Assignment-2

Discussion on the role of rural and agricultural development since

independence

Summer-2021

Course – DEV-504
Rural development

Submitted by: MD. LUTFUL KABIR

Student ID: 19162029
Introduction:
Rural development has been the core focus of the Bangladesh economic policies
since her independence. The rural sector is pivotal to the country’s economic,
social and political development. This paper examines the Bangladesh rural
development policies, strategies and programs since Independence in 1971.
Secondary data were used and collected from various sources especially from BBS
and HIES. Data were analyzed using descriptive statistical tools such as mean and
percentage to reach the objectives. Results of this study show that the share of
agricultural sector in the country’s GDP has declined which is an indicator of a
country’s progress from an agriculture-based to an export-oriented economy. The
success of the agricultural and rural programs in Bangladesh is reflected in the
reduction in the poverty incidence in the rural sector from almost 54 percent in the
1983-84 to about 35 percent in 2009-10. Development efforts of Bangladesh are
governed by the twin objectives of achieving growth with equity and reducing
poverty. The government policy has to some extent achieved the intended results
but poverty and inequality are still significant and apparent. Hence, rural
development continues to be an important agenda to the country’s development
effort. One of the major thrusts of the economic development of Bangladesh since
her Independence in 1971 has been and continues to be the rural development
programs and policies. The rural sector plays a pivotal role in the country’s
economic growth, social and political development. The economy of Bangladesh
largely depended on the rural sector performance in the early development stage
for agricultural input and output hence the country‟s export earnings and growth in
the 1970s and 1980s. The rural sector before the 2000s was almost synonymous
with agriculture as more than 70% of her population was engaged in agricultural
activities including livestock and fishing. Taking agriculture as a proxy for the
rural sector, its importance as the engine for growth was 30.89 percent in 1980-81
and it went down to about 18.59 percent in 2009-2010 (BBS, 2010). Like any other
developing economies, the growing economic importance of the manufacturing
sector (as the contribution of this sector increased from 13.37 to 17.89 percent of
the respective years) implies that the role of rural sector is as the supplier of labour,
land and capital required for industrial development. Despite the declining trend of
agricultural share in the GDP, it will remain an important sector to the country in
terms of export earning, employment and food security. One of the major social
problems of the rural sector of the country is rural poverty. Although poverty is a
universal problem and its higher occurrence and incidence in the rural sector
makes it predominantly rural phenomenon (Hossain and Sen, 1992). The incidence
of poverty in the country was very high in the 1990s, that is, more than half of the
populations (56.70 percent in 1991-92) lived in poverty, with the rural sector
suffered the highest which was 58.80 percent compared to the urban (42.80
percent) (HIES, 2010). The problem is further aggravated with the predominance
of the north and ethnic groups in the rural areas and hence creating an economic
imbalance of the country. This inequity was perceived as a potential seedbed for
social unrest and political stability which might hinder the country‟s progress and
development. With the above premise, the Bangladesh government since her
Independence has focused on various social and economic programs and strategies
targeting to develop the rural people mainly through the agricultural policies. The
success has been remarkable as reflected by the reduction of poverty incidence to
31.5 percent in 2010. Nevertheless, the benefits of the development strategies have
not been equitable between the rural and urban sector as the former recorded 35.2
percent incidence of poverty compared to the latter which was about 21.3 percent
in 2010 (HIES, 2010). Hence, the struggle to improve the rural sector is still an
important agenda to the government in the next century. This paper attempts to
examine the evolution of the rural development policies in Bangladesh since her
Independence that was responsible in improving somewhat the quality of life in the
rural sector. The review would provide some understanding of the philosophies,
rationales as wells as the lessons that can be learned from the Bangladesh rural
development experience. This paper is organized as follows. The following section
provides an overview of the progress made so far in agricultural, rural development
and poverty reduction. This is followed by discusses of the role of agriculture in
poverty reduction in the Bangladesh context. A chronological review of the
development planning and policy since 1971 is reviewed in the consequent
paragraphs. The paper ends with conclusion and policy implication.
Progress and performance in agriculture, rural development and poverty
reduction:
Agriculture and rural development

