Pushing agriculture forward

Dr. Quazi Shahabuddin
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One of the dominant features of Bangladesh economy is its structural change with a declining share of agricultural GDP over the last four decades. The share of agriculture has declined from about half of total GDP during the 1970s to about one-third during the 1980s. The share has declined further during the 1990s and the current decade from about 29 per cent in 1990 to about 25 per cent in 2000 and further to about 21 per cent in 2008. Despite such declines, the economy is still predominantly agrarian. The sector still provides employment to about half of the country's labour force. If only rural areas are considered, the percentage of labour force dependent on agriculture will even be larger. Moreover, agricultural production provides critical linkages for development of rest of the economy. The performance of agriculture thus has an important bearing on employment generation, food security and poverty alleviation in the country. In other words, while the declining share of agriculture in national income is a natural process, the development priorities still need to recognise the primacy of agricultural growth in providing food and income security to rural households in Bangladesh.

Review of agricultural growth performance and past policies
As mentioned earlier, a significant feature of Bangladesh economy is the declining share of agriculture in GDP (Table II.1). Within agriculture, crop and horticulture is the dominant activity, claiming about 56 per cent of agricultural GDP in 2008, although the share has declined over the years. The share of non-crop agriculture, on the other hand, has increased from about 35 per cent of agricultural value added in 1990 to about 44 per cent in 2008. This is most pronounced in fishing: 22 per cent in 2008 as compared with 15 per cent in 1990.

The pattern of agricultural growth, disaggregated by sub-periods and sub-sectors is presented in Table II.2. An examination of the growth rates by sub-periods reveals that although both GDP and population displayed upward and downward trends respectively, agriculture exhibited fluctuating growth over the 1990-2008 period. Agriculture grew at a rate of only 1.6 per cent during 1990-95, which was lower than the population growth during the period. However, the growth rate picked up significantly (4.7 per cent) during 1996-2000, though it has declined to 2.8 per cent in the current decade (2001-2008). This can largely be attributed to significant acceleration in growth of crop and horticulture during 1996-2000. In fact, this sub-sector registered negative growth during the first half of the 1990s.

Anisur Rahman

Foodgrain production
Bangladesh has made significant progress in food grain production, especially in rice production since independence. Total food grain production (rice and wheat) more than doubled since 1971, increasing from around 10 million tons in early 1970s to 25 million tons by late 1990s and further to about 30 million tons in 2008. This phenomenal increase can largely be attributed to rapid dissemination of modern technology, otherwise known as the Green Revolution, over the last three decades or so. In particular, this can be attributed to two specific factors: first, substitution of local varieties of rice by high yielding varieties during the three crop seasons aus, aman and boro, specially in the boro season, and second, increase in acreage under boro rice which has higher yield compared to aus and aman. It may be emphasized here that rice dominates not only food grain production, but overall crop production in Bangladesh, with an acreage and production share of about 75 per cent and 70 per cent respectively. It is, therefore, not surprising that the growth performance of crop sub-sector is largely dictated by the production performance of rice in the country.

Non-rice crops
The new seed-fertiliser-irrigation technology favoured rice and wheat production in Bangladesh. In the process, other crops including coarse grains, pulses, roots and tubers, oilseeds and spices that used to occupy a significant amount of cropped area became less attractive in terms of their profitability from farmers' point of view. The notable exceptions, however, are vegetable and potato. These crops grown in less favourable production environment, were largely bypassed by the Green Revolution. As a result, production of some of these crops, e.g. some minor food grain, pulses, oilseeds, and spices have either exhibited a declining trend or could not keep pace with the population growth during the past decades.

The production of these minor crops needs promotion to reduce import dependency, if not for complete import substitution. Moreover, these crops provide substantial opportunities for value addition after processing and for creation of employment opportunities in the rural areas. Several studies of comparative advantage demonstrate that considerable scope exists for crop diversification through promotion of non-rice crops in Bangladesh.

It may be interesting to examine whether the actual growth performance of different crops is consistent with the comparative advantage of producing these crops domestically, either for import substitution or for export. These are shown in Table II.3. It is observed that except for pulses and oilseeds, the crops (such as HYV boro, HYV aman, wheat, jute, potato and vegetables) with DRC ratio of less than unity displayed positive and mostly significant growth performance, while those with greater than one (such as local aman, local aus and sugarcane) registered negative growth during the 1990s. Thus, the production growth pattern is observed to be largely consistent with the comparative advantage as reflected in the estimated domestic resource costs ratio, thereby indicating land allocation pattern conforming to the resource endowment of the country.

