20-09-2016, 11:40 AM
Agriculture Sector Development Strategy: background paper for
preparation of 7th Five Year Plan
1455292472-17AgricultureSectorDevelopmentStrategy.pdf (Size: 675.1 KB / Downloads: 40)
Introduction
Although Bangladesh is on course for Middle Income Country status by 2021, agriculture
remains the largest employer in the country by far; and 47.5% of the population is directly
employed in agriculture and around 70% depends on agriculture in one form or another for their
livelihood. Agriculture is the source of food for people through crops, livestock, fisheries; the
source of raw materials for industry, of timber for construction; and a generator of foreign
exchange for the country through the export of agricultural commodities, whether raw or
processed. It is the motor of the development of the agro-industrial sector including food
processing, input production and marketing, and related services. As main source of economic
linkages in rural areas, it plays a fundamental role in reducing poverty, which remains a
predominantly rural phenomenon. The role of agriculture is also fundamental in promoting
nutritious diets, especially in the countryside where production and consumption patterns are
closely linked. According to the HIES (2010) 35.2% and 21.1% of the population in rural areas
lives below upper and lower poverty line respectively. It also plays a fundamental role in the
sustainable valorization and preservation of natural resources and in preserving and promoting
the resilience to natural calamities and climate change of rural communities and agro ecological
systems. However, as Bangladesh develops, and other sectors grow (such as readymade
garments), the share of agriculture in Gross Domestic Product (GDP) has naturally declined.
During the fiscal year 2012-13, the broad agriculture sector1
contributed 16.77% to the total
GDP. The contributions of crop, fishery, livestock and forestry subsectors in GDP were 9.49%,
3.68%, 1.84% and 1.76% respectively. The provisional estimates show that contribution of the
broad agriculture sector to GDP in 2013-14 would be 16.33% (BER 2014). Nearly three fifth of
the agricultural GDP comes from the crop sub-sector; the other contributors in order of
magnitude are fishery, livestock and forestry.
Performance of Bangladesh Agriculture
Following independence in 1971, agricultural production in Bangladesh increased at around
the rate of 2% per year. The growth rate accelerated during the 1990s and early 2000s to
around 4% per year. The Sixth Five Year Plan sought to build on the success of such rapid
agricultural growth, targeting average growth of 4.5 % during the plan period (6
th FYP MidTerm
Report, 2014), and a remarkable 5.1% growth was achieved in 2010-11. However, this
momentum could not be sustained subsequently and the growth rate fell sharply in 2011-12 to
2.7%, and weakened further to only 2.2% in 2012-13. The drop in performance was largely
due to slower growth of the crop sub-sector. One simple explanation may be that most of the
easily accessible productivity gains have already been captured, so that future growth in productivity requires new major breakthrough in the technological front. This is especially the
case for the intensification of traditional crops, while important GDP gains can and should be
obtained by promoting increasing diversification of crop and non-crop agricultural production
toward higher value and more nutritious foods.
It is worth noting that livestock did better than the crop sector but equally could not sustain the
momentum it had gained during 2005-2010. This is an area in which special efforts should be
made to ensure that public services (veterinary, extension, insemination, etc.) are developed to
the level required to realize the full potential of the sector. In 2012-13, fisheries alone managed
to perform in line with targets, with a GDP growth rate (6.2%) at a time when the subsector has
been marked by a radical structural transformation with the spread of organized and
commercially-oriented aquaculture.
For achieving the goals of MDG and post MDG, and turning Bangladesh into a middle income
country by 2021, the GDP has to grow at a minimum rate of 7% per year. To attain this GDP
growth rate and to keep pace with the population growth, agriculture should grow at a constant
rate of 4-4.5% per year. There will be serious gap between demand and supply from domestic
source if the current rate of productivity and production is not augmented.
Improvement in agricultural productivity is a precondition for sustainable development, as
productivity gains would allow resources such as labour to be diverted to expand the nonagricultural
sectors, including agro-food industry. Total factor productivity (TFP) indices
capture the effect of improvements in technology as well as investments in rural
infrastructures. Empirical evidence showed that TFP of Bangladesh crop agriculture grew at an
annual rate of 0.57% over the long past years from 1948 to 2008 (Rahman and Salim 2013).2
Regarding the drivers of TFP growth, Rahman and Salim (2013) found that farm size, crop
specialization, investment in research and extension positively influenced TFP growth, whereas
literacy rate influenced TFP growth negatively, reflecting exodus of educated people from
agriculture. Their policy implications included encouraging investment in research and
extension, increasing average farm size and promoting crop diversification.
Key Challenges
The major challenges for Bangladesh agriculture are to: raise productivity and profitability,
increase diversification of production in line with consumption diversification to promote
nutrition and minimize trade imbalances, reduce instability of production, increase resource use
efficiency, reduce loss of arable land, minimize yield gap, maintain food safety and quality,
expand irrigation and farm mechanization and develop resilience to climate change impacts.
As Bangladesh develops, structure of demand for food exhibits changes. The successive HIES Reports show that considerable consumption diversification has taken place, with lesser per
capita consumption of rice and increased consumption of high value food items such as meat,
fish, milk and edible oil (HIES 2005 and 2010). However, macro level indicator shows that there
has been negligible change in the share of rice value added in the total food value added (a
change from 41.9% in 2011-12 to 41.1% in 2012-13), reflecting slower pace of production
diversification (FPMU 2014).
One of the causes of relatively poor performance of agriculture is the relatively poor rate of take
up of new technologies. Public services such as research, education and extension are important
to bring improvement in this area, obviously supported by the private sector input supply (seed,
fertilizer, credit, etc). The challenge is to establish effective linkages between these public
services and farmers who have to play a major role in testing and adapting technologies based on
their local knowledge.
Another challenge is to sustain and further develop the capacity of agriculture to effectively
respond to market signals – to ensure that what is grown can be sold at remunerative prices, both
to maximize rural income generating opportunities and optimize the use of limited natural
resources. The small and marginal farmers need to be supported in producing diversified crop
suitable for both markets and household consumption to improve their nutritional status. They
also need to be supported in selling their products at remunerative prices by developing linkages
with domestic and international markets. Strengthening the institutional capacity to address the
complex production and marketing constraints with advanced knowledge and technological
know-how will be an important task in the 7th Five Year Plan.
Sustaining agricultural production and developing resilience to climate change is a formidable
challenge. The Comprehensive Disaster Management Programme (CDMP) and other analyses
done at the Climate Change Cell of the Department of Environment suggest that 10-15% land of
the country will be inundated due to sea level rise of 45 cm by 2050. Effective implementation of
the Bangladesh Climate Change Strategy and Adaptation Plan (BCCSAP) 2009 will have to be a
priority issue.
The purpose of this paper is to (i) make an objective assessment of the nature of performance of
the agriculture sector during the 6th Plan period, (ii) identify the factors contributing to the nature
of performance, (iii) identify the opportunities and challenges for the future, especially for the 7th
Plan period and (iv) propose policies and strategies to address the challenges and opportunities.