Agriculture performed relatively well in the 2000s. The growth of agricultural

incomes is estimated at 3.9 percent per year during 2000- 01 to 2010-11 compared
to 3.5 percent during 1989-90 to 2000-01. The acceleration of agricultural growth
has contributed substantially to improved performance of the overall economy. The
national income grew at 5.9 percent in the 2000s compared to 5.3 percent during
the previous decade (Table 1). The acceleration in the growth of agricultural
incomes was on account of crop and non-crop agricultural sectors particularly from
livestock and fisheries. Livestock and fisheries subsectors experienced substantial
increase in physical output, as well as favorable prices compared to the crop sector
in 1990s. The fisheries income grew by 7.8 percent per year in the 1990s and
reached pick, substantial declined was observed in consequent year and was 3.1
percent during the 2000s. The income from livestock activities picked up in the
1980s and continued to grow at a robust rate of 7.3 percent in the 1990s and then
fall in 2000s. Only the forestry sub-sector grew at a moderate rate of 4.0 percent
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 2009-10 they contributed more than 67 percent to agricultural
incomes. However, the crop sector is still dominated by the production of rice.
Although the area under rice increased marginally from 9.28 to 11.27 million ha,
rice production increased from 9.77 million tons in 1971-72 to 32.36 million tons
in 2009-10 (Table 2). It implies a rate of growth 2.78% per year, much faster than
the growth of population. Development and diffusion of highyielding rice varieties
supported by the development of minor irrigation through shallow tubewells and
power pumps was the main driving force behind this growth (Hossain, 1988;
Hossain et al. 1994). More than 62 percent of the land is now irrigated, and over 91
percent of the rice area has been brought under the cultivation of the high yielding
modern rice varieties.
Table 1(Long-term growth (percent) of agriculture and economy, 1973-74 to 2020-
21)

Table 2(Technological progress and its effect on the growth in rice production)
The long-term trend in rice production however shows a cyclical pattern with a few
years of rapid growth followed by a few years of stagnation. This pattern is partly
due to depression in prices in seasons following consecutive good harvests that
provides disincentives to farmers to further increase production, and partly due to
occasional natural disasters – floods, droughts and cyclone. Bangladesh has also
experienced respectable growth in the production of wheat which turned it from a
minor to a major crop during 1976-84. Wheat production increased from 0.14
million tons in 1976 to 1.4 million tons in 1984, but remained stagnant at that level
during the next decade. The growth resumed again in the late 1990s in response to
favorable prices, reaching a production level of nearly 2.0 million tons but in 2000s
falls again and reaching 0.9 million tons. The rapid expansion of wheat in 1990s
and the dry season Boro rice was however achieved partly through reduction in the
area under jute, sugarcane, pulses, oilseeds and other minor crops. As a result
Bangladesh has to spend scarce foreign exchange for import of noncereal food
products in increasing amounts. The reduction in the availability of pulses, which
are important sources of protein and micronutrients, has adversely affected
balanced nutrition, particularly for the poor (Jahan and Hossain, 1998). Among
other food crops, the growth was respectable only for potatoes and vegetables.
Bangladesh has comparative advantage in the production of these crops
(Shahabuddin, 2000), and production can increase substantially if foreign markets
can be tapped. Because of limitations of market, the prices of these high value
crops collapse at harvest time, which is main constraint to the expansion of
production. The growth of agricultural productivity has however promoted a
healthy development in the rural non-farm sector by triggering what economists
call “backward and forward linkages”. Agricultural growth has generated
opportunities for employment and income in the rural non-farm sector through its
effects on a) the demand for irrigation equipment and chemical fertilizers produced
and transacted in the non-farm sectors, b) the demand for services for processing,
storage and marketing of additional agricultural produce, and c) the demand for
trade, transport, construction, education and health care services, as farm
households spend a larger proportion of additional incomes for purchasing non-
farm goods and services.
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 income expenditure surveys (HIES) conducted by the Bangladesh
Bureau of statistics that report the incidence of poverty and income inequality
through periodic generation of household level data changed over time the method
of data collection and the measurement of poverty line. Thus, while making a
judgment about poverty trend one needs to be cautious about the interpretation of
the information. According to the World Bank estimate based on the HIES data,
nearly 40 percent of the rural population in Bangladesh lived below the poverty
line in 1995-96. A study by Ahmad and Hossain (1983) estimated that the number
of poor households in rural Bangladesh remained almost stagnant at 75 percent
during 1963-64 to 1973-74, but increased to 84 percent in 1976- 77, after the
famine in 1974-75. According to the Bureau of Statistics the poverty ratio for rural
areas declined from 74 percent in 1981-82 to 48 percent in 1988-89. The dramatic
improvement in the poverty situation in the 1980s, as shown by the official figures,
was however highly debated in the literature and was partly attributed to the
change in the data collection method in the 1983-84. During 1983- 84 to 1989-90
there was a decline in poverty ratio from 54% to 50% for rural areas and from 40
to 36% for urban areas. And during 1991-92 to 2010-11, the nation level poverty
was declined from 56.7 to 31.5 percent but rural poverty is much dipper than urban
poverty. It is now widely recognized that the poverty ratio has been declining by
one percent per year which is very slow considering that over 35.2 percent of the
rural population are still poor. The slow progress in poverty reduction in spite of
the acceleration of economic growth in the 1990s and 2000s are attributed to
growing inequality in the distribution of income for both rural and urban areas
(Sen, 2003). There are indications that Bangladesh has made moderate progress in
other dimensions of poverty. The primary school enrolment ratio has improved
from 43 to 89 percent, and the infant mortality rate declined from 99 to 38 per
thousand live births during the 1990-2010. The access of the population to safe
drinking water has increased from 78 to 98.1 percent, and to improved sanitation
from 26 to 53 percent. The most impressive progress has been made in population
control. The number of births per woman has declined from 6.1 to 2.2. The
preliminary findings from the 2011 population Census show a decline in
population growth from 2.2 percent in the 1980s to 1.3 percent in the 2000s (Table
3).
Table 3 (Progress in non-economic indicators of well-being)

