Move to high-value agriculture: WB

A 10 percent increase in farm income generates a 6 percent rise in non-farm income in Bangladesh, a recent study found.

Subsequently, the study report advised the country to shift towards high-value agriculture, including horticulture, livestock and fisheries, as well as greater value addition to improve farmers' income and household nutrition.

The report -- Dynamics of rural growth in Bangladesh: Sustaining poverty reduction -- was conducted jointly by the Planning Commission and the World Bank.

Khandker Mosharraf Hossain, minister for local government, rural development and cooperatives, unveiled the report at a programme at Cirdap auditorium in the capital yesterday.

Madhur Gautam, lead economist of the WB, who was the team leader for the study, presented the highlights on the report.

The study found that the majority of the farm growth came from increased yields and, more precisely, through total factor productivity. Agricultural research and policy reforms also contributed to the growth.

Bangladesh has raised agricultural productivity significantly in the last few decades, said Qimiao Fan, the WB's country director for Bangladesh, Nepal and Bhutan.

“It is remarkable that with so many people and so little arable land, the country has been able to provide sufficient food to almost everyone,” he added.

Yet, there is no room for complacency for Bangladesh as the agriculture sector has not been diversified enough to meet the shifting demands, improve nutrition and adapt to changing climate, the report said.

The WB said diversification is an important priority for Bangladesh given the changing consumption patterns and the need to improve nutritional outcomes.

“A step in this direction would be to remove the remaining regulatory constraints to private sector participation in the seed sector to inject new technological vigour,” the report said.

Rice dominates the crop sector and has driven much of the growth in agriculture productivity, the study found.

The country needs to invest more in research on non-rice crops, livestock and fishery as well as infrastructure to support the shift towards high-value agriculture. The report went on to urge the government to adopt strategies to promote more robust development of the rural non-farm economy, which is growing slowly for rising road connectivity and declining arable land.

“An emerging concern is that the rural non-farm activities do not seem to be growing in scope or sophistication over time,” said the WB.

Many rural non-farm activities are linked to agriculture, be it processing, trading or food preparation.

But the conundrum is that they are not progressing much from basic to more sophisticated ones.

Gautam said Bangladesh now needs upgraded market facilities, increased investments in roads to connect secondary cities, improved rural logistics and access to finance to move to the next level, with more modern and efficient supply chains.

“These improvements will help increase income and productivity, and they are especially important as Bangladesh transitions to a more modern food system involving high-value products and greater value additions,” he added. The report found that a lack of credit and infrastructure still remains a binding constraint to the rural non-farm enterprises.

“But the good thing is that the cartelisation of markets by few powerful traders fleecing farmers or other forms of uncompetitive behaviour has come down significantly,” said the report. Hossain said, though agriculture will continue to play a vital role in the rural economy, there is huge scope for improving non-farm activities.

He also stressed the need for smooth connectivity and transportation system in rural areas.

The minister said the government will improve the database of rural farm and non-farm activities with a view to setting strategies for further development.

Shamsul Alam, member of Planning Commission, said the rural economy needs support, from infrastructure to connectivity and access to credit.

The farm sector has to be modernised through the use of technology and policy support, he added.