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Financial and Economic Suitability of Agroforestry as an Alternative to Shifting Cultivation: the Case of the Chittagong Hill Tracts, Bangladesh

Golam Rasul*
International Centre for Integrated Mountain Development, Kathmandu 3226, Nepal

Gopal B. Thapa
School of Environment, Resources and Development, Asian Institute of Technology, P.O. Box 4, Klong Luang, Pathum Thani 12120, Thailand

Abstract/ Executive Summary:

As in other mountain regions of Asia, agricultural lands in the Chittagong Hill Tracts (CHT) of Bangladesh are undergoing degradation due primarily to environmentally incompatible land use systems such as distorted from of shifting cultivation (jhum) requiring the slashing and burning of vegetation every year. Agroforestry is considered to be environmentally suitable for mountainous areas like CHT, as the rate of soil erosion under such systems is considerably less than jhum. To design strategies in the pursuit of promoting agroforestry its financial and economic benefits need to be evaluated systematically. Based on three criteria such as benefit–cost ratio, net present value, and return to labor, this paper evaluated the financial and economic benefits of agroforestry and jhum using farm household data. Information was collected from farm households and agricultural commodity traders through questionnaire surveys, case studies, focus group discussions, and key informant interviews following a two-stage sampling method. The results show that economic returns from agroforestry are better than from jhum in terms of all the three criteria. When economic benefits of two land use systems are analyzed by taking into account the cost of nutrient depletion arising from soil erosion, agroforestry appears to be more attractive than jhum. The analysis revealed that despite higher environmental and economic benefits the low adoption of agroforestry is largely attributed to policy and institutional constraints such as insecure land tenure, complicated transit rules, double levy on agricultural commodities, and farmers’ poor socio-economic condition. Findings of the study indicate that there is a prospect for promoting agroforestry by eliminating the existing policy and institutional barriers combined with the provision of necessary support services and facilities.

Keywords: Shifting cultivation (jhum); Agroforestry; Financial analysis; Economic analysis; Chittagong Hill Tracts; Bangladesh

Location: Bandarban Sadar and Alikadam of Bandarban district of CHT

Start Date: 00-01-2002

End Date: 00-07-2002

Program Area: Socio-economic and Policy

Commodity: Agroforestry

Objectives:

In view of the need for the promotion of financially and environmentally sustainable land use systems in CHT, on the one side, and a lack of relevant research, on the other, this paper firstly analyzes financial and economic or social benefits of shifting cultivation and an agroforestry system based on mainly primary data collected through a field survey. This is followed by a brief discussion of ongoing land use practices in light of the findings of financial and economic analyses. Finally, important policies have been outlined for the promotion of sustainable land use systems such as agroforestry in CHT.

Methodology:

