Agriculture for equity

Khondkar Ibrahim Khaled

Photo: Amirul Rajiv

AGRICULTURE contributes towards growth at a slow pace and low rate, while industry contributes at a faster pace and higher rate. Countries like South Korea, Malaysia and Singapore achieved miracle through industrial development. But India immediately after independence, consciously fixed priority on agricultural development, accepting comparatively low rate of national income growth. European countries joined industrial revolution and achieved spectacular growth. But France decided to walk on two legs, agriculture and industry.

Bangladesh inherited an agrarian economy. Industry and international trade were at a low ebb. National income was at a low level. It was difficult to identify any rich class or capitalist group among Bangladeshi citizens. Hence, income inequality among people was not significant.

Scenario has changed. Last two decades witnessed significant growth in industrial and services sectors. Development clustered around cities, particularly Dhaka and Chittagong. Initiatives centered around small number of new entrepreneurs who seized the opportunity and amassed wealth. They succeeded in bringing about sustainable economic growth for the country. Bangladesh economy did not suffer any mentionable dent even during American debacle. Bangladesh economy maintained a growth rate of around six percent during last few years. This is one side of the coin. The other side depicts a gloomy picture of staggering inequality and consequent social tension. Number of people below poverty line has increased, while wealth amassed by rich people is significant. Average per capita income has, however, increased to indicate national growth.

Bengalese fought against two economies of East and West Pakistan. Paradoxically, now Bangladesh itself witnesses two economy. Dhaka and Chittagong represent affluent Bangladesh, while rural Bangladesh remains far behind. Poverty stricken equality depicted Bangladesh in seventies. Todays Bangladesh exhibits gross inequality with city-based affluence.

The present government probably realises the disruption of social equilibrium. Since they were inducted to power in early 2009. the government has been consciously taking steps at least to stop deterioration of the situation. They have corrected constitutional distortions and initiated pro-active economic steps towards ameliorating depressions of peasants and rural populace.

After 1975, the sword of martial law illegally eliminated 'socialism' from the constitution, promoting 'capitalism of thugs' in the country. Capital was accumulated by musclemen and the processes were loan-default, bank-robbery, looting, grabbing property, black-marketing, non-payment of tax/duty, uncontrolled profiteering etc. In the process, an entrepreneur class emerged. Initially, it was a bunch of thugs. Gradually, an enlightened entrepreneur group managed to make their mark. Consequently, Bangladesh witnessed remarkable economic growth, concentrated in the cities. Banks located in the rural areas served as a tool of transferring rural savings to city entrepreneurs for expanding city-based business.

Recent judicial verdict for restoring 'socialism' in the constitution has provided the legal cover (mandate?) for pursuing a balanced economic policy (welfare economy?). Welfare economy demands reducing gross inequality both regionally (rural-urban) and individually (rich-poor).

New government has undertaken a few measures towards reducing rural-urban inequality. Rural economy is predominantly agrarian. Hence agriculture came up as a thrust sector. Over five thousand crore taka was provided to farmers as subsidy in one year. Simultaneously, banks provided about twelve thousand crore taka as agri-loan to farmers. The dry agri-sector suddenly wakes up being showered by financial irrigation. Subsidy was previously considered as market-distortion under capitalist economy. Now under welfare economy, Bangladeshi version of socialism, subsidy to weak sector is a compulsion. This little change of perception has probably opened up a new horizon.

Subsidy has provided a sort of 'seed capital' to farmers. Farmers work hard, but could not make any saving even after good harvest. Given subsidy is small amount for individual farmer, but it is a scratch beginning. Observations reveal that farmers have grown tiny savings and recycling the savings towards increasing production.

Banks are aggressively, yet systematically, searching ways of achieving greater financial inclusion. Enthusiastic and optimistic rural poor people, including farmers, have already opened one crore savings accounts with the banks. Banks facilitated the process by reducing the requirement of opening cash to taka ten only. This is a simple, unconventional and creative thinking for financial inclusion. This is again a scratch-beginning of potential capital growth in rural economy.

Another innovative subsidisation is providing bank loan only at 2% interest for raising some crops other than rice and wheat. Bangladesh spends over twelve thousand crore taka annually to import spices, onion, dal and some such items, which can be produced in the country. By subsidising these import-substitute agri-produces, social benefit will far exceed subsidisation. Requirement of subsidisation will not exceed a few hundred crore taka for reversing the process of import. This will not only save foreign currency, but also significantly contribute towards self-reliance.

These are some examples of steps taken by the government during the last two years for invigorating agricultural sector in particular and rural economy in general, consequently reducing the gap between rural and urban economy.

Let us consider the hindrances towards rural growth. Even if rural production moves up substantially, farmers do not harvest the benefit, which is snatched away by middle-men in the process of marketing. Rural marketing is, therefore, the next step after boosting up production. Rural marketing be so designed and developed that the rural producers get the benefit.

Rural producers co-operative may play an effective role for building rural marketing infra-structure as well as promoting producers interest. Present government might have thought on it. In the last budget-speech, the Finance Minister mentioned about 50 rural marketing centres in the rural areas and a central market in Dhaka. We do not know about the progress of these outlets. We also do not know necessary linkage between producers and the outlets. If producers are elbowed out by existing strong middlemen and if the middlemen start using the market outlets, then producers shall remain poor and rural economy will remain stagnant, because marketing profit will be transferred to urban area. Hence rural marketing is not simply a process of produce movement. It is essentially a matter of conflict between unorganised rural producers and organised marketing middlemen. Rural producers need active government support to win the unequal fight. The government is probably willing to lend support. Is the government efficient enough to solve the problem? This is a big question.

Among the rural marketing infra-structures, vegetable cold-storage is one. Government took initiative to construct three such cold-storages at three different areas experimentally and to arouse interest. To the best of our knowledge, none of these could see the daylight and might have been taking rest in cold-storage. May we request the government to examine the matter and apprise the people about the findings.

Most important step for rural marketing is the process of organising rural producers. Because unorganised producers can never compete with organised strong middlemen. Producers co-operative is, therefore, a must for building an institution or a platform for organising and operating marketing activity. Extension officials of the government have so far proved themselves utterly inadequate to rise to the occasion. They may provide support services. But leadership should probably emerge from committed citizen volunteers. Establishment of strong local government will facilitate the process. Praiseworthy activities of the government for agricultural and rural development can not move further without the establishment of responsible and accountable local government, which may play significant role in crating and nourishing institutions and infrastructures for the development of rural economy.

The author is Managing Director of Bangladesh Krishi Bank