Bangladesh, Economic, International, Political

Smallholder farmers in Bangladesh at risk from country’s growing prosperity

Today, Bangladesh has almost everything going for it; pre covid-19 growth rate had been one of the highest in the developing world, social sector achievements have been exemplary during the covid-19 period (2020 and early part of 2021), the country is faring much better than many other countries. Columnists, commentators of development experiences have been hailing the country for proudly shrugging off the infamous label of ‘international basket case’ at its independence in 1971, and rightly claiming a middle income spot now.

Unfortunately, however, the benefits of growth do not seem to be shared by all. The most deprived people seem to be the country’s 9 million or so smallholder farmers (SHFs). The SHFs (defined by landholding size of 2.5 acres (1.0 hectare) or less) constitute 84 percent of all farmers. One in every four in Bangladesh depend directly on small farming for their livelihoods, more if ancillary activities like food processing, marketing and transportation of agricultural products are included.

The country’s food security largely depends on the SHFs, and the government can ill afford to neglect them.  Yet, the SHFs belong to the poorest segment of the country’s population, and they are facing a slow process of decline.

Two factors are primarily responsible for this outcome.

The first is the rising income inequality which is marginalising the large majority of the smallholders.

The country’s income inequality has kept on increasing, and the SHFs, mostly at the bottom end of the income scale, have experienced a decline in their relative share of the country’s income.

The second and the more menacing threat facing the SHFs is loss of their agricultural land over time.

Available data, though rather fragmented and often not very consistent, indicate a worrisome trend of loss of land by agriculture, the large burden of which is borne by the SHFs.

Information emerging from rather infrequent land censuses as well as surveys by researchers indicate a decline of agricultural land area from 20.2 million acres (8.2 million hectares) in 1984 to 17.8 million acres (7.2 million hectares) in 1996 i.e., by 2.4 million acres (1.0 million hectare). This is about 12.0 per cent over the 12-year period.

Over the longer term, 1984-2008, there has been a decline in agricultural land. Bangladesh seems to have lost about one per cent of cultivated land per annum (about 80,000 hectares) over this period due to non-agricultural uses such as urban expansion, expansion of rural habitation, construction of roads and highways, economic zones, and other infrastructure facilities.

There is evidence of land loss brought out by other studies too. The Soil Resource Development Institute (SRDI) shows that over the 44-year period of 1976 and 2010, a total of 43 thousand hectares of land per year seems to have been lost to agriculture. A private survey of 6 divisions in Bangladesh shows that land loss is very high in Dhaka (a Division with very high development activities) than in Khulna. Given the growth momentum in recent years, it can be hypothesised that land loss has increased in recent years.

The loss of land however is not due to coercive tactics of the rich and the powerful, nor of the state.  

The coercive tactics by the private sector are not ruled out, but much more is lost through operation of market forces, though purchases by both rural and urban entrepreneurs, tax evaders, money launderers and speculators. Small farmers (needing cash to meet their various economic, social and health related exigencies) succumb to the offer of cash by the rich purchasers. Encroaching salinity, river erosion, floods and droughts increase the magnitude of land loss. These natural disasters ‘force them’ to sell a part or whole of their holding ‘voluntarily’.

But it is not only the private sector interests that gobble up agricultural land. The same is done by the public sector too, but for the ‘noble purpose’ of rapid economic growth. Big public projects like power plants, roads and highways, economic zones, airports, cantonments, parks etc., require acquisition of large swathes of land. Land holders are now compensated handsomely at about 2-3 times of the market price of land. The poor and cash starved SHFs even wish that their land is ‘marked’ for acquisition by government.

The government policy of handsome compensation unwittingly becomes an instrument for land loss by poor SHFs.

Growth pushing back the frontiers of agriculture is not unique for Bangladesh only. China, for example, is losing about 1 million hectares of land every year, and the USA about 400,000 hectares every year. But the difference is that while those countries can afford to lose, given their large land mass; Bangladesh, with high population and low land/man ratio, can ill afford to do that.

This dilemma between unhindered growth and protecting the landholding of SHFs raises the critical question: should Bangladesh sacrifice growth to protect smallholder interests?

This is an enduring dilemma, and this is certainly not what is suggested. Policies can be crafted without sacrificing either. Bangladesh badly needs infrastructure projects, economic zones and investments to continue its upwards trend of prosperity. But that does not mean that it will have to be at the cost of SHFs. It is possible to craft policies to accommodate both.

What is required is a much stricter land utilisation policy, not only by making construction ‘going vertical’, but also limiting the conversion of agricultural land for non-agricultural uses. The government could impose hefty penalties for land purchased for speculative and money laundering purchases. Further, the government could create a national digital ledger, which will contain information on land codified as agricultural (including fishery, livestock) and non-agricultural.  Conversion could be allowed only after careful review and only on national interests, and even that after public hearing of the views of land right groups/environmentalists and public representatives.

In addition, there should be increase in investments (i) on research to increase productivity of SHFs, by developing new and more productive varieties of plants, (ii) to improve transparency of land sales by Distributed Ledger Technology (DLT), also called Blockchain, (iii) to reduce distress sales of land by farmers by providing loans on easy terms, and (iv) further increasing taxes on non-agricultural land. These policies if carefully developed and implemented could go a long way to stop the rot of our agriculture.

Dr Atiqur Rahman is an economist and ex-Lead Strategist of IFAD,