Modernising agriculture sector: Raising productivity

Bangladesh, a low-income country (LIC) since independence, was upgraded, in accordance with World Bank definition, to the status of a low middle-income country (LMIC) in July 2015. This higher status was achieved six years earlier than which was envisaged to be materialised in the 2010-21 Perspective Plan of the country - in the terminal year of the Plan in 2021.
With this new socio-economic status and gross domestic product (GDP) annual growth rate of more than 7.0 per cent, Bangladesh needs to see the development of agriculture sector from a new economic perspective.  The share of agriculture in GDP has been on a secular decline as part of the structural transformation process of development. Yet, the strategic importance of agriculture in meeting basic food demand and providing livelihood for a vast swath of the labour force is beyond dispute. Cross-country evidence shows that low agricultural productivity is linked to food insecurity, concentration in a narrow range of products, vulnerable and low wage employment, and high poverty rates. Hence, agricultural growth will critically depend on raising agricultural productivity keeping pace with the country's socio-economic development.
THE MIRACLE OF ACHIEVING FOOD SUFFICIENCY IN RICE: With a population of 160 million, growing at 1.37 per cent per year, it is indeed a formidable task to ensure food for all in the country. This challenge becomes more difficult in the context of shrinking size of net cultivable land. Thus, there is sufficient evidence of productivity improvement as rice production has increased manifold with diminished area of cultivable land. Since independence, there has been more than 350 per cent increase in grain production until FY16, which can be considered as one of the biggest achievements of the agriculture sector.
Bangladesh is considered as one of the prime beneficiaries of Global Green Revolution, stemming from the use of high yielding seeds, irrigation and chemical fertilisers. Since 1972, there has been almost eleven-fold increase in the production of Boro rice to around 20 million tonnes in FY16, which accounts for more than half of domestic rice production. Again, due to increased use of fertilisers and better seeds, yield of traditional Aman rice has also more than doubled during FY72 to FY16. Bangladesh achieved self-sufficiency in rice production in 2012.

The Perspective Plan (2010-2021) and the 7th Five Year Plan (2016-20) have emphasised on food production with specific targets to achieve by 2021 which will be the golden jubilee year of Bangladesh's independence. Table-1 suggests that our self-sufficiency in rice grain and fish will continue in 2021 despite the growth of demand even in high population growth scenario.
PRESENT SCENARIO OF AGRICULTURE: There was considerable success in implementing the underlying agriculture strategy during the 6th Five Year Plan (2011-15). Average agriculture sector GDP annual growth reached 3.5 per cent, along with exceptional performance during FY10 and FY11. The slowdown in domestic demand has reduced the growth of the crops sector (as low as 0.5 per cent in FY16) but forestry and fishing (more than 6.0 per cent) have gained momentum. Even then in FY16 growth rate of agriculture was 2.6 per cent, which was second lowest in the current decade. The growth rate of agriculture was 5.2 per cent even in 2010.
Consistent with the ongoing structural transformation of the Bangladesh economy, the share of agriculture in GDP is falling but agriculture continues to be the largest source of employment and a major contributor to poverty reduction. The achievement of rice self-sufficiency is a major milestone. Steady progress with diversification in the fields of fish, meat and vegetable production is also contributing to the nutrition strategy of the country (Table-2).
Since independence, rice production has more than tripled from 11 million tonnes (milled rice) in 1972 to about 34.6 million tonnes in FY16. Since late 1990s, most of this growth has occurred initially through development and adoption of improved rice varieties, use of good quality seed along with fertiliser and lately especially during 2009-2014, with: stress tolerant, salt, heat, water logging/submergence tolerance varieties; hybrid rice varieties supported by irrigation in Boro in the dry season; supplemental irrigation in Aman rice; and introducing Boro rice in low-lying areas by replacing rain-fed Aus/Aman rice of local varieties with high-yielding varieties.
