Beneath the Surface
Rural Bangladesh: Changes and challenges
In 1987, only 24 per cent of the cultivated land in Bangladesh was covered by irrigation -- the leading input in modern technology. The share rose by 2.5 times to 60 per cent in 2000. During the same period of time, rice area under modern varieties increased almost by 2.5 times from 33 per cent to 70 per cent. But irrigation could have increased inequality among farm households due to the alleged differential access to the package and possibly due to the alleged "irrational instinct" of the small peasantry.
TODAY, in this column, I shall attempt to present few of the aspects of the agrarian changes that swept Bangladesh during the last decade or so. And to this effect, I shall use the first ever inter-temporal data set generated by the International Rice Research Institute (IRRI). Just to remind the readers, IRRI conducted a survey in 62 villages of Bangladesh on 1240 households in 1987. In-depth investigation was carried out on socio-economic variables affecting people's lives and living. Structured questionnaires were administered and multi-stage random sampling technique was used. To examine the changes in parameters over the decade or so, the same questionnaires were administered on the same households (about 1900 as result of splitting households) in 2000. Thus the changes that could be in evidence from the data set relates to 12-13 years.
Inevitable inequality?
Land is the scarcest of all factors of production throughout the world but, perhaps, more so in the context of Bangladesh. Here too many people tend to chase too few lands. Leaving the limited amount of land aside, it is further alleged that land distribution is not egalitarian either and the skewness is growing over time. To put the premise on an empirical plane, we usually categorise rural households into functionally landless (owning up to 0.2 ha), marginal (0.2-0.4 ha), small (0.41-1.00 ha), medium (1.01-2 ha) and large (2.0+ ha). In 1987, households owning up to 1 ha (i.e. functionally landless, marginal and small) constituted 83 per cent of all households in rural areas and the total land under their ownership was 32 per cent. Over the decade or so, they almost retained their position as a group but the land under their ownership marginally increased to 36 per cent. On the other hand, the large land owning households (owning 2+ ha) comprised 8 per cent of all households and commanded 42 per cent of all lands in 1987. In 2000, this group constituted 5 per cent and claimed 37 per cent of land. The inequality in the ownership of land is quite evident in rural areas with little sign of abatement.
Digging further into the data set, one could observe some revealing statistics. First, the average size of owned land per household declined from 0.61 ha in 1987 to 0.53 ha in 2000 -- by about 13 per cent. At disaggregated level, poor households' land size declined from 0.33 to 0.20 ha -- by about 43 per cent. That means, demographic pressures continue to hunt rural households, perhaps, more heinously, the poor ones. Second, concentration of land in the hands of fewer families continue in Bangladesh and land being the leading source of income in rural areas also increases inequality between the rich and the poor households. Third, land distribution in Bangladesh over the years -- a la Mahabub Hossain -- points to pauperization rather than differentiation. And finally, the concentration of owned land might justify a redistributive land reforms but, in the face of tiny size of holdings, could also nullify the economically efficient use of land.
Farm and farmers
Farm households are defined as those who devote at least some of their lands for agricultural activities. Defined so, obviously, not all households are farm households. Field level observations by IRRI tend to show that in 1987, about 68 per cent of rural households were farm households. But in 2000, the share drastically dwindled to about 56 per cent. This implies a decline by one percentage point every year. What about the distribution pattern of farm lands?
In 1987, about 71 per cent of farm households (holding size up to 1 ha) cultivated 24 per cent of the total land. In 2000, they constituted about 81 per cent but could cultivate 46 per cent of land. Interestingly, farm households with 2+ ha comprised about 11 per cent and controlled about 36 per cent of land in 1987. But in 2000, they were only 4 per cent and controlled 23 per cent of the land. The following observation follow from a closer examination of the data set on farms and farm size.
First, as far as farm size or cultivated land size is concerned, the average per household declined 16 per cent from 0.87 ha to 0.67 ha between 1987 and 2000. Special mention may be made of poor house holds whose cultivated land size declined from 0.56 to 0.41 ha -- by 30 per cent. Second, concentration of farm holdings also continues to grow but, perhaps, at a lesser extent than is in the case of owned land. To use technical jargon, the gini coefficient -- depicting the depth of inequality -- should have lower value for farm land than for owned land. It is simply because farmers might cultivate more land than they own through the operation of tenancy market. That would moderate the inequality effect. Third, large land owners seem to be parting with cultivation as the main source of income and gradually moving towards more remunerative income generating options (e.g. business, transport, services etc.). Admittedly, these activities require literacy, credit and skill to which they have universal access. Fourth, the trend seems to reject an earlier hypothesis that modern technology would leave less land in the tenancy market as "profit maximizing" large land owners would cling to their holdings or even take back their rented out parcels. Ipso facto, modern technology would perpetuate poverty and inequality in rural areas. And finally, if a household does not have any other income generating options other than eking out a living by cultivating, on average, 0.67 ha of land, the income derived would meet only 70 per cent of the minimum calorie requirement required to lift the household out of poverty line. And here lies the growing importance of non-farm activities where government should step in with appropriate policy instruments to help the poor.