Non-crop agriculture
The growth performance of non-crop sub-sectors has not been uniform over the last two decades. Animal farming experienced modest growth during the 1990s but the growth rate picked up (about 5 per cent) during the current decade. Intensive development efforts of public and private sector, especially establishment of both commercial dairy and poultry farms in the private sector and the NGOs through expanded vaccination, feed production and improved management contributed to the recent success. Forestry displayed a rather modest growth of about 3 per cent during the early 1990s, but the rate accelerated in subsequent periods, both during the late 1990s and in recent years. Fishing sub-sector exhibited phenomenal growth of around 8 per cent during the 1990s, but the growth rate has considerably declined in recent years (Table II.2).

Review of past policies
The past performance of agriculture was greatly influenced by macroeconomic and sector-specific policy changes. The reform in trade and exchange rate policies changed the incentive structures in agriculture and between agriculture and non-agriculture sectors. The liberalisation of the economy, market-oriented reforms and reduced regulations favoured growth in agricultural output and productivity.

The sector-specific policies in agriculture evolved around the dissemination of modern technologythe so-called 'Green Revolution'with direct involvement of the public sector. The Bangladesh Agricultural Development Corporation (BADC) had a virtual monopoly in procurement and distribution of fertiliser, seed, pesticides and minor irrigation equipment in the country. The Bangladesh Water Development Board (BWBD) implemented large scale surface water irrigation, flood control and drainage projects. With economic reforms, liberalisation of input and output markets became the dominant feature.

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The markets for other agro-inputs such as power tillers and pesticides were also liberalised. The deregulation of agricultural pricing and distribution policies and abolishing public monopoly in food grain trade provided positive incentives to the private traders and farmers. The changes in policy regime contributed to increased production while prices of irrigation equipment and other input declined, and ownership of irrigation equipment for all categories of farmers increased with no clear evidence of adverse distributional consequences.

The reforms in agriculture led to reduced price distortions which encouraged the farmers to take more rational decision, with respect to both input use and crop production. The anti-rural bias in economic incentive structure declined through adjustments in exchange rate, lowering of the rate of protection for import-substituting industries, reduced dispersion of tariff structure and reduction of tariff anomalies. It is important, therefore, to pursue further reforms to remove existing distortions that will encourage increasing production and exploiting export potential of crops having comparative advantage.

Similarly, reform measures aimed at deregulation, privatisation and liberalisation of trade and marketing structure in agriculture led to increased fertiliser use along with adoption of HYVs and investments in irrigation and other agricultural equipment. Although these reforms contributed to accelerated growth, further liberalisation of markets and production processes is needed to ensure increased use of modern input and better performance of input and output markets. The government needs to adopt a clear and time-bound strategy and policies to implement the reform agenda to ensure more effective participation of the private sector.

Emerging challenges
The preceding sections have provided a broad overview of the past and current situation in agriculture, specially in the crop sub-sector. Before we attempt to identify the priority issues for future policy research and interventions, we intend to highlight the emerging challenges that Bangladesh is expected to face in the coming years. These are:

*The arable land has been shrinking by almost one per cent per year due to increasing demand from housing, infrastructure and industries, as well as loss of land from river erosion. With global warming, loss of more land in coastal areas due to advancing seas is likely to happen. Water availability for irrigation has increasingly becoming scarce. The soil fertility has been declining due to overexploitation of soil nutrients, and imbalanced and inadequate use of fertilisers.

* Farmers have adopted high-yielding varieties (HYVs) in most of the areas suitable for food grains. As a result, yield gap between the farmers' field and experimental stations has narrowed down. Therefore, further increase in yield of food grains at the farm level will depend on making breakthrough in yield frontier through technological improvements. Bangladesh must tap the opportunities in technological breakthroughs created by advancement in biotechnology, keeping food safety in mind.

* Bangladesh is recognised world wide as one of the frontline countries, most vulnerable to the impacts of climate change. Rice production in Bangladesh is likely to be reduced by 8 per cent by 2050, as a result of climate change.

