Transforming agriculture for an inclusive & diversified economy

The spirit of ‘Leave no one behind’, which informs the implementation of the Sustainable Development Goals (SDGs), stipulates that issues of concern and interest to the most vulnerable and marginalised groups in society ought to be prioritised in view of attaining the global as well as national goals. The idea is to ensure that no segment of society is excluded from the development process and its positive outcomes. In no sector is this as important and relevant as the agriculture sector. Attainment of many SDGs, not to speak of SDG 2 (zero hunger) and SDG 1 (zero poverty), crucially hinges on the performance of this sector. In the context of developing countries, there is a rich literature that shows that one of the most effective ways to improve the lives of the left behind and marginalised people and those living below the poverty line is to support the growth of the agriculture sector in a way that keeps the concerns and interests of the people engaged in agriculture and living in rural areas at the centre of agricultural transformation.

The agriculture sector broadly includes crops, animal farming, forests and fishing activities in the Bangladesh context. To note, in Bangladesh, about 90 per cent of the farms are small holdings, with land size ranging from 0.5 to 2.5 hectares; more than 50 per cent have at most one acre of land (Agricultural Census, 2022). In view of this, the current paper, a Policy Brief to be exact, focuses on issues of interest, particularly to marginal and small farmers and the challenges they face in accessing inputs, production and marketing, and in view of the transition that will need to take place in agriculture for its modernisation and transformation becoming of an upper middle income developing country beyond 2030.

Challenges of transforming agriculture for an inclusive and diversified economy: The agricultural sector of Bangladesh has made notable progress over the past years. This is captured in areas of food production, cropping intensity, commercialisation and diversification of the agriculture sector. For example, food grains production tripled to 38.7 million tons in 2020-2021 from 9.8 million tons in 1972 (BBS, 2022). Since 2000, one of the most influential drivers of poverty reduction in Bangladesh has been the agriculture sector, which contributed to reducing poverty by about 90 per cent between 2005 and 2010 (World Bank, 2016). According to the Labour Force Survey 2022, about 45 per cent of the total population is involved in the agricultural sector, indicating that the sector continues to remain the major source of employment generation in the country.

However, this also indicates that productivity of labour in agriculture has been lower compared to the other sectors of the economy. The contribution of agriculture to the country’s GDP over the last decade has come down to11.2 per cent in FY2022-23 from 18.4 per cent in FY2009-10 (Bangladesh Economic Review, 2023; BBS, 2020). The share of households that only do farming has come down to 30.3 per cent in 2013 from 46.5 per cent in 2000, while the share of mixed (farm and non-farm) households has increased to 33.7 per cent from 14.8 per cent during the corresponding period (Sen et al., 2021). The country’s population is projected to cross the 190 million mark by 2030, indicating that the importance of agriculture will remain over the foreseeable future. This will create demand for an additional 25 per cent of food grains (Sayed & Haruyama, 2016). Development of the agriculture sector will continue to remain critically important from the perspective of Bangladesh’s food security.

To strengthen the agricultural sector, the Government of Bangladesh (GoB) has taken a number of initiatives that include installing solar-powered irrigation pumps, establishing agriculture information centres, distributing agriculture assistance cards, providing subsidies, imparting training, extending loan facilities, and improving food storage capacities and others.

However, in spite of the aforementioned various initiatives, the agricultural sector has remained mostly undiversified, with the dominance of monocropping (rice). The small and marginal farmers are finding it increasingly difficult to sustain their livelihoods based on prevailing cropping practices, marketing channels and value chains. Going forward, strong backward and forward linkage of agriculture with industry, in a way that secures and safeguards the interests of medium and small farmers, will not only ensure sustainable development of agriculture but also help attain this in an inclusive way. This is not an easy task though.