While the bad news is that some are leaving lands, the good news is that some others are cultivating their left out lands. These "some others" are the relatively poorer segment comprising functionally landless, marginal and even small farms in rural Bangladesh. Data reveal that area under tenancy increased from 23 per cent in 1987 to 34 per cent in 2000. Especially, poor households' area under tenancy rose from 35 to 51 per cent during the same period of time.
Small but smart!
Small-peasant farming system -- based on household labour -- have long been criticised on several grounds. First, they are fired at for their failure to exploit the economies of scale. Too small as the holdings are, allegedly, they cannot use efficient mechanical devices to reap home better harvests. Second, they are considered as "irrational" since they fail to take advantage of the new opened up opportunities in the face of risk-aversion. It may be mentioned here that both of these allegations loomed large on the eve of the advent of modern technology in Bangladesh. Many famous economists at that time argued that modern technology could bypass the small and marginal farms on account of their lack of access to expensive inputs required to grow modern varieties. It is, perhaps, the proper time to test the hypotheses using IRRI data for the two comparable periods.
In 1987, only 24 per cent of the cultivated land in Bangladesh was covered by irrigation -- the leading input in modern technology. The share rose by 2.5 times to 60 per cent in 2000. During the same period of time, rice area under modern varieties increased almost by 2.5 times from 33 per cent to 70 per cent. But irrigation could have increased inequality among farm households due to the alleged differential access to the package and possibly due to the alleged "irrational instinct" of the small peasantry.
The findings from the field stand quite contrary to the conventional wisdom: the rate of adoption of modern varieties and the intensity of irrigation use was higher among the small and the marginal farms. For example, large land owners (2.01+ha) had 22 per cent of their land under irrigation in 1987 and the share rose to 48 per cent in 2000. The areas under irrigation of small farms increased from 28 per cent to 67 per cent. Again, large land owners had 28 per cent of the rice area under modern varieties in 1987 and 62 per cent in 2000. The figures for small farms are 45 and 75 per cent, respectively.
Tenants not trailing!
It is generally argued that modern technology could bypass tenants -- either owner or pure -- in the face of surrendering a part of the share in output while, at the same breath, shouldering alone the input costs. But it could be observed from field data that pure tenants -- without any owned land whatsoever and mostly meaning the poorest in the village -- had 27 per cent of their parcels under irrigation in 1987. In 2000, 58 per cent of their rented in land remained covered by irrigation. In the case of the use of modern varieties, they were not laggards either. In 1987, the area under modern variety of rice was 43 per cent but in 2000, the share was 70 per cent. On the other hand, relatively more solvent tenants -- called owner tenants with half the cultivated land owned and the half rented in -- performed better by raising the area under irrigation from 21 per cent to 58 per cent and the rice area under modern variety from 32 per cent to 68 per cent. By and large, as far as adoption of modern rice variety and irrigation were concerned, tenants performed no worse -- even better -- than the owner cultivators.
Policy points
- The small and the marginal farm households dominate farming in Bangladesh. There was almost no change in the dominance between 1987 and 2000. Any public investment in agriculture is, therefore, going to be pro-poor.
- Modern agricultural technology did not bypass the small and marginal farms. This group of farms might have been hesitant in earlier stage to adopt modern technology but hastily embraced the package in later stage in the wake of growing subsistence need propelled by growing population. In fact, in the coming days, small and marginal farms would continue to be more land based than larger ones in the face of labour shortage and less time for monitoring.
- Inequality in land ownership continued to grow. But the growth in the tenancy market moderated the inequality. The tiny size of holdings, possibly, rejects a redistributive land reforms policy but calls for radical reforms of the tenancy market.
- Inequality grew but poverty waned. This could be in evidence from the fact that the share of pure tenants production increased, and notwithstanding their poor endowments of land and capital, share in the technology adoption, pari passu.
- Access to credit, education and training should be increased for households at the lower end of the ladder.
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