AGRICULTURE SECTOR DEVELOPMENT STRATEGY: The share of agriculture in GDP is decreasing rapidly in the recent years (Table-3). Since 2010, the percentage share of agriculture in GDP has been reduced by five percentage points. It is estimated to be only 15.33 per cent of total GDP in FY2016, with a growth rate of 2.6 only, whereas the GDP growth rate is estimated to be 7.03 per cent. On the contrary, about 47 per cent of the labour force is dedicated for this sector (LFS 2013). It suggests that the productivity in agriculture is very low in Bangladesh. And it is worrisome.
In the non-crop sector, fisheries sub-sector averaged 4-5 per cent growth during 2005-10, contributing 4.0-4.5 per cent to GDP and engaging about 13 per cent of rural labour force, while the livestock sub-sector, contributed 2.4 per cent to GDP but employed around 20 per cent of rural workforce. The remaining non-crop sub-sector - forestry - contributed around 1.8 per cent to GDP, with a growth rate of 5.4 per cent.
In terms of growth performance, despite declining trend in the share of national output as well as employment, with increased modernisation and research and development, the agriculture sector experienced steady rise in average decadal growth reaching 3.9 per cent during 2001-11 compared to 2.0 per cent during the 1980s. In terms of individual crops, rice continues to dominate the sector -- occupying more than three-fourths of cropped area. Significant growth in rice production was achieved since the 1980's with the expansion of groundwater irrigation (contrasting with rain-fed cropping) and extensive use of fertiliser and HYV rice.
It must however be borne in mind that despite these higher growth rates compared to the past, agricultural growth cannot be expected to be in the 7-8 per cent region to fuel growth acceleration of the whole economy, something that can be expected of the manufacturing sector. The industrial growth has been 9.5 per cent and service sector growth rate was 6.0 per cent and agricultural growth rate has been only 2.61 in FY 16. Therefore, we cannot attain average GDP growth of cherished 8.0 per cent or above to be on the way to a high middle-income country.
In view of these circumstances the 7th Five Year Plan (2016-20) has prescribed for the transformation of agriculture into a newer and modern form which will certainly require short- and medium-term adjustments with adequate investments. These include among others: (i) crop diversification with the application of innovative technology; (ii) modern forms of irrigation and fertiliser use; (iii) well-integrated and developed storage facilities and transportation systems; (iv) advanced agriculture research in a wide range of products beyond its traditional focus on rice and introduction of hybrid seeds; and (v) development of drought- or flood-resistant crops. Furthermore, the food price hike and global shortages (partly aggravated by export controls in surplus countries) that preceded the global financial crisis of 2008 have caused a re-evaluation of the food security challenge in favour of moving towards self-sufficiency. Another crucial consideration of agriculture sector is to rethink about strategies related to labour market as vast pools of agricultural labour turns redundant and migrates to urban manufacturing and service sectors in search of jobs.
In order to strengthen food security in the country, scheduled private and foreign banks participated in agricultural loan disbursement thrust initiated by the central bank recently but just only tuning to semi-subsistence small-holder agriculture. Area-wise special marketing support for agricultural production, especially agricultural credit programme has been launched. Public-Private Partnership (PPP) policy has been created in partnership with the private sector to conduct agricultural activities. In the field of agricultural credit, easier mechanism has been initiated to distribute money to farmers. A scheme has been introduced to the farmers which allows them to open an account by depositing only Tk 10. Considering the growing demand for agricultural and rural credit, agriculture and rural credit distribution has been enhanced enormously. Policies and programmes for agriculture and rural credit, agricultural credit, three major agricultural sectors (crops, fisheries and livestock) have been given priority. In order to achieve agricultural diversification, production of pulses, oilseeds, spices and maize crops is provided with agricultural loans at the interest rate of 4.0 per cent. Also agriculture and rural loan interest rate ceiling has been reduced to 10 per cent from 11 per cent for this priority sectors. A block allocation of Taka 90 billion has been earmarked as subsidy for agriculture in the budget FY17. But there is no provision for large-scale ventures to create commercial crop farming based on advanced integrated technologies.
Prof. Shamsul Alam,  Member Senior Secretary, General Economics Division, Bangladesh Planning Commission, is President of Bangladesh Agricultural
Economists Association.
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