The extent of vulnerability to external shocks has also been reduced. People have
become more resilience to natural disasters because of the change in the seasonal
composition of food production. The area under pre-monsoon Aus rice which was
highly susceptible to droughts has been reduced from 3.0 to 0.98 million ha from
1971-72 to 2009-10; the land has been diverted to growing dry season high-
yielding and relatively safe Boro rice or the highly profitable vegetables and fruits.
The risk of the loss of Aman rice from droughts has also been reduced due to large
scale expansion of the shallow tubewells that could be used for supplementary
irrigation. The percentage area under deep water broadcast Aman of total rice area
has been reduced from 19 to 4 percent, substantially reducing the loss in rice
output from abnormal floods. In the deeply flooded area farmers now keep the land
fallow during the monsoon season and grow Boro rice with irrigation during the
dry season (Table 4). The Boro area has expanded from 0.9 to 4.71 million ha over
the last four decades, which together with wheat brings nearly 55 percent of the
cereal harvest during the May- June period. So the losses in the rice output from
floods or droughts could be recovered within a few months. Earlier, farmers had to
wait for the next Aman harvest to recover the loss. With the year round production
of rice, the seasonality in employment and income for the landless workers is now
much less pronounced than it was earlier. Needless to point out, the insecurity and
vulnerability due to violence, lawlessness and lack of justice have substantially
increased.
Table 4(The changes in rice cropping pattern in Bangladesh, 1971-72 to 2009-10)

