The crisis and coping capacity of the ultra-poor

Photo: TANVIR AHMED/ DRIK NEWS

In this column today, we shall present livelihood patterns of various types of poor households -- specially extreme or ultra poor -- in rural Bangladesh. The idea is to show that although the ultra-poor are seemingly homogeneous, but each type have different livelihoods and poverty dynamics. To this effect, from the list of ultra-poor households collected from 62 villages by a recent Brac-supported survey in 2008, we have randomly picked a few cases for closer look at poverty correlates, socio-demographic transition and poverty traps.
First, we consider two very poor persons, Fazlur Rahman and Prem Nath of Gopinathpur village under Badargonj upazila, Rangpur. They are of same age, 28, and married. Reportedly, in both cases, the wives are not engaged in any economic activity, not even as a secondary occupation. They claim to be housewives although data tend to reveal that they perform some economic activities such livestock and poultry rearing, growing vegetables etc., in addition to their usual domestic activities.
Both Rahman and Nath spent 4-5 years in schools and their wives 7 years. Rahman has one child and Nath has two, all below school-going age. The household size of both, at 3 and4, is very small compared to Bangladeshi average. And, finally, they have one-room houses with tin-roofs, while the walls and floors are made of mud. And they use sanitary latrines.
According to social scientists, Rahman and Nath are ultra-poor owning, respectively, 3 and 6 decimals of inherited land. That means, they have only homestead land. Again, both the housewives joined NGOs two years ago. While Mrs. Rahman borrowed Tk.5,000 fromAsa, Mrs. Nath borrowed Tk. 7,000 from two NGOs: Tk.4000 from Asa and Tk.3,000 from Grameen Bank. Rahman has no VGD card while Nath is lucky to have access to this facility.
By and large, both Rahman and Nath are alike in terms of socio-demographic characteristics, but they are different with regard to economic parameters and opportunities. As we shall see later, land and loans -- unless properly packaged -- are necessary, but not sufficient, condition to keep the poor on an even keel.
First, we start with the case of a pure tenant, Fazlur Rahman. The primary occupation of Rahman is operation of rented land supplemented by a secondary source of income from van driving. He owns 3 cows, 3 goats and 3 poultry birds and earns Tk.400 per month from these sources. Mrs. Rahman looks after this side of income generation.
The NGO loan enabled Rahman to mortgage/lease land which, reportedly, improved the economic condition of the household. He mortgaged and leased 96 decimals to try a diversified cropping of HYV paddy in amon season, HYV paddy and wheat in boro season, and jute in aus season. In 2007, he got 30 maunds of paddy, 10 maunds of jute and 5 maunds of wheat.
His monthly income is roughly Tk. 3,200 distributed as follows: Crops Tk.750 (net of costs, besides family sustenance for rice), non-crop agriculture Tk. 400, van driving Tk.2,000 and others Tk.50. Rahman claims that his household is self-sufficient in rice as the total requirement of 720kg/year for the household comes from own production. That means the recent high prices of food grains hardly hit his household.
To store rice and other crops, Rahman created storage capacity in his one-room house. His family had eaten fish and meat for 2 and 3 days, respectively, in the week preceding the days of the survey in February 2008.
He perceives that overall economic condition improved over the years, and his family can have three "satisfactory" meals during the year. The improvement in livelihood achieved over time was not knocked down even by the recent food crisis. How could that happen? Poor Rahman adduced a part of the positive gain to NGO credit that helped him mortgage in land. And, contrary to our conventional wisdom, Rahman considers himself as a poor person -- not ultra-poor -- which a researcher like myself will judge on the basis of land ownership and housing status.
We now turn to the case of a fisher man-cum petty trader, Prem Nath. He is not engaged in crop production, unlike the previous case, and having an additional member in the family also disadvantages him. There are some non-crop agricultural activities such a rearing 3 livestock, mostly by Mrs. Nath. His main occupation is fishing (9 months) supplemented by fish business (3 months). The major portion of two NGO loans (Tk.3,000+ 4,000=Tk.7,000) was spent on business, but seasonal and risky fish business could not make much of a dent in his poverty.
