Khawaza Main Uddin

Bangladesh, Monday, October 22, 2007

Trade liberalisation that eventually has resulted in skyrocketing of food prices afflicts the rural population of Bangladesh, admits the World Bank in its World Development Report 2008: Agriculture for Development.

The report released by the bank on Friday also says that the trend of shrinking the sizes of farms in economies, such as Bangladesh, which still heavily rely on agriculture, is another major cause of rural poverty, and such a reality can generate further social tensions, leading to civil conflicts.

‘Trade liberalisation that raises the price of food hurts net buyers (the largest group of rural poor in countries like Bolivia and Bangladesh) and benefits net sellers (the largest group of rural poor in Cambodia and Vietnam),’ reads the report.

The report of the multilateral lending agency, which prescribed the process of trade liberalisation in the 1990s, also claims that a liberal trade policy, inducing massive imports of rice by hundreds of small traders during the 1998 floods, helped the government stabilise prices without building up any large stock.

Quoting a Bangladesh study, the WB report asserts that although the ‘average landless poor household loses from an increase in rice prices in the short run’ but it ‘gains in the long run as wages rise over time’.

The report, forecasting a further increase in food prices on the international market, expressed ‘particular concern’ for the food-importing developing countries, ‘Because many of the poorest countries spend a large part of their incomes on cereal imports’.

More than 50 per cent of the poor in Bangladesh, according to the report, comprise the rural landless households and they spend 27 per cent of their total budget for buying rice, the nation’s staple food. And so, it says, ‘Poor Bangladeshis are the most vulnerable to increases in rice prices.’

Only 8 per cent of the country’s poor are found to be net sellers of food. ‘So the aggregate welfare effect of a change in rice prices is dominated by its effect on net buyers.’

Also, the number of farms in Bangladesh has doubled over the past 20 years, increasing the number of farms smaller than 0.2 hectares in size proportionately. ‘Continuing demographic pressures imply rapidly declining farm sizes, becoming so minute that they can compromise survival if off-farm income opportunities are not available,’ the report cautions.

It also points out that ‘a large share of rural households… does not have any access to land’.

The Washington-based lending agency, however, attributed what it termed the substantial reductions in rural poverty in Bangladesh to earnings form rising farm and non-farm activities and lower rice prices thanks to use of new technologies, besides manpower export which has also benefited the rural as well as the national economy.

The report has triggered the question whether a densely populated Asian country like Bangladesh, with its labour-intensive small-scale farming, would be able to produce cereals and other staple foods efficiently in its farms that generally tiny in size, especially if rural wages rise.

In South Asia, the report predicts, the decline in farm size will continue because the rural population has been growing by 1.5 per cent a year.

As an indicator of poverty, the report mentions that Bangladesh, India, and Nepal occupy three of the top four positions in the global ranking of underweight children.

The World Development Report also expresses concern for the developing countries due to proliferation and stringency of food safety and health measures being adopted in export markets. ‘Many fear that the emerging standards will be discriminatory and protectionist,’ it observes.

The document underlines the need for increasing the productivity of agricultural labour through consolidation and mechanisation of farms to bypass the widening gap between rural and urban wages in many Asian countries.

Millions of workers employed in rural areas are said to be trapped in low-earning jobs in Bangladesh, where around one million people join the rural workforce every year. The WB report mentions that non-farm rural employment increased at the rate of 0.7 per cent and farm employment at 0.1 per cent a year during the 1990s.

Delineating a strong record of agriculture in development, the report posts an estimate that the contribution of agriculture to the growth in gross domestic product was at least twice as effective in reducing poverty as the GDP growth in non-agricultural sectors.

The report calls upon the policymakers of countries facing severe resource constrains to attach a balanced priority to various sectors and give due attention to agriculture, especially to increasing investment in the sector.

