The case for innovative agro-investment

Agriculture is the single-most important sector in the Bangladesh economy. Eighty per cent of the population is engaged in agriculture, with 57 per cent of the labour force in the crop sector --- which represents about 78 per cent of the value added in the sector. The role of agriculture in Bangladesh economy is a major factor in measuring the economy's state of growth and development. The country is mainly agrarian. The contribution of agriculture to the country's gross domestic product (GDP) is now near 20 per cent, almost 4.2 per cent of total export earnings. The sector provides work for about 62 per cent of the population. It is also source of many of the small industrial sectors' raw materials and off-farm activities. It has the potential for serving as a strong driver of growth and poverty reduction in Bangladesh. In short, agriculture is a major driving force behind economic growth; and as a result, the increasing agricultural production, especially food grain, has always been a major concern for policy makers.
 Despite the impressive contribution of agriculture to the nation's economy, the sector remains largely underdeveloped and uncared for. Most of the farmers still survive at subsistence level and are small-scale ones, having less than 1.5 acres of land. They live in rural areas and are mostly poor. The level of technology use is also low. Production remains weather-dependent and, consequently, the farmers' incomes remain stuck at a low level, with poor market access for their produce, weak infrastructure and limited ability to influence government policy.
Agricultural investment is the most important and effective strategy for poverty reduction in our rural areas. Investing in agriculture reduces poverty and hunger through multiple ways. Farmers' productivity and incomes are enhanced, thus generating demand for other rural goods and services, and creating employment and incomes for the landless rural poor. In addition, there is increased availability of food in the market, which leads to lower consumer prices, thus making food more accessible to rural and urban consumers. At one point, it becomes evident that these benefits have roots in the village and eventually enter the broader economy.
 Bangladesh agriculture has greatly been impeded   by lack of adequate investments, funds and credit. Inadequate access to investment has been a prevalent feature of our agriculture. Besides, the sector has yet to see full adoption of better technologies. Farmers typically experience seasonal incomes, long maturation periods, and are exposed to considerable risks. The seasonal natural hazards affecting agriculture arising from flood, drought, variable rainfalls etc cause price fluctuations of inputs and products, as well as crop failure due to pests and diseases. Credit constraints have adverse effects on farm output, profit, investment and efficiency, thus lowering the farmers' risk bearing ability. It results in underinvestment and, consequently, leads to the marginal people's inability to break out of poverty. Therefore, if agriculture is to become a chief player in eradication of poverty, the issue of agricultural investment in this country is very pertinent.
Agricultural development cannot be possible without innovative investment. It is a major source of improved productivity, competitiveness and economic growth throughout the advanced and emerging and developing economies. Innovative investment in agriculture refers to new ways of raising funds, often from extra-official sources to expedite development of the sector. It can be a catalyst coming from private sources, which traditionally underutilise their potential in contributing to development through public-private and private initiatives. The Bangladesh government has been the main source of agricultural investment over the years, although the supply of official investment to the sector is not up to the mark. The restricted and unpredictable nature of public funding, especially in the times of crisis, underscores the fact that new types of innovative investment, which are specially devised to suit the prevailing conditions, are required for agricultural development.
It has been revealed that Bangladesh food supply is expected to increase dramatically in order to meet the demand for an increasing population. It is estimated that by 2050 the nation's population will double. Among the least developed countries (LDCs), where the agro-sector challenges will require the most efforts, Bangladesh lags behind others with regard to productivity gains from major crops.  The country is facing severe threats to its agriculture concerning maintenance of soil fertility mainly because of a fragile environment, increasing land pressure, and low adoption of effective soil conservation practices. In addition, challenges from climate change represent major risks for long-term food security and nutrition, especially in the southern districts of the country. It calls for efforts to adapt our agriculture to climate changes on an urgent basis.
Meeting these challenges will require a considerable scaling up of investment in Bangladesh's agriculture. There is the need for huge volumes of investment per year in order to cope with the present challenges. Against the backdrop of the enormity of the challenges, coupled with existing budget constraints, it is necessary for us to find innovative ways of sourcing funds to help meet the adversities. Recent investment-related innovations in place around the world, including Bangladesh, in the field of agriculture have been in the areas of rural leasing, providing financial education for farmers, providing non-financial services and market linkages, arranging marketing, technology adoption and helping in risk management.
Despite the myriad problems facing agricultural investment in Bangladesh, efforts are being put in place not only on the part of the government, but initiatives are also taken by some private entities, individuals and local and foreign investors. The contribution of the government to the provision of framing basic infrastructures and ensuring security of life and property is highly commendable.  But more need to be done in the agricultural sector by materialising uninterrupted power supply; so that the foreign and local investors with innovative ideas come forward.
 On the farmers' part, resources are presently pooled together through individuals, groups, contract growers and cooperatives to assist one another. Remarkable achievements have been recorded in terms of the number of beneficiaries and loan repayment.
There are a few local and foreign investors in the country who are involved in production, processing, selecting and grading, and marketing agro-products and different farm inputs. They play a major role in making innovative investments in agriculture in the country.  
Alongside recognising the successful countries in the agricultural sector as models, and following their policies, we can introduce the practice of investing remittances, voluntary contributions from consumers, firms, and related industries in the sector. Innovative investment, whatever the form it may take, must be sustainable and based on a supportive policy environment. The success of innovative investment in agriculture rests on private investment, public-private partnership ventures and free market economy, where the forces of demand and supply dictate the prices of tradable commodities. The government is naturally expected to provide an enabling environment; and in addition, the principles of social cohesion among farmers ought to be strengthened to ensure the success and sustainability of innovative agricultural investment.
The writer is an Assistant General Manager of Bangladesh Krishi Bank, and a life-member of Bangladesh Economic Association.
 sobhan_bd2003@yahoo.com