Of rural land and labour

Land is the leading input and a precious asset in rural Bangladesh. Hence hardly any land transactions tend to take place through purchases and sales, unless driven by distresses. In a recent research article on agrarian changes in Bangladesh, Dr Mahabub Hossain and co-authors note that land transfers now-a-days account for barely 1.3 per cent of owned land compared to 1.7 per cent even a decade ago. That is, land sales has decreased over the period under review. Interestingly, as the same authors observed, the incidence of land purchase was higher than sales indicating that rural-urban migration emerged as the contributing factor in land transactions. Any way, the percentage of land accumulated through purchases and sales was negative 5.5 per cent for the marginal landowners, nil for the small land owners and 1.7 per cent for the medium and large land owning groups.

But, beneath the surface, land transactions tend to take place under a different veil. This is through the operation of the tenancy market. The most predominant system of share cropping is the share of outputs and certain inputs between two parties, i.e the land owner and the tenant. For ages, farmers surrendered half of the produce to owners -- a system called share cropping -- dubbed as inefficient arrangements detering incentives to raise productivity for both the parties. Gradually, the system moved to a kind of quasi-share cropping arrangements with owners willing to share a part of the input costs. But with the advent of the Modern Varieties of paddy, the system swung heavily towards a fixed-rent system, both in cash and in kind. Land is also being transacted under a credit arrangement where the borrower mortgages land to the lender as collateral for the loan. The lender cultivates the land in lieu of the interest charges till the loan is repaid. If the borrower fails to repay the loan during a specified period of time, he or she preserves the right to buy the land often at a lower price than the market. This transaction, notes Mahabub and others, known as Dai-shudi is sometimes the first step in the process of land transfer through purchase and sale.

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It could be observed that the proportion of tenant-farmers has increased from 42 per cent to 57 per cent, and the land under tenancy cultivation has increased from 22 to 33 per cent during the period 1987/88 to 2000. Most of the tenants, needless to mention, come from economically crippled households to eke out a living by renting in lands. There is another consideration. Even the poor in our society carry some prestige image. In a regime where one could rent in land and thus manage the farm oneself, working in other's land as day labourer emerges as the last best solution to the uplift. Thus we find nearly half of the tenantry land was operated by households having land less than 0.2 hectares and another 40 per cent by households owning 0.2 to 1 hectare.

Why such a surge in tenancy? There are possibly many factors, but let us cite two of them. First, the rapid rural-urban migration is turning migrant households as absentee land owners who let the land cultivated by their fellow residents or kith and kin.

Second, the growth of rural non-farm sector continued to pull the educated and wealthy ones away from low productive agricultural pursuits and put them in the pinnacles of prizeworthy economic pockets where, possibly, they can utilise their money and merits better. So, with productive employment opportunities lying outside farms, growth of urbanisation and infrastructural developments, we observe that the rural land supply has increased but demand has not risen paripassu. The demand-supply imbalance apparently also went to the terms of the tenants.

The importance of different tenancy arrangements also underwent changes. For example, during the 1960s, more than 90 per cent of rented land was transacted under pure share cropping arrangements -- an arrangement called inefficient by economists. Again, 'exploitative' as it is, the system also works as a disincentive to agricultural investments and adoption of new technology. With the introduction of modern technology, as noted before, the system seems to have come to a market friendly phenomenon where the tenant has developed a capacity to bargain with the owners over the terms and conditions. Now, say in 2000, only 60-65 per cent of the lands were transacted under that "inefficient" and "exploitative" methods of operation of holdings. But the development has taken place only for the modern varieties that involves high input costs and hence requires some options for the tenants. For the rainfed conditions, the prevalence of a 50:50 arrangement still persists where both owners and tenants are sharing the outputs as well as the risks associated with agricultural operations.

Another important input in production is labour. The rural labour market has also shown some changes over the years. The proportion of attached workers called 'bandha majur' is gradually declining. The proportion of daily wage workers is also declining against contract labour. In some parts of rural Bangladesh, agricultural operations have moved to contractual arrangements where the labor benefits more than before. Again, the reason is also being that labour market has become tight with the growth of non-farm activities and development of infrastructure.

Both changes in land and labour contracts seemingly support the contention that growth in agricultural sector is likely to inject changes in the rural markets and thus turn the table in favour of the poor.

Abdul Bayes is a Professor of Economics at Jahangirnagar University.