The report correlates agricultural development with achievement of the UN Millennium Development Goals of halving extreme poverty and hunger by 2015. It acknowledges that, despite convincing successes, agriculture has not been used to its full potential in many countries because of anti-agriculture policy biases and underinvestment, often compounded by mis-investment and donors’ neglect, at the cost of severe human sufferings.

‘A dynamic “agriculture for development” agenda can benefit the estimated 900 million rural people in the developing world most of whom are engaged in agriculture and who live on less than $1 a day,’ the World Bank Group president, Robert B Zoellick, told the launching ceremony of the report in Washington on Friday.

‘We need to give agriculture more prominence across the board. At the global level, countries must deliver on vital reforms, such as cutting distorting subsidies and opening up markets, while the civil society groups, especially the farmers’ organisations, need more say in setting the agricultural agenda,’ Zoelink maintained.

The Daily New Age, 05 September 2007

Khawaza Main Uddin

The country’s striving for food security and poverty reduction may falter as a consequence of ‘diminishing marginal return’ from farming and limited livelihood opportunities the poor get in agriculture.
   Apart from expressing that apprehension, a UN-government joint report also has named a number of factors such as seasonality in food production, food price instability, social and household inequalities including gender disparity, natural and man-made disasters, and poor sanitation behind continued poverty and hunger.
   ‘Given the finite amount of land and a still-growing population, land use and crop intensity are approaching a maximum [level], severely limiting the ability of many poor people to earn a livelihood from farming,’ said the recently published ‘Meeting the Challenge: A Mid-term Report on Achieving MDG-1 in Bangladesh’.
   The report finds ‘deteriorating terms of trade’ for farmers owing to high input prices and an imperfect market structure dominated by middlemen causing decrease in agriculture’s contribution to the gross domestic product, despite manifold increases in farm output.
   The share of agriculture in GDP, as mentioned in the report, declined from 30.4 per cent in 1991 to 20.1 in 2005. The sector still employs more than 50 per cent of the country’s labour force.
   The report stresses the need for new investments and innovations in the agriculture sector to boost productivity for removing hunger and poverty as well as promotion of new thrust sectors to sustain the progress so far achieved towards the first UN Millennium Development Goal of halving poverty by 2015.
   Bangladesh has reduced the percentage of people living below the poverty line, or the daily income of $1, from 58.8 in 1991 to 40 while the national target in conformity with the UN goal is to bring it down to 29.4.
   According to the report, faltering economic performance, growing population density, climate change, and exclusion from demographic and social changes are among the major reasons for the concern that the current rate of progress in reducing extreme poverty may not be sustained.
   ‘The extreme poor rely on government social protection programmes, family support or charity to survive,’ the report says, adding that no more than 10 per cent people eligible for government assistance receive it.
   Another formidable challenge to Bangladesh’s poverty reduction efforts is said to be the adverse consequence of the global warming since one-fifth of the country’s landmass may go under water, if the sea level rises by just one metre, causing massive displacements and reducing rice production by around 30 per cent.
   The report further acknowledges that poverty continues to prevent many children from the poorest and vulnerable groups from accessing ‘free’ education opportunities due to ‘many direct costs involved.’
   It points out that temporary labour migration — primarily to Saudi Arabia and other Middle Eastern countries —also has contributed significantly to increasing household income and reducing poverty. ‘Any adverse shock — global, political or economic instability — could seriously undermine the gains in poverty reduction,’ it warns.
   The foreign affairs adviser, Iftekhar Ahmed Chowdhury, presented the executive summary of the report at the annual ministerial review meeting of the Economic and Social Council of the United Nations on ‘Strengthening efforts to eradicate poverty and hunger, including through the global partnership for development’ in Geneva in July. Its in-depth version was published recently by the United Nations Development Programme.
   Iftekhar quoted the Johannesburg Declaration of World Summit on Sustainable Development in 2002 as saying that the countries of origin of temporary labour migration such as Bangladesh would enjoy a return of $160 to $200 billion if the European Union, Canada, Japan, and the United States allowed migrants to make up 4 per cent of their labour force.