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Poverty Reduction Through Agricultural and Rural Development: the Bangladesh Case

Mahabub Hossain
Head,
Social Sciences Division, International Rice Research Institute (IRRI), Manila, Philippines.

Abstract/ Executive Summary:

Rural development means improvement in the well-being of the people living in rural space. If the livelihood improvement brings into its fold people who lack capabilities to meet the basic needs, rural development would encompass poverty reduction. Since three-fourths of the population in Bangladesh still lives in rural areas, a broad-based rural development that improves the well-being of the bottom 50 percent of the rural population would contribute substantially to poverty reduction in the country. The improvement in the livelihood of the resource-poor households and thereby poverty reduction could be better achieved through faster growth in non-crop agriculture than for the crop sector, because the latter is much more land-intensive than the former, and the land is so scarce and unequally distributed. Non-crop agriculture generates substantially higher value-added in post-production (processing, storage and marketing) activities that can create opportunities for higher productive employment for the land-poor households. The exploitation of this potential will however require support from the public sector for developing rural infrastructure in the field of transport, power and communications, investment in secondary and technical education, as well as providing access to finance to the resource-poor households. The movement of labor from low-productive agriculture to high-productive non-farm activities is a positive trend for poverty reduction, and should not be an issue of concern. Farmers have started responding to the phenomenon by adopting mechanization. The government could facilitate the process by providing access to credit for financing mechanization and setting up small-scale agro-processing enterprises, and removing policy distortions against small-scale trading and business enterprises. Also, children from low-income households must be provided greater access to quality secondary education, to facilitate their occupational mobility and to improve the distribution of income from the rural non-farm sector.

Keywords: Poverty Reduction, Agriculture, Rural Development, Bangladesh

Location: In Bangladesh

Start Date:

End Date:

Program Area: Resource Development and Management

Commodity: Poverty, Socioeconomic

Objectives:

To determine the Poverty Reduction Through Agricultural and Rural Development of Bangladesh

Methodology:

Agriculture and rural development: Agriculture performed relatively well in the 1990s. The growth of agricultural incomes is estimated at 3.5% per year during 1990-2001 compared to 2.6% during 1974-90. The acceleration of agricultural growth has contributed substantially to the improved performance of the overall economy. The national income grew at 5.3 percent in the 1990s compared to 4.1 percent during the previous two decades. The acceleration in the growth of agricultural incomes was mainly on account of noncrop agricultural sectors, particularly from livestock and fisheries. These sub-sectors experienced a substantial increase in physical output, as well as favorable prices compared to the crop sector. The fishery's income grew by 7.8% per year in the 1990s, compared to 2.3% during the previous two decades. The income from livestock activities picked up in the 1980s and continued to grow at a robust rate of 7.3% in the 1990s. Only the forestry sub-sector grew at a moderate rate of 3.8% per year. Thus, agriculture has become much more diversified than it was at the time of independence (Mandal 2000; Ahmed and Chowdhury 2000). The share of livestock, fisheries and forestry in agricultural incomes was only 20 percent during 1973-74; by 2000-2001 they contributed nearly 44 percent to agricultural incomes. Poverty reduction: An accurate assessment of the trend in reduction of income poverty is difficult, in spite of a large number of studies conducted for Bangladesh on the subject (Muqtada, 1986; Hossain and Sen 1992; Ravallion and Sen 1996; Sen 2003). The household expenditure surveys (HES) conducted by the Bangladesh Bureau of statistics that report the incidence of poverty and income inequality through the periodic generation of household-level data changed over time the method of data collection and the measurement of the poverty line. Thus, while making a judgment about the poverty trend one needs to be cautious about the interpretation of the information. Agriculture’s role in poverty reduction: Agriculture is an economic activity based on land. Agricultural development aims to increase the productivity of land resources. In Bangladesh, almost one-third of the households do not own any cultivable land and another 17 percent own only up to 0.2 ha. So how can agriculture improve the livelihood of the people of these bottom 50 percent of the households who do not own any land and constitute the vast majority of the poor? The BIDS-IRRI study estimated that in 2000 an average farm household operated only 0.65 ha. With the level of land productivity prevailing in 2000, this size of farm could generate an income of only US$ 100 per person per year, which was only 70 percent of the income needed to meet the most basic human needs (poverty line). A poor household owned 0.29 ha of land, which at the prevailing productivity level generated only 30 percent of the poverty level income. Major challenges and opportunities: The major obstacle to poverty reduction in Bangladesh is its over-population in relation to natural resources. A rising population puts pressure on the limited land resources for producing food, and limits the capacity of the household and the nation to accumulate physical capital, due to the diversion of resources for maintaining a large proportion of young and unproductive population. Because of inadequate investment in education and health care, the human capital content of the population remains poor. Instead of becoming a resource, the illiterate and unskilled population becomes a burden for the nation. The lack of physical capital and skills constrains the development of the industry and services sector and limits the generation of productive employment for the rising labor force. Unemployment and underemployment breed social ills like violence and terrorism that in turn hinders development.

Source of Information: Report: Poverty Alleviation in Bangladesh, CPD Occasional Paper Series 39

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The movement of labor from low-productive agriculture to high-productive non-farm activities is a positive trend for poverty reduction, and should not be an issue of concern. Farmers have started responding to the phenomenon by adopting mechanization. The government could facilitate the process by providing access to credit for financing mechanization and setting up small scale agro-processing enterprises, and removing policy distortions against small scale trading and business enterprises. Also, children from low-income households must be provided greater access to quality secondary education, to facilitate their occupational mobility and to improve the distribution of income from the rural non-farm sector.

Knowledge Management: Journal