AGRICULTURE’S A CENTRAL ROLE IN BANGLADESH’S ECONOMY, ESPECIALLY IN RURAL AREAS

The agriculture sector has been critically important in reducing poverty in Bangladesh, and further progress in agriculture will remain important as Bangladesh’s economy continues to evolve. Real gross domestic product per capita increased from US$525 in 2000 to US$1,203 in 2018, and rural areas registered significant poverty reduction: from 52.3 percent in 2000 to 26.7 percent in 2016. Between 2005 and 2010, the agriculture sector contributed 69 percent of total poverty reduction; from 2010 to 2016, the contribution was more modest (27 percent). The slowdown in agricultural growth since 2010 has been mainly driven by a slowdown in the growth of total factor productivity—from 2.4 percent from 2001 to 2010 to 1.0 percent from 2011 to 2016—along with a continuous decline in the growth of input use. Given the high level of labor intensity in agriculture, the slowdown in agricultural growth is one key reason for the declining role of agriculture in rural poverty reduction, and the slowdown in the growth of rural employment. The rural nonfarm economy also depends on the performance of agriculture; hence, the slowdown of the sector is posing serious challenges for overall rural economic development. The reforms were made in order to liberalize the agricultural input market in the 1980s, particularly in relation to fertilizing and irrigation; in the 1990s, these reforms were followed by reforms in the seed sector initiated through the National Seed Policy. Repurposing the country’s agricultural support will be key to balancing the incentive structure across crops and promoting diversification within the sector.

With rapid urbanization and income growth, dietary patterns are changing. The average amount of cereal intake is declining, and the demand for nutrient-dense foods is growing. A projection of increased demand for food commodities shows that, by 2030, total demand for eggs, fruits, meat, and fish will rise by more than 50 percent, as compared to consumption levels in 2016. However, domestic production is facing challenges in meeting the growing demand for higher-value commodities. The private sector is gradually becoming more involved in making significant investments in processing and improved marketing to meet this growing demand. Agrifood ecosystem analysis has identified critical constraints to the diversification and modernization of the agrifood sector. These constraints fall under three broad categories: (1) on-farm productivity constraints, (2) off-farm value addition and commercialization constraints, and (3) cross-sectoral enablers. Bridging these productivity gaps will be essential to increase production and improve cost competitiveness. Major productivity constraints include land fragmentation and informality in the land rental markets; limited access to quality seeds for nonpaddy crops; limited knowledge of and adoption of good agricultural practices (GAPs), reflected in unbalanced use and overuse of inputs; and limited use of farmer aggregation models, which constrains the delivery of extension services, access to financing, and linking with markets. Other key constraints are preventing off-farm value addition and commercialization in the sector. These constraints include the limited number of formal off-takers, inadequate and costly marketing infrastructure and logistic services, inadequate upholding of appropriate food safety practices and product quality standards, and a poorly designed export subsidy policy. These constraints are exacerbated by other cross-sectoral issues such as access to finance and the overall challenges of the country’s investment climate and competitiveness enablers.

The COVID–19 crisis has hit Bangladesh’s economy and its agrifood sector hard, and lasting impacts can be expected. The International Monetary Fund has projected a reduction of economic growth in 2020 to 3.8 percent, against an earlier projection of 7 percent. A recent study shows that, beyond the 20.5 percent of the population that is officially recognized as poor, an additional 23 percent of Bangladeshis have fallen into poverty since the COVID–19 outbreak. With markets closed, trade disrupted, and travel limited, many producers have nowhere to sell their produce and are losing their livelihoods. Both during and in the direct aftermath of the crisis, relief measures will be needed to ensure that the population can afford and access nutritious food and that the agrifood sector can maintain its ability to supply food to the domestic market. In the longer term, a wellfunctioning agrifood ecosystem will be important in improving the sector’s readiness for and resilience to future pandemics and disasters. Promoting greater diversification and modernization of the agrifood sector in Bangladesh will require increasing private investment both along the agrifood value chain and in support services to that chain.

STRATEGIC OPTIONS FOR GREATER ON-FARM PRODUCTIVITY

Aggregation models such as productive partnerships, contract farming, and producer groups, among others, need to be encouraged in order to facilitate economies of scale. While public extension services can encourage and promote aggregation models for achieving efficient inputs and service delivery to farmers, the private sector can also lead in the organization of such models for improving good agricultural practices, traceability, economies of scale, and so on. Removing regulatory barriers to private sector participation in the seed market, along with increased oversight on the quality standards for seeds, is important. Finally, in order to stimulate farmers’ demand for improved genetic materials, there is a need to increase market transparency regarding seed quality. Local GAP standards should be developed and adopted through public-private collaboration to address the misuse and overuse of certain inputs, like fertilizer and pesticides, and other food safety concerns. They should also be aligned with the need for environmental and social sustainability. Subsequently, GAPs should be the key area of focus for both public and private extension service delivery to farmers. Also, improvements to current extension services are needed in order to bring information on new techniques and innovations down to the farm level in a usable form. Repurposing the current agricultural support policies is a key priority for agricultural diversification and modernization, especially in terms of the sector’s long-term sustainability. A phased approach for reforming the policy on fertilizer and other subsidies and increasing direct support to farmers should be adopted. This will improve the efficiency of public support for agriculture and help incentivize farmers to take market-driven production decisions.