* International financial and technical support to Bangladesh through International Rice Research Institute (IRRI), International Maize and Wheat Improvement Center (CIMMYT) and other research and development organisations played a critical role for technological advancement and dissemination. Unfortunately, international support for agricultural research and development has declined since mid-1990s which might be a limiting factor for making a breakthrough in this arena for Bangladesh.

* Since the 1990s, Bangladesh has been following the strategy of self-reliance (importing from international market to meet the deficit in domestic production) to ensure food security. This strategy worked well particularly after the floods of 1998 and 2004. However, in 2007 and 2008, Bangladesh had a difficult time to import adequate amount of food grain after the floods, Sidr and during the time of high price of food. Experts argue that volatility in international rice market, both in terms of price and availability is likely to continue in the near future.

* Successful conclusion of the Doha Round negotiation on agriculture is likely to increase food prices globally. As a net food importing country, this is a concern for Bangladesh. Some studies have shown that Bangladesh might have the opportunity to export some agricultural commodities like vegetables and fruits where the country has comparative advantage. However, compliance with sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) may be a major constraint to realise the export potentials.

* Bangladesh has a formidable challenge to provide food at affordable prices to 40 per cent of the people who live below the poverty line. On the other hand, farmers need incentives in the form of higher profit margin to generate marketable surplus for the growing urban population. It will be a continuing challenge to strike a balance between ensuring adequate incentives for the numerous small producers on the one hand, and keeping food prices low for the poor consumers on the other.

It may be mentioned here that Bangladesh has prepared two Poverty Reduction Strategy Papers (PRSP) in the current decade. The first PRSP (2004-2006) rightly recognised agriculture as an essential component, in fact, a prime mover in the quest for more equitable and pro-poor growth. The projected rate of economic growth implied an agricultural growth of 4.5 per cent, which is higher than what the sector has actually attained in recent years. One may, therefore, ask whether is it possible to attain and more importantly, sustain such a growth in agriculture in the future? Also, what does it imply in terms of growth of different sub-sectors and associated policies and programmes?

Agriculture has been the main source of food in Bangladesh. However, domestic production has to be supplemented by imports mainly of cereals such as rice and wheat, but also of other essential food such as edible oil, sugar and dairy products including milk powder. The demand for all these food products will continue to grow due to both population growth and growth in income. Against this rising demand, the availability of land for growing food is dwindling fast, as mentioned above. This implies that an increasing agricultural output including food has to be coaxed out of an ever-declining area of land to meet the growing demand unless imports on a vast scale is contemplated, which may not be a feasible option for Bangladesh.

One of the most serious challenges that Bangladesh agriculture will have to face is the adverse impacts of climate change. What might happen in the not-too-distant future (some would argue that the uncertainties have already begun on the ground as problems of pollination in wheat and early or immature flowering of rice have been reported in 2009) are that the water regime may drastically change with years of too much abundance (heavy floods) and too little (severe droughts) with greater frequency than before. Sea level will rise, although how fast and how far it would submerge the land along the coast remains debatable due to the coastal defences in the form dykes and polders. Salinity levels would, however, increase and so will the frequency and severity of coastal cyclones and storm surges. It may be noted here, however, that the implications for agriculture are not something completely different from what these may be under a situation without climate change. The implications for research and technological change to develop new varieties are logically the same. The only new thing that comes up is the urgency of necessary actions.

The technological change that has taken police in agriculture, particularly in crop production so far has been the development and dissemination of high yielding varieties which need controlled water, are fertiliser responsive but may be susceptible to various diseases and pest attack. Upto 2001, the rice research system had released 47 improved rice varieties. Several refinements have also been made to the HYV profile over time. These include the development of pest and disease resistant varieties, better yielding varieties and most importantly, shorter maturity variety, particularly suited to aman cultivation. There are also newly developed boro HYVs which are somewhat lower-yielding but can be harvested 3-4 weeks earlier than the normal boro harvesting time. Some limited success has also been achieved in developing varieties suited to specific ecological conditions such as those resistant to salinity. However, all of these still have two basic characteristics inherited from the earlier ones. These need chemical fertilisers and controlled water regime related to irrigated land. In the near future, therefore, the issues related to fertiliser availability and use, pricing and subsidy, as well as pricing and policies facilitating irrigation, given the dominance of boro in total rice production, remain critical. In particular, the issues of subsidy for fertilizers as well as for diesel and electricity for irrigation has become immediate policy concerns.