Role of agriculture in poverty reduction

Agriculture is an economic activity based on land. Agricultural development aims
to increase the productivity of land resources. In Bangladesh more than one-third
of the households do not own any cultivable land (Table 5). So how can agriculture
improve the livelihood of the people of these households who do not own any land
and constitute the vast majority of the poor. One can argue that agriculture
generates wage employment for the landless households, as medium and large
farmers hire labor for conducting farm operations. But since the proportion of
medium and large farmers is very small, the agricultural labor market can generate
employment for only a small number of the vast landless and marginal land
owning households in the country. When the modern high yielding rice varieties
were introduced the demand for hired labor increased substantially. But overtime
the labor use in rice cultivation has declined with the spread of agricultural
mechanization in land preparation, irrigation and post-harvest processing. Even full
employment in agricultural labor market cannot provide a poverty escaping income
at the prevailing agricultural wage of about one and half dollar per day. It is the
expansion of the non-farm sector that has been contributing to the increase in
incomes of the households who are poorly endowed with assets. Many landless
households have migrated to rural towns and cities and found jobs as transport
operators or construction laborers. The impressive development in the rural road
network in the 1990s coupled with the increase in marketed surplus rice and
vegetables and fruits have created employment opportunities in transport operation
and petty trading. This is the main reason why the supply of agricultural labor has
declined in recent years and farmers have been complaining regarding the scarcity
of agricultural labor. The increase in the number of shallow tube wells, pumps,
power tillers and rickshaw and rickshaw vans has created jobs as in the operation
and repair and maintenance. Last but not the least, many marginal landowning
households with some skills for utilizing capital have been able to generate self-
employment in livestock and poultry raising, petty trading, and various kinds of
personal services with the vast increase in micro-credit supplied by the NGOs.
Agricultural development has contributed to poverty reduction in an indirect way.
Agriculture produces food for the people. The increase in the supply of food faster
than demand has helped keep food prices within affordable limits of the low-
income people, and thereby has contributed to achieving food security. The amount
of food the poor can access from the market with their limited income depends on
the price of food. An analysis of the 2010 Household Income and Expenditure
Surveys (HIES) conducted by the BBS reveals that rural landless and the urban
laboring class spend 59 percent of their income on food and 35 percent on rice
alone, compared to 44 percent and 10 percent respectively for the top 10 percent in
the income scale. So a reduction in the price of food grains relative to the industrial
products benefits the poor relatively more than the non-poor households. In
Bangladesh the poverty situation deteriorated in the early 1970s due mainly to the
decline in the per capita availability of rice. The soaring price of rice caused
tremendous hardship to the landless, marginal farmers and artisans in the rural
areas, and industrial laborers and transport and construction workers in urban
areas. Since the mid-1980s the food grain prices have increased at a much slower
rate than the general price index, due to favorable growth in agriculture in general
and the rice production in particular. The large farmers have been hurt by the
decline in the real rice price, but the landless have gained. An agricultural wage-
laborer could buy 2.4 kg of rice with their daily wage in 1980-81. The rice-
equivalent wage was 5.4 kg in 2009-10, an increase of 4.16 percent per year during
1980-81-2009-10 (Table 5). So, agriculture’s main role in poverty reduction lies in
maintaining the supply of food at least at a rate at which the demand has been
growing, thereby keeping the food prices stable and within affordable limits of
low-income households.

Table 5(Changes in the real wage for agricultural workers, 1980-80 and 2009-10)

Conclusion:
Rural development has been the core focus of the government policy, strategy and
programs after Independence of Bangladesh. The rural sector was strategic to the
country’s economic growth, social and political development. The sector was
crucial in providing the agricultural labour and output to the country; while the
high incidence of poverty that characterized the sector posed a major threat to the
social and political stability of the nation. The multifaceted significance of this
sector provides the underlying rationales for all the development of Bangladesh
and economic policies since 1971. All the past agricultural and rural development
programs failed to uplifted the condition of rural poor although contribution of
agricultural sector to the economic development and wellbeing of the nation is
highly satisfactory. In fact it can be said that the sector not only provide the engine
for economic growth of the country and but also laid the foundation for the
country’s drive towards industrialization in the 1990s and 2000s. The share of
agricultural sector in the country’s GDP has declined from its peak at 30 percent in
1980-81 to about 19 percent in 2009-10. The reduction of agricultural sector
contribution to the economy is seen as an indicator of a country’s progress from an
agriculture-based to an export-oriented economy. Although the contribution of
agriculture to the country’s economy is declining but its absolute value is expected
to increase and its economic and socio-political significance in terms of export
earning, employment and food security will remain strong. The success of the
agricultural and rural programs in Bangladesh is reflected in the reduction in the
poverty incidence in the rural sector from almost 54 percent in the 1983-84 to
about 35 percent in 2009-10. However, despite various policies and programs to
improve the life in the rural sector, poverty and income inequality still remain
grave concerns when the economic being of this sector is compared to the non-
agricultural or non-rural sectors. It cannot be denied that some progress have been
achieved in poverty reduction along with improvements in socio-economic
indicators such as population growth, life expectancy, infant mortality rates,
literacy rate, proportion of population supplied with safe drinking water and
improved sanitation facilities. But the fact remains that there exists a disparity of
income between the sectors and poverty incidence is still high in the rural sector.
Hence, rural development is still an important agenda to the country’s future
development plan.

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