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reduction Cc: <address removed> Sender: <address removed> Precedence: bulk Dear All, I would like to congratulate DFID on its initiating the consultation forum on agriculture and poverty reduction. The two kick-off papers by Michael Lipton and Simon Maxwell have set the tone right. I have also followed other's contributions on the subject. I would like to share some of the experiences from Bangladesh. I begin with my general comments that agriculture in both Michael and Simon's presentation is conceived predominantly as green revolution phenomenon (mostly rice and wheat crops), which have demonstrated significant contribution to reducing poverty and ensuring food security. Naturally, the balance sheet of green revolution technologies would include performances about input market, subsidies, yield gaps, environmental consequence of chemicals and above all income distribution. In Banglaadesh, agriculture is the primary motor of growth and poverty reduction'. On the whole Bangladesh has done reasonably well showing about 3.8 percent growth annually in cereal production (rice with some wheat), which has been well above the population growth rate of about 1.6-1.8 percent over the last three decades. This has certainly been pro-poor growth contributing to the reduction of poverty roughly at 1 percent per annum, although there has been some modest increase in income inequality and there are still about 50 million people below officially estimated poverty line. Agriculture in Bangladesh did not fall off the map but it recieved less budgetary allocation in public funding mainly due to reduced flow of aid (predominantly because of the donor's feeling that Asia as a whole became food self-sufficient) as well as increased allocation to social and physical infrastructure projects. Good,that there seems to be a reversal of thinking from both sides. There is more pressure now for increased allocation to agriculture and rural economy in the annual budget. And also there is an on-going initiative for conducting a comprehensive agriculture sector review aand vision for investment programming which the major donors have agreed to support. Agriculture and rural economy has also shown up as the centre point for PRSP exercise which is currently under way by the government. What one should now recognize is the simultaneous rapid growth of high value non-crop agricultural enterprises in Bangladesh e.g. livestock and poultry, dairy, shrimp and open water as well as capture fishery, vegetables and some fruits. These are the major areas which need increased emphasis in terms of investment in infrastructure, processing, improvement of domestic marketing outlets, integration with export markets, etc. Quite a prop ortion of the newly created employment in these non-crop enterprises goes to rural women and girls, implying the need for gender focus in human resource development programmes. In Bangladesh, economic growth is the primar y means to poverty reduction. It means sustaining agricultural growth in favourable areas and accelerating growth in unfavourable ecologies. Secondly, agriculture faces new challenges. Despite impressive growth in rice production, there are regional variations in yields and outputs. Especially, HYV rice expansion far lags behind in agro-ecologically unfavourab le areas i.e. deeply flooded area, char land area (where a DFID project is currently on), flush flood area, coastal tidal surge and salinity prone areas. These need special investment programmes. The other issues include soil fertility degradation due to rice monoculture, declining farmers' profit due to increasing cost of labour, fertilizer, diesel run pump irrigation in the face of drastic fall in harvest price of rice. So, maintaining stability in foodgrain prices is a prerequisite for increased investment by farmers, about 80% of whom=A0 operate on small farm of less than a hectare. Thirdly, rice policy under WTO regime. Although Bangladesh has so far enjoyed the comparative advantage in rice production (IFPRI studies) aand attained a modest surplus in rice production, she has recently faced tough co mpetition from cheaper imports of rice from India, lowering domestic rice price and thus affecting small holder rice producers. The issue at hand is how to increase competitiveness of rice production and protect numerous small rice growers from free trade. How to go about anti-dumping policy for rice? DFID can provide support to devise appropriate trade policy framework and also facilitate capacity building within the government for trad e negotiations. Fourthly, input subsidy and other forms of supports. Given the increasing cost of inputs relative to output prices, it is being argued that level of subsidies on fertilizers and diesels for irrigation pumps should be incr eased (whatever indirect subsidies exist at present is well below the WTO limit). India and other countries in the region do reportedly subsidize irrigation. Why not then Bangladesh? If at all, how to target subsidies on fertilizers, diesel and pesticides so that these reach the poor farmers and also these do not affect the private sector trade in these inputs? DFID may assist in improving policy analysis and targetting appropriate forms of supports so as to improve efficiency and productivity. Fifthly, for agriculture to be more effective in poverty reduction, farm and non-farm linkages need to be strengthened and fostered. As far as Bangladesh experience is concerned, rural non-farm economy has grown at a fast er rate (about 7% annually) than the growth in agriculture (about 4%). These have developed as backward and forward linkages of green revolution technologies and are characterized as rural contruction and manufacturing, r ural trade and other services, and rural transports. The local level manufacturing of irrigation equipment spares sparts, growth of metal workshops and repair services, development of house building materials, carpentry a nd masonry, grain trading, etc