Bangladesh is well-positioned to drive sustainable agriculture-led economic growth. Agriculture can strengthen the resilience of its food system and boost nutrition. Nearly half of all Bangladeshis are employed in agriculture, which includes a large majority of the rural population. While food and nutrition security, in its fullest sense, is yet to be achieved, notable progress has taken place in agriculture production – thanks to the overwhelming focus on research and development over the past decade.

However, conventional Bangladeshi farmers are losing interest in agriculture. The country has a youth bulge with more than 30% of its population being young, and the youth in Bangladesh are yet to embrace agriculture as a profession. This dual problem is a matter of concern. It is reflected in the depletion of agricultural land, and according to a study by the Soil Resource Development Institute under Bangladesh’s Ministry of Agriculture, the country is losing nearly 69,000 hectares of agricultural land a year. If this trend continues, Bangladesh may not have much farmland left in 50 years, demanding consideration of important questions: Who will produce the food? What will Bangladeshis eat?

‘We are not interested in farming, and if we had other options we would take those,’ said Malek Miah, a farmer from the agricultural region of Lalmonirhat in northern Bangladesh.

‘We are not interested in farming, and if we had other options we would take those,’ said Malek Miah, a farmer from the agricultural region of Lalmonirhat in northern Bangladesh. Malek has been working in the fields for more than 40 years. Every day he heads out to the field at the break of dawn to pull out weeds, water his plants or pluck his row crops. However, his sons have shied away from helping him in the farm.

 

Agricultural work in Bangladesh is demanding and laborious. This is probably one of the reasons why fewer and fewer young people are interested in farming.

Predominance of agriculture

Bangladesh is a country where the agricultural sector has played a central role in propelling economic expansion. Historically, it has proudly outpaced its two main competitors, the service and the industry sectors, in terms of job-creation. However, in 2020, the service sector for the first time took over the agricultural sector in terms of workforce employment.

The statistics show that the 2010s was the start of a decline in the employment gap between the agricultural and service sectors. According to the International Labour Organisation (ILO), the employment in the service and agricultural sectors both reached 27.3 million in 2019. The industrial sector also saw a sharp rise in employment but is still lagging behind the agricultural sector even though the gap is also closing.

According to the Bangladesh Bureau of Statistics, the country saw an exodus of approximately 17 million people from the agricultural sector between 2010 and 2020. This trend is expected to continue in the foreseeable years and, at this rate, Bangladesh may lose all its farm labourers by 2050.

A large segment of Bangladesh’s youth perceives agricultural work as low-wage, back-breaking manual labour that is tantamount to poverty and illiteracy. Fewer young people are pursuing farming as a profession compared to their previous generations. As a result, in the last ten years, overall employment in the agricultural sector has exponentially declined. At the same time the unemployment rate of young people has increased from 6.4% in 2010 to 11.5% in 2020. Both changes indicate that these problems can be mitigated simultaneously. If unemployed young people can be reoriented into the agricultural sector, then the unemployment rate can be reduced along with a resurgence of the sector’s productivity.

Why is agriculture falling behind?

It is important to unpack some of the key challenges which have held back Bangladesh’s agriculture sector. The covid-19 pandemic has burdened the agriculture value chain with new constraints, but it has also the old constraints to resurface.

Not enough income: According to Bangladesh’s Report on Agriculture and Rural Statistics in 2018, the average annual income of families that are dependent on agriculture stands at USD 2,472. The same study also shared that a major part of the income of farmers’ families comes from non-agricultural sectors, while their earning from agriculture amounts to only 38%. Data from a Bangladeshi agro-tech firm, iFarmer, observed that the average annual income of a farming household is around USD 2,216, which means the monthly income is USD 185. However, due to the nature of the sector, farmers rarely get paid on a monthly basis. They have to wait for the few months between sowing and harvesting to earn their return. If the farmers deduct the cost of their input (e.g. fertilisers and labour), which could reach up to 60%, they are left with almost nothing.

In comparison to agricultural income, the minimum wage for labourers in Bangladesh is USD 95 per month. To put this in context, the average earning of Bangladeshis is about $ 176 per month. In Bangladesh’s primate city, Dhaka, jobs like delivering food or ridesharing are popular among less-skilled young people. Their jobs can certainly earn them more money than an average farmer in the rural areas. A 2018 report into Bangladesh’s rideshare sector by economists Syed Mafiz Kamal and Noor Ahsan shows that a full time rideshare driver in Dhaka makes between USD 488–732 a month.

In Bangladesh, rural household income is declining. The composition of rural household incomes between 2000 and 2014 in Bangladesh largest administrative units highlights the growing role of non-crop earnings across the country. While the share of income from agriculture remains high, it declined in all of the divisions except for one. 

Without access to a distribution chain,
most farmers in Bangladesh rely
on middlemen to market
their crops.