2.1. Data collection methods This study is based on both primary and secondary data. Primary data were collected through a household survey, focus-group discussions, key informant interviews and case studies. Information was collected at two stages from two representative sub-districts, namely Bandarban Sadar and Alikadam of Bandarban district of CHT during January to July 2002. These sub-districts were selected as the majority of the farmers are hill tribes, with a different culture and language from lowland Bengali people, practicing jhum as their main economic activity. However, some of the hill tribes have adopted sedentary agriculture, including agroforestry. Initially, information was collected on the farmers’ socioeconomic condition, land use, land management and farming systems, employment, income, and personal experience with different types of land use from 304 randomly sampled farm households using a standard questionnaire. This was followed by the collection of additional information on specific land use practices such as the area under agroforestry and shifting cultivation, amounts and prices of inputs and outputs, and time spent on cropping activities through detailed interviews with randomly sampled farm households. Information provided by individual farmers was cross-checked during the focus group discussions held with each type of land user group to check any discrepancy in information collected through the questionnaire survey. Likewise, the reliability of information was verified with the key informants, agriculture extension and forestry officials, and local NGO workers. It revealed that the information provided by farmers was reliable. Although farmers had not kept written records, they were able to provide information correctly because of their long experience with shifting cultivation and agroforestry. 2.2. Selection of farmers There are several types of land uses being practiced by farmers in the study area. Jhum is dominant among them. Several crops are grown together with upland rice in the jhum field. Agroforestry, horticulture, and annual cash crops are also gradually evolving in the study area. As agroforestry is one of the important land use practices it was decided to focus on jhum and agroforestry in the pursuit of seeking privately and socially suitable land uses. Although jhum is the dominant land use, its importance to household economy varies largely. While some households entirely depend on it, others depend very little. Households who used 50% of the cropland for jhum and had practiced such land use continuously for the last 12 years were considered for the survey. Out of the total 304 sample farmers, 127 met these criteria. One-third of them were randomly selected for the interview. Regarding the agroforestry, farmers who had planted trees deliberately in association with field crops and earned some income from them during January–December 2001 were considered for the interview. Out of the total of 103 farmers who had planted some trees, 27 met these criteria. One-third of them were randomly interviewed. 2.3. Estimation of financial costs and benefits Production cycles of jhum and agroforestry vary considerably. In a typical agroforestry system there are both annuals and perennials, including fruits and timber trees. Most of the farmers in the study area grow timber tree species which mature after 10–12 years. Some of the fruit trees are productive for quite a long time, but their yields decrease considerably after the 12th year. Mango, jackfruit, shaddock and guava start bearing fruit after 5–6 years of planting and provide maximum yield for six years. After that the yield gradually decreases. However, fruits like jalpai (Elaeocarpus robustus) and black berry maintain high yields for more than 12 years. To make the cost-benefit analyses of jhum and agroforestry comparable, a 12-year time horizon was considered during which three jhum cycles, with 3–4 years for each cycle, are completed. Costs and benefits were analyzed based on inputs used and farm-gate prices of produce sold. The cost of labor was estimated based on the opportunity cost of labor, which was based on the prevailing rates of payment for male and female wage laborers. Accordingly, Tk. 90 and Tk. 60 (US$ 1 = Tk. 57 in 2002) were considered to be the daily per capita opportunity costs of adult male and female workers, respectively. The national interest rate for agricultural credit is 11% and farmers incur additional cost of about one percent in the process of obtaining credit. Therefore, a discount rate of 12% was considered to reflect the cost of capital. The same discount rate was considered to reflect the cost of capital in some forestry projects of the neighboring country of India.

Source of Information: Agricultural Systems 91 (2006) 29–50

Article Link (Online Journal):

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

While developed countries have been providing subsidies for promoting environmentally suitable land use systems in mountain areas for their contribution to the society as a whole, the Government of Bangladesh and local administrations have resorted to policies and institutional arrangements that make such land use systems unattractive by requiring farmers to get permission for the sale of timber harvested from their farmlands and to pay double levies. Therefore, the government should remove all rules and regulations, including the permit system for the sale of farmtimber and levies imposed by local governments. Local governments will certainly lose some of their revenue as a result of the abolition of a levy on agroforestry based products, including timber, bamboo and fruits. However, this is justified as the entire society benefits from this kind of land use. In case the local governments do not agree to this, the central government may offer other sorts of assistance to them in return for the sacrifice of their revenue. As elsewhere (Thapa and Weber, 1993), the Forestry Department has made the provision of a permit system for the sale of farm-timber to control illegal logging in national forests under the disguise of timber harvested from private farmlands. Though this legal provision has not helped to control illegal logging effectively due to rampant corruption on the part of forestry officials, it constrains the marketing of agroforestry products. To promote planting of timber species of trees, the government should make the process of selling farm-timber easy and simple by authorizing local organizations, including user groups, to grant certification for timber cut on private farmlands. Such certification should be considered as a legal permit for transportation of timber from villages to the market centers. Plantation and management of several agroforestry species, including fruits, entails investment of substantial amount of capital, which is beyond the capability of most farmers who are struggling to secure adequate subsistence requirements. Therefore, the provision of short- and medium term credit on a group guarantee basis should be made especially for small farmers without land certificates in order to enable them to adopt agroforestry.

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