Recommendations: Transformation and modernisation of Bangladesh’s agriculture sector will bring wide ranging benefits to the farmers as also for the country. These will reduce labour time, give higher yield, ensure efficient use of resources (land, labour, capital), create job opportunities, increase income, reduce poverty and vulnerability, increase food safety and bring down malnutrition. Modernisation of agriculture will help propel the economy en route to the upper middle-income journey. Such a transformation will call for effective collaboration among all involved partners: farmers, government, private sector, NGOs and other non-state actors, research community, and data producers. Adequate investment will need to be made in support of the cause of modernisation and diversification of agriculture. In view of the challenges identified above, a set of recommendations has been presented below, which are grouped under three broad categories: diversification, inclusiveness, and governance.

Diversification

Emphasis will need to be put on productivity-driven diversification. This will call for interventions in areas of agro-practices, skills, technology and innovation. By addressing the concerns in these areas, farmers, more specifically, small farmers, will be able to generate more and sustainable income, meet consumer demand and improve market access.

Undertake skill-needs assessment and take measures for capacity development. Conduct a comprehensive skill-needs assessment to identify the knowledge sets required for different segments along the agricultural value chain. Such an assessment will help design targeted training programmes in view of the needs of the agriculture sector. Capacity of farmers will need to be built through training programmes, workshops and knowledge-sharing initiatives to encourage them to adopt modern agricultural practices. Farmers will need to be informed about best farming practices, crop management and post-harvest handling to maximise yields and preservation of quality. Geographical specificities ought to be considered in the delivery of services to farmers.

Improve the capacity of the agencies’ staff under the Ministry of Agriculture (MoA) through proper training to enable them to provide necessary extension and advisory services to farmers. This should be done on a regular basis. Such training programmes should be informed by scientific knowledge and a deeper understanding as regards the effects of policies on intended recipients. Inter-ministerial coordination and collaboration must be strengthened.

Help adopt climate-smart agriculture practices. To reduce climate change risks and vulnerabilities, the NAP 2022 has set six goals, the second of which is to develop climate-resilient agriculture for food, nutrition, and livelihood security. Considering this, there is a need to promote climate-smart agricultural practices, e.g., efficient water management, sustainable farming techniques, climate-resilient agricultural practices and technologies to build resilience against the impacts of climate change. Initiatives are required to avert, avoid and arrest environmental degradation. Traditional knowledge should be seen as an important resource in this connection.

Small-scale technological solutions Promote small-scale technical solutions to guide the ongoing mechanisation of Bangladesh agriculture. In this backdrop, consider the local context, e.g., use of large combined harvesters which are not only very expensive but also technologically not feasible in most parts of the country. Appropriate technologies must be promoted through policies, targeted subsidies (if necessary) and government support. Government should put in place measures and incentives to promote group purchases and cooperatives, leasing and rental arrangements, markets for used equipment, and partnerships between NGOs and agricultural organisations. Local manufacturing and assembly plants should be encouraged to produce small-scale and cost-effective technology.

Support the adoption of modern methods. Adoption and adaptation of appropriate, modern technologies should be incentivised. Initiatives will need to be taken to encourage the uptake of high-yielding crop varieties and drought and flood-tolerant seed varieties. Adopt integrated Pest Management (IPM) practices to manage pests and diseases in a sustainable and environmentally friendly manner.

Take initiatives in support of local production of agricultural machineries. Small-scale manufacturing and assembling of agro-machineries and equipments will stimulate rural economy and strengthen agriculture-industry linkages. This will also help in terms of import substitution, help reduce import costs and make agri-equipments more affordable to farmers.

Promote agricultural innovation. The government should create platforms to promote networking and interactive learning with the participation of farmers, input suppliers, manufacturers, traders, researchers, extension officers, government officials, NGOs and civil society organisations. Ensure that the needed extension services, technical support and training are provided to farmers who undertake contract farming. Take advantage of digital technology: send SMS to raise awareness about improved agricultural practices, innovative technologies and market information. Introduce water control methods to help cultivate land during the dry season. Motivate farmers to use natural/organic fertilisers. Help small and medium farmers adopt better storage and transportation facilities to reduce post-harvest losses and conserve product quality.

