Assets in rural areas

A household would have different types of land in portfolio. These are used for homestead, orchards, ponds, etc.  that are used for seasonal and permanent crops. The portfolio may change over time in consort with needs and imperatives. For example, it could be observed that the average size of homestead land declined over the past decades. This might have happened due to division of households and growth of homestead-based agricultural crops. The cultivable land had shrunk at a rate of roughly 1 per cent per annum over the entire period. This observation supports the widely-held view that Bangladesh loses cultivable land by 1 per cent per year. The reasons behind the loss are rising demand from non-agricultural uses and building of infrastructure, growing urbanisation etc.

However, the share of land under pond/water bodies has increased over time substantially signifying growth of pond aquaculture at household level. On the other hand, land for gardens and orchards has also increased substantially indicating growing importance of horticultural crops. In fact, the proportions of households owning pond and gardens have increased roughly four-folds over time. It thus appears that in the face of rising man-land ratio and declining cultivable land, rural households are engaged in optimising the use of limited non-agricultural land for earning a living.

In this context, we can possibly put a few policy tips. Since the use of land in rural Bangladesh has been increasing for producing perishable crops, provisions for facilities with regard to marketing, storage and information should be increased. Besides, the Department of Agricultural Extension (DAE) or NGOs should come up with training programmes, especially for women, as homestead-based horticulture and aquaculture activities are gaining importance. And finally, credit arrangements should be made available for homestead-based agriculture.

Besides land, livestock is another asset in rural Bangladesh which is not only a major source of livelihood but also helps cope with crisis. There was a time when the size of the cattle-sheds and the number of livestock used to indicate the level of solvency of rural households. That is, it was assumed that the owners of more livestock assets are the solvent households or families in villages and a lack of it implied poverty. But available evidences now provide us with a different picture.  Nowadays, the proportion of poor households in rearing livestock, goats and poultry birds also increased in tandem with the rich. At present, a rural household has, on average, 2.7 livestock, 2.4 goat/sheep and 2.7 poultry birds.

Seemingly, the earlier enthusiasm on the part of the rural rich in rearing animals dissipated to some extent presumably with growing costs of rearing animals due to scarcity of fodder and increase in prices of livestock feed. The large and medium farmers have resorted to agricultural mechanisation and are rearing mostly dairy animals for supply of milk for the family members. On the other hand, a larger proportion of small and marginal farm households have been rearing cattle in one or two units based on feed available within the homestead. The ownership of the cattle is financed with loans obtained from micro-finance organisations. It is reported that nearly 40 per cent of the micro-credit is used for livestock and poultry raising.  

Rearing of goats is another kind of asset accumulation. In times of crisis, poor households can sell goats to earn livelihood. Over time, the incidence of rearing of goats has increased. For example, 23 per cent of rural households reported an increase in the ownership of goats during the comparable periods. And finally, if we consider the total value of livestock, we will observe that rural households, especially poor ones, have increased their assets over the same period of time. In the distant past, these poor households fell behind in accumulation of such assets but now, happily, they have moved ahead in this respect. Income from livestock and poultry, for example, increased for all households and particularly for the poor, it rose more. This means, poor households can benefit from accessing credit even at a rate of 30 40 per cent per annum.

Leaving aside land and livestock, rural people also depend on some non-land fixed assets to eke out their living. These assets constitute an important component of their capital stock to generate current income. These include power tiller, shallow tube-well, threshing machine, rickshaw van, and so on. As we will see later, non-land fixed assets emerge as one of the significant determinants of household income.

Noticeably, 10 in every 100 households in rural areas have their own irrigation equipment - mostly shallow tube-wells and power pumps. This compares with about 6 out of 100 households owning such assets in the past, and 3 out of 100 in the 1980s. Assuming that the total number of agricultural farms in Bangladesh is 14.5 million, roughly 1.2 million households are now owners of this equipment. We argue that the import liberalisation policy of the late 1980s played a vital role in the expansion of ownership of irrigation machines over time. Households owning bullock-cart is on the wane, possibly, pushed out by modern transport mode and the development of paved roads that has made operations of rickshaw vans easy and profitable. The average value of capital owned by sample households rose from US$ 500 to US$ 635 between 2000 and recent past - by more than 6 per cent per annum.

The writer is Professor of Economics at Jahangirnagar University. [email protected]