The middlemen trap: Without access to a distribution chain, most farmers in Bangladesh rely on middlemen to market their crops. The middlemen buy from farmers in bulk at very low prices, many a times locking in orders long before the harvest — a futures-trading practice which is locally known as ‘dadon.’ According to a 2020 study by the Asian Development Bank (ADB), farmers in Bangladesh get less than 40% of the consumer retail price, while the middlemen get 43%. The different layers of handling the agricultural produce results in USD 2.5 billion post-harvest losses.

Climate-change induced setback: Extreme weather conditions caused by climate change, such as severe flood and untimely rainfall, have led to crop failures across Bangladesh. According to the Global Climate Risk Index 2021, Bangladesh is the seventh most vulnerable country in the world. In the coming decades, the country is likely to be affected by rising sea levels, saltwater intrusion, average temperature increase, rainfall variability and increased extreme weather events. Each of these factors will have a considerable impact on agricultural production in the country.

According to a World Bank study in 2018, Bangladesh’s average annual temperature may rise by 1.5°C by 2050, even if preventive measures are taken along the lines of those recommended by the Paris Agreement of 2015. If no measures are taken, then the country’s average temperatures are predicted to increase up to 2.5°C.

In Bangladesh, the most visible affect of climate change has been the gradual drifting of the rain-fed rice season (aman) due to droughts and delayed monsoons.

In Bangladesh, the most visible affect of climate change has been the gradual drifting of the rain-fed rice season (aman) due to droughts and delayed monsoons. If the drift continues, the production of rice, the staple food of the country, may fall by 32% by 2050. Moreover, climate change-induced rains and prolonged floods have been causing severe damages to crops, including aus, aman, jute and vegetables. This damage alone cost Bangladesh around USD 160 million in 2020.

Lack of investment: In terms of GNP, investment in agriculture has been falling since 2015, at a time when the agricultural sector has also been declining. According to the Bangladesh Bureau of Statistics, the annual average growth of agricultural GDP fell to 2.45% between 2014–2015 and 2018–2019. It had stood at 3.62% in the previous five years.

Over the last 15 years, the scope for expanding production has narrowed due to antiquated technology. According to a study by the Centre for Research and Information (CRI), ‘The Bangladesh Model in Agriculture Growth,’ the current government invested USD 7.22 billion in agriculture between 2008 and 2017. However, the majority of the investment was in subsidies for agriculture components, such as fertiliser and agri-machineries.

Food security remains at the centre of Bangladesh’s agricultural policies. The Government of Bangladesh continues its incentives for rice production through input subsidies, output price support and price stabilisation. According to the World Bank, between 2012 and 2014, agricultural subsidies accounted for 80% of the total recurrent public expenditure for the crop, livestock and fisheries sectors of the country. Bangladesh’s emphasis on food security through the increased production of staples has created a bias against diversifying the production systems.

In agriculture, investment means more than the macro-level public investment. At the micro level, investment in agricultural inputs, farm mechanisation and technical services are vital for the sector’s performance. These investments have also stagnated. The stagnation faced is caused by the lack of access to the right kind of capital or upgradation services for farmers.

Locks in business and trade: With regards to regulatory environment, according to the World Bank’s Enabling the Business of Agriculture (EBA) 2019, Bangladesh is performing well and above the regional average on livestock, plant health and finance indicators. However, in several other indicators (seed, fertiliser, machinery, agricultural trade and water), the data shows that Bangladesh lags behind its regional peers. In all areas measured by the EBA 2019 report, Bangladesh scores below the global average when compared to the broader sample of 101 countries. Although a recent regulatory reform was undertaken for the seed sector, the seed certification initiative, the EBA 2019 data show that private sector participation in the seed market is limited.

Agricultural trade regulations in Bangladesh do not require burdensome licensing, and the reforms to ease agricultural trade by making the necessary documentation available online are noteworthy. Still, the process of obtaining mandatory agriculture-related documents can take up to 150 hours, compared to an average of 45 hours in other countries in South Asia. This significantly increases the cost of doing business in the agriculture sector.

With rising urbanisation and increasing incomes, Bangladesh’s population is transitioning from cereals to higher-value and more nutritious agricultural commodities. As domestic production faces challenges in meeting that growing demand, the agricultural trade deficit has been continuously growing over time. From 2007 to 2017, Bangladesh’s agricultural imports increased by a factor of three, to USD 10.7 billion, with cooking oils, cereals and sugars accounting for 60% of these imports. During the same period, exports decreased by 9%, to just USD 0.9 billion.

Agro-food processing puzzle: The agro-food processing industry constitutes an important industry in the manufacturing sector in most countries, and this is certainly true of Bangladesh. The agro-food processing industry now contributes to about 1.7% of GDP. Despite maintaining sustained growth in output over the last decade, agro-food processing’s share of GDP has remained quite static.

Systemic error to access finances: In Bangladesh, institutional structure for financing agriculture has a deep flaw. The rural and agriculture credit market is characterised by a dual system. Farming households face restriction to access formal financial institutions due to this policy imperative. On the one hand, there is a formal market where institutions provide loans charging a relatively low rate of interest, often subsidised by the government. On the other hand, the century-old informal market exists along with the formal market. In the informal market, groups within the community supply credit from their own savings. They may be the professional moneylenders, traders, landowners, friends or relatives.