Introduce diversified and multiple cropping systems. Provide incentives in the form of subsidies and financial support to farmers for adopting diversified cropping systems. Promote commercial cultivation of cash crops such as sugarcane, jute and other crops for export to foreign markets. Invest in the marketing of agricultural products to strengthen competitiveness in the global market. Promote multiple cropping. Introduce short-duration rice varieties to free land for cultivation for additional crops, particularly high-value items such as potatoes and onions, between rainy season and dry season rice crops. Promote awareness among farmers about the benefits of going for crop diversification, taking into cognisance the advantages of the local agro-ecological-geographical systems.

Ensure that small farmers have access to finance and incentives. Ensure that farmers, especially smallholders, have easy access to credit and financial services to raise their capacity to invest in modern inputs, equipment and infrastructure. Arrange short-, medium- and long-term loans, as required, for farmers to be able to address risks. Introduce insurance schemes to protect farmers against crop failures, natural disasters, and other risks which could result in financial losses. Provide incentives and recognise the success of small-scale farmers who perform well and, maintain high-quality of products and comply with good standards on a consistent basis. Undertake an awareness raising campaign to sensitise farmers and general public about the consequences loss of agricultural land and the long-term value of retaining agricultural land.

Ensure coordination in the value chain. Take measures to strengthen vertical coordination by promoting collaboration between different actors in the value chain (from primary producers to consumers). For example, link farmers to supermarkets directly. Introduce the ‘Gucchogram’ concept through union parishads. Focus on vertical expansion (backward and forward linkages) and strengthen horizontal coordination (between actors at the same level).

Discourage rural-urban migration. Design a medium-term strategy to reduce youth migration from rural to urban areas by creating job opportunities in the rural non-agricultural sector. Create jobs in agro-based rural services.

Raise awareness about climate-related risks. Educate farmers about climate-induced risks. Raise awareness about the impacts of extreme weather events, including droughts, erratic weather patterns, floods, etc. Disseminate knowledge about safe cultivation methods that reduce risk. Take measures to strengthen local institutions, and promote community and group–based approaches to promote location-specific cropping culture and crop varieties in climate stress-prone areas (Khanam, 2021).

Inclusivity

Inclusivity is geared toward reducing income disparities between small farmers and large farmers. For this, targeted measures are needed to enable small-scale farmers and low-income rural households to access essential services and improve their standard of living. Recommendations for inclusion of small farmers for an inclusive and diversified economy are the followings:

Ensure access to information and resources. Ensure access to quality seeds, fertilisers, pesticides and other agricultural inputs for small farmers. Ensure that farmers have easy access to government-provided information related to incentives, weather forecasts, best agricultural practices and appropriate technology, among others. Develop and strengthen market information systems to provide farmers with real-time data on demand and price trends. Ensure accuracy and accessibility of the weather forecasts to farmers through weather department. Provide farmers with information about consumer preferences, global market and price trends, and help them align their production processes and cycles with market needs. Take advantage of digital technology for this.

Ensure gender inclusivity. In extending support to farmers, keep the needs of women farmers at the centre of focus to ensure that they have equal access to resources, information and training.

Take measures to guarantee an appropriate level of income for marginal farmers. The government may take the following steps in view of this: (i) Establish minimum support price for various agricultural commodities to ensure that farmers receive minimum guaranteed price for their products; (ii) Maintain buffer stocks of essential agricultural commodities to stabilise prices and forestall sharp price fluctuations. Government should release foodgrains from stocks during times of scarcity to minimise price volatility; (iii) Calibrate procurement targets based on production partners. Enhance procurement to stabilise prices during bumper crop years. Establish systems to disseminate reliable and timely price information to farmers as regards when and where to sell their produce, and (iv) Encourage the formation of Farmer/Producer Organisations and Cooperatives to empower small and marginal farmers to collectively negotiate better prices for their produce and access government support programmes.