However, his monthly income is estimated to be Tk. 2,350 -- 36% lower than Rahman's -- and is distributed as follows: Catching fish Tk.1500 and trading fish in the market Tk.750, and Tk.104 from VGD. With this income, he has to purchase food to feed a family of four!
Prem Nath is not happy, although the household members can have three meals regularly during the year. They had no fish or meat in the diet in the week preceding the survey. Out of his total income, he had to spend Tk.1,600 (67%) for meeting rice need. In self-assessment, Nath placed himself as ultra-poor.
Take another case of a pure day labourer. Mohiruddin (40) and his wife (31) are older than the two heads of households sated earlier. The household size is also bigger -- 5 including the ailing mother of Mohir. The household owns 4 decimals of land and has been a member of Asa for eight years. The household currently had a loan of Tk. 13,000 but the whole amount was spent on the treatment of Mohiruddin's mother.
However, the rise in wage level in recent years paripassu the increased demand for agricultural labour reduced some of his economic hardships. His wife also serves as a household helper for others families.
The monthly income is estimated at Tk. 4,100 distributed as follows: Wage income Tk.2,000, spouse's income Tk.1,400 and old age pension + VGD Tk.600. Mohir perceives an improvement in economic condition -- not due to NGO loan spent on medical care -- but due to increased wages of the two earning members. Thus, a rise in wage, to some extent, saved his household from the heat of high prices of food-grains.
In the fourth case, Mohammad Ali (28), a van driver, is the sole non-farmer. His wife, Begum (21), is a part-time household help for other families. The household size is 4, with no school going children. Begum is a member of Asa, and last year took a loan of Tk. 5,000 for buying cattle.
The monthly income is about Tk. 2,700 distributed as follows: Tk. 25,00 from van, Tk. 133 from VGD and part-time job and Tk. 67 from others. Ali perceives an improvement from an NGO loan that enabled an increase in income from milk production. During the last one year, the household did not suffer deterioration in economic condition.
Finally, we have a widow, Olima Begum (55), who was once a member of an NGO, but not now. Olima looks after two grandchildren left by the daughter who works outside. After the death of husband, Oliima rented a goat. She works as an agricultural labourer 6 months a year, and gets employment for 15 days a month. She is also involved in earthworks for 2 months and gets 25 days of work in a month.
Her average monthly income for a year is Tk. 1,500 distributed as follows: Tk. 375 from agricultural wage, Tk. 167 from earth work, Tk 500 sent by daughter to look after kids and Tk. 50 from VGD. Olima perceives no improvement, as there is no earning member or agricultural land. She has to buy rice worth Tk. 1,110/month, which is about three-fourths of her income. The increase in rice pries obviously made her economic condition worse.
Out of the five cases mentioned above, the resilience in Rahman is worth noting. He is ultra- poor but receives no government grants. Rahman relies on both agriculture and non-agriculture for eking out a living. He accessed modern technology. Both husband and wife work very hard for a living. He also has a diversified system where both cash and subsistence crops are grown. The NGO loan was used to diversify his livelihood, with special emphasis on agriculture and food security as well as keeping a hand on non-farm activity.
Prem Nath, on the other hand, embarked on a seasonal but risky business and put all his eggs in one basket. He has to buy food from the market or wait for government dole. It is, therefore, not unlikely that the recent crisis has the household groaning under poverty. And it is not also unlikely that Prem Nath's household might go further down the poverty line if the crisis continues.
Mohiruddin and Md. Ali suffered serious blows from the illness of family members and large households. They have the problem of diversifying sources of income. Olima is a widow, and in the absence of earning member her hardships override others.
It appears that only non-farm activities could hardly ensure sustainable food security of the ultra-poor households. Total reliance on the market for the purchase of food, in the absence of a substantial rise in agricultural or non-agricultural wage, might not benefit them.
The other preconditions for uplift of the ultra-poor are the following: small household size, ownership of livestock and poultry, NGO credit and its proper utilisation in agriculture and non-agricultural operations and a diversified livelihood patterns.
By and large, most borrowers benefited from NGO loans after investing in productive pursuits -- unless the loan was diverted for health or other crises as in the case of Mohir. To make an appropriate judgment on their changes in living conditions over a span of time, we shall have to go back to their pasts. Hopefully, we could do that in our next attempts.
Abdul Bayes is a Professor of Economics at Jahangirnagar University.