by the private sector are some of the glaring examples of dynamic segments of rural non-farm activities ( a publication on RNF development under DFID-B supports is under process). Further ga ins from agriculture can be maximized through development of non-farm sector which provide consumption and employment linkages. This is one single area where DFID can assist in policy framing and investment. The current DFID-B initiative to develop rural trade with special focus on women and girls is a right step in this direction. Sixthly, further attention is needed for fisheries aquaculture and shrimp farming. The development of water resources, which has been so far looked at as flood control and irrigation only, need to be redirected as a compr ehensive programme envisaging open water capture fishery, which is fast deplating with adverse impact on the income and nutrition of the poor. The development of pond fishery has no doubt increased overall fish production but this has been largely captured by those having access to land, capital and skills. The growth of poultry farming has also largely attracted those with capital, wheras the small ones suffer from cash constraints, espe cially when feed prices go up or diseases break out. They need financial supports (bank loans), technical supports (feeds, vaccine) and infrastructure supports (good roads, electricity, marketing). DFID may redirect more resources to these with special focus on small and medium entrepreneours and the poor either lose out from drying of water bodies or from increased mechanization of activities. Seventhly, the impact of declining land resource base and falling average farm size. Land available for cultivation will continue to decrease further at about 1% per annum due to competing uses by infrastructure, housing, brick fields, etc. There will be more and more small and marginal farms and no large farms at all. Agreed that he number of effectively landless households will swell up being alleniated from farming on tiny plots but th e challenge is to find enough jobs for them. No doubt rural non-farm sector will absorb major bulk of the labour force released from farm sector, agriculture has to remain the major employer. Then, what to do about acces s to land? The illusion of distributivist 'land reform' has faded out simply because it is not implementable nor very meaningful in the present context. What has emerged as an 'agrarian reform' is the emergence of contrac t farming by private companies, which has vertically integrated the small land holder growers of high value products e.g. vegetables, poultry, milk, etc. with urban and export markets. Since this shows the potentials of o vercoming the problems of inputs and credit distribution and output marketing problems, increased investment for creating enabling environment (infrastructure, information & communication, investment climate) can be an im portaant area for further supports. In India, the MNCs have started contract growing of vegetables in a number states, although the enforcement of contracts and legal framework of such contract are also debated. DFID can facilitate informed studies aand policy analyses in these respects. The other cross-cutting issue is to improve rural financing, which can tap the additional gains from agriculture and remittances from migrant labourers abroad (roughly 2.5 billion US$ per annum) for investment in rural no n-farm sector. This is more pressing now because the loss making branches of the nationalized commercial banks are being closed down as a part of the banking sector reform without organizing any alternative provision of f inancial intermediaries in the rural areas. A crucially important point is that the allocation to agricultural research is secularly declining, resulting in virtual stagnation in research, poor quality output and large exodus of good agricultural scientists going a broad for jobs. One important area of future DFID supports should be funding agricultural research in crop and non-crop agriculture as well as rural non-farm sector. Public sector research institutions as well as privat e sector and NGOs should be allowed to have share of research funding on a competitive basis. The performance of the present mode of funding for agricultural extension services through public sector agencies is far less t han expected aand so this can be gradually directed towards private sector and NGOs or at best through public-private sector collaboration, the latter being tried to some extent. The private sector's role in inputs distri bution should also be free from government interference but the private sector must be accountable for any anti-market practices under a legal framework. This can be accommodated within the DFID mandate of private sector development. Finally, as a matter of principle, for DFID or any donor , public responses about the design and impact of any project supports should be screened not only through the urban based civil society activists, but more importa ntly through direct consultation with local level trade bodies, farming communities, academia, local government, etc. One weakness in the project design is the inadequate understanding of and familiarity with the local e conomy by the expatriate consultants partly due to short stay and/or availability of relevant data. This can be overcome by involving informed local expertise intensively from the scoping studies through project design s tage. Sorry, these are rather patchy. I would try to respond more later. M.A.Sattar Mandal Professor of Agricultural Economics Bangladesh Agricultural University, Mymensingh E-mail: <address removed> ============================================================= To send a reply to this message that goes to all list members, make sure that you send your reply to <address removed> To unsubscribe from this list, send an email to "<address removed>", with the message body: unsubscribe growth-and-poverty <your-email-address>
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