Consolidation of farmlands and cooperative farming

A two-tier cooperative system - primary one in villages and the federation at Thana level - was put into practice in the late 1950s in Comilla at the initiative of Dr Akhtar Hameed Khan. Some supply-side incentives like irrigation infrastructures and subsidised inputs were the motivating factors in organising the farmers. Those input-recipient societies failed to turn into 'vigorous local institutions' as was visualised by Dr. Akhtar Hameed. Their outreaches were limited to a number of pilot projects without any nationwide replication until 1960s.
In the post-independence period, cooperative ownership was recognised as a separate type of resource ownership in Article 13(b) in the Constitution of Bangladesh. And many organisations launched experimental projects following the 'Cooperating Farming Seminar' held at the Bangladesh Academy for Rural Development (BARD) in 1972. Cooperative farming was endorsed in the first five-year plan of the country under 'socialistic pattern of economy'.
The cooperative practice was, however, not successful in Bangladesh for excessive experimentations, problems of follow-on policies and numerous implementing agencies. Jasim U. Ahmed in his research found most of the experimental projects closed within two years of commencing for financial loss. Similar ill-fate befell on a number of societies formed by the Bangladesh Agricultural University. They had differential resource pooling for only 'plot-to-plot irrigation' to 'all post-tillage operations as single unit farm'.
Professor Muhammad Yunus and Sir Fazle Hasan Abed also tested cooperative approach in delivering credit to the poor, failure of which prompted them to adopt group-based microcredit.
Similarly, the Integrated Rural Development Programme (IRDP) of 1972, which was transformed into the Bangladesh Rural Development Board in 1982, ended in failure in the early age of stagnating cooperative farming.
Many farmers were found to prefer simple cooperatives without collectivising distribution of returns. This indicated the failure of the policy of pooling resources? Small and medium farmers in non-land pooling cooperatives often enlarged farm size with rented-in lands. They could turn tenancy terms less exploitative using subsidised inputs and irrigation in areas under cooperative farming.
WATER-LORDS AND SHARECROPPING: But subsidies did not favour the tenants for long. The situation was initially changed when private investment in irrigation was introduced. In early 1990s, Professor Koichi Fujita in his book Rethinking Economic Development described shallow tube well (STW) owners as water-lords. He found an over-investment trap in 1999 and later, a competitive irrigation market.
On the other hand, in an article based on a 2004 case study of rented-in land and published in the Journal of International Farm Management, I observed that sharecropping turned unfavourable for tenants when the 1984 land reform approved one-third share for land. However, in my recent field visits, I found larger supply of lands from migrating farmers and an extensive practice of flexible cash renting.
In another article, published in the Journal of Land and Rural Studies, I  have noted that rural land market was a sort of mockery during the trial of cooperative farming; it turned into a distressed one with an increase in real land price and a fall in capital (land value)-output ratio. This trend created heightened interest in holding lands among all types of farmers in the early 1990s. The stagnation (falling price) gifted unprecedented returns to landowners after 2013. Recently the tenants do not seem to be much interested to accept exploitative terms as they have the option of non-farm income generation. Many landowners also are not worried over return but anxious in managing borders of their farmlands. As sanction and protection rights of property are weakly defined at the moment, there is hardly any possibility of mitigation  of this border-problem through negotiations based on the Coase theorem which says  "economic efficiency is achieved best by full allocation of, and completely free trade in, property rights." There is obviously no mechanism through which the landowners can enter into trustworthy agreements to consolidate farmland.
COMPREHENSIVE VILLAGE DEVELOPMENT MODEL: Meanwhile, leasing or cash renting has made tenancy terms favourable for commercial farming. Some 'potato projects' are taking large areas, which is different from raising farm size with rented-in lands by cooperative farmers earlier. The farmers did not get marginal returns consolidating land or labour, and cooperative activities turned into managing inputs and selling farm products.
Accordingly, the recent model of the comprehensive village development programmes practises collectivising within individual operations. Many people have likened this model to growers' cooperatives of Japan. They advocate, knowingly or unknowingly, large-scale farming following the Japanese example. But cooperative farming in its true sense was never introduced in Japan. I visited some large paddy fields during my stay there in 2005. Those were operated by farmers belonging to growers' cooperatives which were created with leased lands.
The Japanese Agricultural Cooperative (JA) became a major player in farming community in the country when the Agricultural Land Act of 1952 postulated that 'farmland should be owned by farmers'. When industrialisation-led migration created many absentee farmers, the classical farming was found inefficient in their small scattered plots. The 'farmland consolidation project' was undertaken to enlarge paddy plots after enacting the Agricultural Basic Act in 1961. The regulated rent was the tool of consolidating farmland that was organised by groups of farmers. Subsequently, the focus changed from 'possession' to 'use' for increasing the number of retiring farmers. The revised agricultural land act in 2009 allowed a number of non-farm industries to operate consolidated farmlands with at least one full-time farmer in the corporation. In April 2014, more non-farming entities were encouraged to start commercial farming. All 47 prefectural governments launched the 'farmland consolidation bank' as a midwife between renters and landowners. Could such a farmland consolidation system be applied in Bangladesh?
This is a land-scarce country with 15 million farm holdings. It has average cultivated area of 0.51 hectare per farmer scattered into six plots. Farmers here have not migrated in large numbers and are active in farming. Japan, long after a downtrend of typical farmers, justified its changes into corporate commercial farming. Bangladesh in any consolidation practices must keep active farmers as active as Japan did until 2008.
Swedish economist Gunnar Myrdal in his book Asian Drama argued for a modified form of welfare capitalism in South Asian agriculture. Any complete collectivisation will fail again as it was with cooperative farming earlier. It has little possibility in this age of problems between owners and users in tenancy and irrigation markets.
The regulatory framework for cooperatives exists and it can be customised to consolidate farmlands. Many absentee farmers might be happy with providing leasable lands and many labour-surplus farmers with small pieces of land might prefer leaving for non-farm earnings. What is essential is a land reform to ensure marginal factor returns and property rights. Any periphery zoning, in addition, would be effective for conservation of farmlands.
Dr. M. Aminul Islam Akanda is Associate Professor, Department of Economics, Comilla University.
 akanda_ai@hotmail.com