advent of plastic.

>ute as the principal commercial nonfood crop in the ,/ thcentury& after cotton enjoyed the long

era of prominence for nearly to thousand years. ?oever& the production and acreage of jute has

declined& especially oing to competition from much cheaper plastic and polythene based substitutes.

>ute is no longer the most important agrarian eport. )his place has been ta*en by shrimp and other fish.

In addition to oderni2ation&(the green revolution and mechani2ation"& plus the groth of fisheries and

poultry& the rural economy and society have undergone very significant transformations. )his occurred

after thousands of years of little change& beginning after the end of colonial rule in 194J& and ith


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significant government effort and some foreign aid. )hough the overall nature of the economy no is

movement aay from rural areas and agricultural sector into urban areas and service industries. What

as a subsistence economy before& is fast becoming a commerciali2ed one.

#reen revolutionH use of hybrid seeds& ?K8& chemical fertili2ers& insecticides& better irrigation& and

cropping techniues.

echani2ationH use of tractors instead of ooden ploughs pulled by cos.

)he rural non7farm sector covers the rural industries and services. )hese implant urban7based and

urban7oriented enterprises& and thereby integrate the rural economy ith the urban. ost rural industries

are devoted to grain milling and food processing& ith a tendency to acuire urban features as the mils

tend to locate around road netor*s and commercial hubs. )he most important difference from the past is

the commercial orientation of this ne rural feature.

A significant element of the rural non7farm sector is the technology7based services of agro7

machinery and the rapid spread of electrical appliances ith the progress of rural electrification. 8arious

rural groth centers have emerged around commercial hubs. #overnment efforts have led to nationide

netor*s of schools and hospitals ith associated services. )he advent of cellular phone has added to the

tempo of this transformation.

Reference


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Bangladesh Bureau of CtatisticsH &tatistical 'ear (ook$ )*+,-

Bangladesh Bureau of CtatisticsH &tatistical 'ear (ook$ )*./-

Bangladesh Bureau of CtatisticsH &tatistical 'ear (ook$ )**/-

Bangladesh Bureau of CtatisticsH &tatistical 'ear (ook$ 011/-

Bangladesh Bureau of CtatisticsH &tatistical 'ear (ook$ 011.-

Bangladesh Bureau of CtatisticsH &tatistical Pocket (ook of (angladesh$ 011+-

Bangladesh Bureau of CtatisticsH &tatistical Pocket (ook of (angladesh$ 011.-

Bangladesh Bureau of CtatisticsH2oreign rade &tatistics of (angladesh$ 011+%1.-

Bangladesh Bureau of CtatisticsH &tatistical (ulletin of (angladesh$ 3arch 011.-

Bangladesh Bureau of CtatisticsHEconomic 4ndicator of (angladesh$ 011.-

Bangladesh Bureau of CtatisticsHEconomic &ituation of (angladesh$ 011.-

)he World Ban* Fffice& $ha*aREconomics and Governance of Nongovernmental Organi#ations in

(angladesh$ 5!ril 011/-

World Ban*H(angladesh Develo!ment &eries-

)he World Ban*H4m!roving the 4nvestment "limate in (angladesh$ 6une 0117-.

acroeconomic policies and institutions in Bangladesh.

agriculture transformation

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