Historically, agriculture in this sub-continent had been practised on a subsistence basis. The villages were self-sufficient; people exchanged goods and services within the village mainly on barter basis. However, with the development of infrastructure and storage facilities, commercialisation of crops crept into agricultural practices and marketing strategies began to claim a respectable berth in academic discourse. Two factors may be mentioned in this respect. First, rapid spread of modern technology in paddy cultivation led to more production per unit of land and a surplus over consumption. The technology also helped release land for non-paddy crops. Second, the agriculture-industry or rural-urban linkages got stronger over time leading to growing exchange of goods and services. But why is an efficient marketing system called for? It is because a good marketing network helps both producers and consumers in many ways as the system:
* Enables primary producers to get a better return or raises the farm gate price;
* Provides facilities for selling crops at an incentive price;
* Reduces the price-spread between the primary producers and the ultimate consumers;
* Makes all farm products available to consumers at reasonable price and
* Reduce the role of middlemen who appropriate a significant slice on the value chain.
Agriculture of Bangladesh is generally termed as 'mono-crop' agriculture as a single crop, paddy, occupies most of the land. Majority of the rural people want to ensure food security through growing staple crops in their meagre amount of land. Thus, the land use pattern is dominated by growing food crops only. Food insecurity always remains instrumental in the allocation of resources. As most of the farms are of subsistence nature, staple crops are grown mainly for home consumption and roughly one-thirds is marketed. Farmers also grow cash crops to meet cash needs where 75-80 per cent of these crops are marketed.
In this context, we can perhaps recollect the food crisis of the most recent past to add further meat to our discussion on marketing. After two decades of calm, rice prices began to rise very fast since 2004. From around $300/mt, the international price of rice reached $1000/mt - an all-time high level. Since Bangladesh is poised for an open economy, it took little time for the transmission to take place. In subsequent paragraphs, however, we wish to deal with the dynamics of the rice market with a view to examining the causes of the recent crisis.
Let us look at the trends in marketing of paddy - the staple crop. Marketing of paddy has increased over time despite farm size becoming smaller. For example, in the 1980s, a quarter of the total output produced by the households found way to markets; by 2007, the share rose to one-thirds. A number of factors could be adduced to this market orientation on the part of the rural households but we shall cite a few: (a) an increase in land productivity due to the adoption of modern varieties helped households reap a better harvest from the same amount of land than previously; (b) improvements in communications, including telecommunications, and media has widened the base of market information and (c) a reduction in household size has reduced home consumption to leave some outputs for the market.
However, the proportions of marketing of other crops have historically been high but only got higher over time. This is not unusual given that, most of these are perishable products and traded for cash income. Farmers usually meet their non-rice demands by selling these commodities. Potato, particularly, is a case where substantial expansion of marketing has taken place because (a) cold storage facilities expanded, (b) modern varieties was introduced and (c) cultivation of potato spread from a few regions to all over the country.
A cursory look at marketing of paddy/rice crop by socio-economic groups provides some interesting insights into the changing marketing environment. We observe that 36 per cent of the paddy output has been marketed in 2007 compared to 26 per cent in 1988. As a strategic and staple commodity, the marketed output of paddy is likely to be lower. This also applies for the international market of rice when only 6.0 per cent of the total rice produced in the world is reported to enter the international market. We observe that households owning up to 0.40ha of land (poor in land ownership scale) have increased their contributions to total paddy production from 16 per cent in 1988 to 28 per cent in 2007. This could be due to increase in their number and greater access of land through the tenancy market. However, the degree of market orientation for this group tends to hover around 40-44 per cent with very little change over time. The important point to note is that, despite deficits in terms of production and consumption, small farmers also sell in the market, although they buy back at a later stage.
In Bangladesh, marketing of paddy is mostly done by medium and large landowning households. Nearly half of the total marketed paddy comes from 13 per cent of rural households owning 1.0ha and above land. As opposed to this, about 30 per cent of the marketed output comes from about 76 per cent of rural households owning up to 0.40ha of land. From the angle of economic status, we observe that solvent households comprise 15 per cent of rural households and they supply 41 per cent of the marketed paddy; about 'self-sufficient' households comprising 42 per cent supply 47 per cent. Over time, the share of both groups increased. Finally, the 'poor' segment of rural households constitutes about 45 per cent but they supply only 13 per cent of the total marketed output. The policy implication of this precarious position is that we need to keep the price of paddy at a remunerative level to appease the actors in the market. At the same breadth, the impact of that on the poor households should not take a back-seat in our mind.
Abdul Bayes is a Professor                  of Economics at                    Jahangirnagar University.                abdulbayes@yahoo.com
From subsistence agriculture to commercial agriculture
Abdul Bayes | Published: December 19, 2013 00:00:00 | Updated: November 30, 2024 06:01:00
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