Ensure market access and establish linkages: Facilitate access to markets by farmers and buyers, including agro-processing companies, exporters and retailers, through improved market infrastructure and information systems. Promote linkages with agribusinesses and retailers for both large and small farmers. Help farmers’ associations establish strong market linkages to reduce dependence on intermediaries and ensure better prices for their produce. Develop a sustainable supply-demand chain to ensure fair prices to growers and consumers. Develop local and niche markets for unique and special agricultural products. For this, help establish collaboration between the private sector and agricultural organisations. Government’s tariff policies and fiscal interventions must be guided by concerns about sustainability of agriculture, food security, climate impact mitigation and agricultural modernisation.

Governance and Policy

Policy reforms. Review and update agricultural policies and regulations to create an enabling environment for the development of the agriculture sector in a way that strengthens its backward and forward linkages with industries. Learn from past experience and mistakes (some of the learnings from the past have been noted in the proceeding sections). Towards this (a) make rental services affordable to small farmers; a dedicated service provider may be identified for this whose operations will be regulated in a way that the provider is not able to charge unjustifiably high price for the services; (b) foster collaboration between the government and private sector to drive agricultural development and investment in modern farming technologies; (c) initiate appropriate policies and support for representatives of small farmers to participate in agro-related decision-making processes and ensure their inclusion in value chains decision; (d) take measures in support of technological and institutional innovations e.g., recognition of quality via third-party certification which would ensure higher prices for good quality products; (e) put in place proper incentives for farmers to adopt quality-enhancing technology; (f) implement land reform policies to improve land tenure security, reduce land fragmentation, and encourage cultivation in economic efficiency-wise viable plots; and (g) promote small farmer-friendly contract farming policies as against farming that serves the interests of large corporations. Regulations and policies should be put in place as regards land use, tenancy rights, and taxation to address the absentee landownership issues. Measures should be taken to encourage absentee landowners to become more engaged in land management and with the affairs of the local communities.

Support food safety and quality standard compliance. Assist farmers to meet food safety and quality standards so that they are able to access higher-value markets and consumers. Promote adherence to international quality standard and certification to ensure that Bangladesh’s agricultural products meet global market requirements and standards. Raise farmers’ awareness about sanitary and phytosanitary requirements, technical barriers, and standards and certification.

Review public procurement policy. Review public procurement policies so that a diverse range of agricultural products is included in institutional food procurement programmes. Sustainable Public Procurement (SPP) policy of Bangladesh provides practical information on how to adopt sustainable public procurement and select the most sustainable procurement decision. The policy should be implemented with due priority.

Invest in research and innovation. Invest in agricultural research and development for the introduction of new technologies, crop varieties, and sustainable practices. Raise the amount of investment in research and development concerning high-value crops and products with export potentials, with a view to diversifying agricultural production and stimulating export earnings. Give more attention to agricultural research on the production of high-quality seed, particularly as regards the development of climate-resilient cropping methods and technology.

Put in place effective communication. To mitigate adverse implications of drought and flash floods, the government should do the followings: (i) inform farmers about the associated risks and educate them on how to respond to various types of natural disasters such as flash flood; (ii) take proactive measures including putting in place early warning systems, community preparedness, robust emergency response plans, and sustainable land and water management practices; and (iii) to reduce potential damage to crops during natural disasters, have systems put in place to issue timely alerts and warnings through various channels, including emergency alerts on mobile devices, radio, television and social media.

Concluding Observations: The importance of the agriculture system for the Bangladesh economy cannot be overemphasised. Livelihoods of a large share of the population critically hinge on the sector despite the sector’s falling share in the GDP. Bangladesh’s agriculture sector is at present facing many challenges, but it also has a lot of opportunities. To ensure its continued contribution to the economy, it is crucial to address the challenges the sector is currently facing and reap the opportunities. In this backdrop, the Policy Brief has suggested a number of concrete measures going forward, keeping in perspective the concerns and interests of particularly the marginal farmers.