ACTIONS FOR BETTER MARKET ACCESS AND POSTHARVEST VALUE ADDITION

The development of marketing infrastructure and logistical services for agricultural supply chains should be led by the private sector. Policies and incentives that will support private businesses that are interested in taking business opportunities in such development could be implemented. A public-private partnership (PPP) framework for an agricultural marketing infrastructure (including regional market hubs, cold storages, warehouses, and cool chains, including railway cool chains) would contribute to giving the private sector greater confidence in government policies in support for the development of the marketing infrastructure. Improvement in the regulatory and oversight system, along with support to the private sector for the adoption of appropriate food safety standards and practices is urgent. Substantial efforts in streamlining both the legal and regulatory frameworks for food safety, as well as the control and enforcement systems, are needed, ideally in close coordination with the private sector. There is also a need to support the private sector in developing harmonized, industry wide commercial standards that comply with the minimum food safety requirements for primary production and food processing. Success would be derived from the public sector supporting the harmonization process and from the public and private sectors working together to ensure close links between regulatory requirements and private standards. Also, to promote the development of more formal off-takers, such as food processing businesses and supermarkets, the public sector could support increased demand for higher quality and safer food by ensuring better enforcement of food safety standards and by promoting consumer awareness about the importance of safe food.

Q1. According to the figures, what was the increase in the real GDP per capita between the year 2000 to 2018 in Bangladesh?

A) USD1203

B) USD525

C) USD678

D) USD1728

Q2. What was the contribution of the agricultural sector in poverty reduction between 2005 to 2010?

A) 50%

B) 69%

C) 27%

D) None of the above

Q3. Complete the following sentence:

In a threatening contrast to a slowdown in the agricultural sector, there has been steady growth in ______________________leading to a growth in demand for _________________.

A) urbanization and income / nutrition rich foods

B) employment / fruits and vegetables

C) population / food grains

D) income / non-vegetarian items

Q4. Complete the following sentence:

A recent slowdown in the growth of the agricultural sector has resulted in__________________

A) slowdown in rural employment

B) slowdown in poverty reduction in villages

C) damage to rural nonfarm production

D) All of the above

Q5. The Bangladesh government had initiated several reforms to revive and boost the agricultural sector and improve rural economy. Some of those are: ____________________

A) reforms related to irrigation and fertilizers

B) liberalizing the agricultural input market

C) reforms in the quality and procurement of seeds

D) All of the above

Q6. How is the private sector participating in reviving the agricultural output?

A) By importing food items that are high in demand

B) By employing farmers and guiding them

C) By investing in better supply chain management and food processing

D) By selling better machinery to farmers

Q7. Evaluate the following statement as “True” or “False” on the basis of the information given in the passage:

Among the constraints hampering the development of the agrifood sector, land fragmentation is one of the productivity constraints while difficulty in accessing finance is a cross-sectoral constraint.

A) True

B) False

C) Cannot Say

D) Not given

Q8. Which of the following is not a constraint imposed by the COVID-19 crisis upon the Bangladeshi agrifood sector:

(i) Restrictions on travel

(ii) Market closures

(iii) Disruptions in trading activities

(iv) Illness among cattle

A) (iii)

B) Both (iii) & (iv)

C) (iv)

D) (i)

Q9. Identify a word from the passage which means “to form a cluster” or “to create a group.”

A) repurpose

B) aggregate

C) fragmentation

D) reform

Q10. The World Bank suggests reforms and improvements in various aspects of the country’s agricultural sector to revive it and make it a pillar of poverty reduction. Complete the following list as per the major recommendations. Do not copy directly from the passage:

a) Improved and accessible fertilizers

b) Better quality seeds

c)

d)

e)

f)

c)

d)

e)

f)

Q11. Creating regional trade hubs and facilitating railways based cargo system are a part of:

A) Marketing

B) Regulatory requirement

C) Infrastructure Development

D) None of the above

Q12. What is meant by “public-private partnership” or “PPP” as mentioned in the passage? Choose the appropriate option.

A) A collaboration between a private company and a government supported entity

B) A partnership between a publicly listed company and a private company

C) A joint agreement between the government and a private company

D) None of the above

Q13. What is a paradoxical challenge posed by the COVID-19 pandemic to the agrifood sector in Bangladesh? Write briefly within 75 words.

Q14. Write a brief note on how the private sector can be involved to intervene and improve the agribusiness scenario in Bangladesh. (Not more than 75 words)