Anisur Rahman

Concluding remarks
The last three decades have witnessed major transformation in Bangladesh agriculture including changes in its structure, resource base, technology and organisation of production. The strategies and policies that Bangladesh has been following over the last three decades were developed centering around the crop production sector, particularly around rice. The last decade has also witnessed significant changes in the crop production regime. A near-stagnation of food grain production led to drastic deceleration of growth during the first half of 1990s. This, however, has given way to significant surge in rice production during the second half of the decade, which not only eliminated the 'food gap' but made the country self sufficient in food grain production. In the context of these short and long-term developments, there is a need to rethink the strategies and policies to cope with the changed circumstances. A few points of importance are outlined below.

The production system in the crop sub-sector continues to be dominated by rice. Once the foodgrain deficits are met, rice should give way to other higher productive and more profitable crops. As mentioned earlier, several studies suggest that except for a few import-competing crops such as sugarcane and oilseeds, Bangladesh has comparative advantage in the production of most agricultural crops. The exploitation of this potential will, however, depend on investment for developing infrastructure for storage, processing, marketing and financial services, for which public support is needed. Investment for reliable supply of power to rural areas, development and maintenance of an efficient transport network, and modern communication facilities for low-cost and timely exchange of information is crucial. The development of infrastructure will also reduce the cost of processing, storage and marketing of fisheries and livestock production, which may encourage private sector investment in these activities.

An important area in which public sector must continue to be involved is agricultural research, education and training for generation of knowledge, information and technology. The world is currently witnessing a major revolution in biotechnology. We need to develop infrastructure and skills to access those technologies to adapt them to suit our needs. In the field of agricultural research, we need to assess the balance in investments for basic and strategic research versus adaptive and applied research on the basis of technologies available from international research centres.

In response to changing pattern of demand, the future strategy for agricultural growth must contain elements to promote non-cereal crops and fish and as well as livestock production. Faster development of livestock and fisheries may promote both equity and food security by focusing attention on disadvantaged social groups and regions where the crop production environment is unfavourable. The promotion of rice-fish cropping system in the deepwater floodplains and saline-affected coastal areas (the areas bypassed by the Green Revolution) could help improve economic conditions of the rural poor, particularly in less developed regions in Bangladesh.

Because of severe land constraints, sustainability of growth in crop production in the 21st century will depend on the government's continued support for agricultural research to further develop technologies and improved farming practices and on its efforts to disseminate these technologies to the farmers. Technological progress in rice and wheat has reduced the competitiveness of pulses and oilseeds and the area under these crops has continued to decline. Research on these crops must be intensified. A system approach has to be taken for broad-based agricultural research that requires collaboration and coordination among various research institutions.

Bangladesh needs to face the challenges of exploiting the emerging global opportunities. Within the general thrust of UR Agreement, the WTO rules provide several opportunities which Bangladesh agriculture can capitalise through policy actions. Under the Agreement on Agriculture (AoA), Bangladesh as least developed country is exempted from reduction commitments on tariffs, export subsidies and domestic support to agriculture. Although Bangladesh reported bound tariffs at 200 per cent for all agricultural products, operating tariffs at present are much lower. The price distorting and indirect supports to agriculture are also minimal and domestic support is negligible. In fact, Bangladesh has the option to increase support to agriculture without violating the provision of WTO.

To conclude, agriculture has undergone major structural changes and achieved major successes in Bangladesh over the last four decades. Despite many problems and constraints, a quiet agricultural revolution has taken place that has enabled the country to achieve its national food security targets in the production of food grains. Agriculture continues to evolve in response to numerous factors, including natural calamities, sociopolitical changes, population growth, urbanization, new technology, opportunities in the rural confirm sector, and commercialisation. Government macroeconomic, trade, and agricultural pricing policies have played a major role in shaping price incentives in production and consumption and will continue to be important determinants of agricultural growth. Policies aimed at increasing production and stabilizing prices need not rely mainly on price subsidies or substantial increases in public stocks, however. Indeed, productivity-enhancing investments in agricultural research and extension, improvements in post harvest management and agro processing, and investments in market infrastructure can complement agricultural price and trade policies and enable rapid agricultural growth and higher farmer incomes even in a context of shifting world prices.

Dr. Quazi Shahabuddin is a Former Director General BIDS, Dhaka.

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