As the paper has pointed out, some of the key concerns were related to fragmentation of land, mono-cropping and lack of agri-diversification, lack of skills and training, adoption of appropriate technology, price volatility and uncertainty, and lack of awareness among many farmers about modern cropping practices and inputs, market opportunities, both domestic and global, and weak backward and forward linkages with industry. Small farmers are particularly vulnerable because of their low capacity to deal with climate change impacts, natural disasters, lack of knowledge about risk-mitigating tools and tenurial uncertainties.

Addressing all these challenges will require a comprehensive approach, including undertaking policy reforms, higher investment in research and technology, effective knowledge dissemination, and capacity building of farmers and agri-entrepreneurs to mitigate risks and adopt innovative practices. In this regard, a concerted effort will be needed on the part of institutional agents such as governments, international and bilateral development partners, NGOs and the private sector. Cooperative actions will need to be incentivised to reduce the role of intermediaries towards direct marketing by farmers. Modernisation and commercialisation will need to be incentivised through training and awareness-raising programmes, agri-extension services, the introduction of cropping insurance and by helping farmers to link with the market. Tenurial reform and procurement policies ought to keep the interests of small-scale farmers so that agriculture transformation is both productive and inclusive.

This paper, under three broad categories (i.e., diversification, inclusiveness, and governance), has come up with recommendations to overcome these challenges and transform agriculture into an inclusive and diversified segment of the economy. It is hoped that by implementing the recommendations, tailored to particular contexts and localities, farm productivity can be improved, sustainability enhanced, food security ensured, employment and livelihoods opportunities expanded, and global markets accessed. In all these, the interests of small farmers must inform the policies and initiatives of both governments and all concerned stakeholders. Higher productivity will also release land resources for non-crop agriculture practices in agriculture such as livestock, poultry and fisheries. These activities will also create opportunities for employment of rural youth and the unemployed and landless. An inclusive and diversified agriculture has the potential to be a key driver of Bangladesh’s long-term sustainable economic growth and help Bangladesh meet its SDG aspirations, by leaving no one behind.

The paper is an abridged version of a policy brief which is prepared by a team of experts with Mr Asif Ibrahim, Core Group Member, Citizen’s Platform and Vice-Chairman, New Age Group and Industries as Chair and Dr Jinnat Ara, Research Fellow, Bangladesh Institute of Development Studies (BIDS) as the Penholder Expert. The other team members are: Dr A. H. M. Saiful Islam, Professor, Department of Agricultural Economics, Bangladesh Agricultural University (BAU); Mr Ahsan Khan Chowdhury, Chairman and CEO, PRAN-RFL Group, Ms Ferdaus Ara Begum, Chief Executive Officer, Business Initiative Leading Development (BUILD); Dr K A S Murshid, Former Director General, BIDS, Dr Kazi Iqbal, Senior Research Fellow, BIDS; Dr M Asaduzzaman, Former Research Director, BIDS; Dr M. Masrur Reaz, Chairman, Policy Exchange; Dr Md Farid Uddin Khan, Professor, Department of Economics, University of Rajshahi; Mr Md. Tanjil Hossain, Associate Professor of Economics, Jatiya Kabi Kazi Nazrul Islam University; Dr Mohammad A Razzaque, Chairman, Research and Policy Integration for Development (RAPID); and Mr Mohammed Nurul Amin, Eminent Banker.

The Policy Brief exercise is the outcome of an initiative of the Citizen’s Platform for SDGs, Bangladesh hosted by the Centre for Policy Dialogue (CPD). The issues were identified and prioritised through nation-wide consultations with local level people and organisations. The initiative was led by Dr Debapriya Bhattacharya and Professor Mustafizur Rahman, Distinguished Fellows at the CPD. [email protected]