It is difficult for a farmer to get a loan from formal sources where the terms are suitable for farming. According to a 2019 study by the International Food Policy Research Institute (IFPRI), farmers in Bangladesh typically borrow more than 81% of loans from private sources, including NGOs, community-members and loan sharks. The interest rate of these loans is between 19% to 63%. The IFPRI survey found that 36.4% of the total loans were borrowed from NGOs where farmers have to pay at least a 20% interest rate.

Pandemic hit farmers harder:  A big challenge for Bangladeshi farmers came in 2020 when the covid-19 pandemic swept across the country. According to a study conducted by BRAC in June 2020, farmers across the country lost an estimated USD 6.7 billion in just three months of the covid-19 lockdown. The pandemic situation, coupled with lockdowns, means farmers are facing additional hurdles to stay afloat because the pandemic has weakened the consumer purchasing power, while the agro-supply chains have been severely disrupted by limited business activities.

Three-point mantra to bring young people into agriculture

At the beginning of 2021, Muhaiminul, 28, a young farmer from a small village in northern Bangladesh shared his vision for the future of farming with the article’s author during a field-survey. ‘If you want more young people to get into agriculture and farming, you must show them the success stories of young farmers like me. Surely people will come around,’ said Muhaiminul. His passion and interest in farming, although rare, shed light on what could be the future of Bangladesh`s agriculture sector. But for all of his passion, he needs support in the form of investment, technology transfer and policy reform.

Farming-focused investment: Investment in the agro-sector in Bangladesh must come from the private sector, the government and NGOs. Increased investment in agriculture to modernise food systems and markets is the key to breaking the vicious stagnation cycle that most farmers are trapped in. Such investments will improve the country’s food production and enhance household income.

In Bangladesh, farmers and market intermediaries consult each other to establish market prices, which results in efficient transactions. Something that could be improved through investment in marketing infrastructure is the logistics and operation of the markets. Private sector initiatives have driven much of the investments in processing, storage, marketing and packaging. These private investments not only provide secure markets for the farmers, but they can also raise the food safety and quality standards. The private sector is gradually channeling investments into processing and marketing to meet a growing demand gap. However, diversification in agriculture and modernisation of the agricultural food value chain is needed to allow the sector to seize the market opportunities in Bangladesh.

For improved agricultural modernisation, it is essential that Bangladeshi agriculture achieves economies of scale. The problem is that fragmentation is limiting its potential. While a well-functioning land market can help to circumvent this challenge, the land rental market remains largely informal, and land leasing agreements are short-term in nature. This dissuades farmers from investing in the medium-term and long-term because the short tenure results in less security.

Improvements are needed in Bangladesh’s overall investment climate. These challenges are limiting the inbound flow of foreign direct investments, which would greatly benefit the agricultural sector in terms of knowledge transfers and the standardisation of value chains.

It is absolutely critical to mobilise investment in the ‘future of farming’ with smart farming and precision-agriculture. Farm management uses data from sensory devices to ensure that crops get exactly what they need for optimum productivity. According to America’s international development agency USAID`s Engaging Youth in Agriculture report 2019, information and communication technologies (ICTs) are instituting new agricultural practices around the world. Young people are more likely to apply these new technologies in the agricultural sector, so they should be encouraged.

The infrastructure for enabling technologies, upon which the future of farming relies, requires further investment. Financial barriers to usage of mobile internet are declining, while high-speed mobile network coverage is expanding, and thus mobile money is widespread.

Technology to reshape agriculture: In Bangladesh, some technology-based companies are working to bridge the gap between farmers and stakeholders such as financial institutions, agri-input companies and consumers. The likes of iFarmer, KrishiSwapno, Khamr-e have been working in this area for a few years. iFarmer, for example, has found innovative ways to bridge the financial gap in agriculture. Their model enables individuals to invest in farmers, allowing the farmers to access that funding and expand their operations.

Farmers need real-time advisory services. Bangladesh’s radio and TV channels have played, and still continue to play, a central role in agricultural extension by getting farmers in touch with key services. Nevertheless, Bangladesh’s public agriculture extension system has not seen reform on information dissemination matters since the late 1990s. Time-befitting information dissemination, especially with the role of ICT to loop farmers with market insights, has streamed into many developing countries in the last decade. Meanwhile it is also important to adopt emerging media, such as video clips for mobile phones, for use of extension services. For example, in India, mKisan SMS Portal for farmers enables all government organisations in agriculture and allied sectors to give information services advice to farmers by SMS in their native language. Farmers can access information at their fingertips – through Push SMS (notifications), Pull SMS, IVRS and mobile apps. Bangladesh can quickly replicate this model.

Blockchain is another area, which can help Bangladesh open up agricultural export markets.

Blockchain is another area, which can help Bangladesh open up agricultural export markets. With high levels of traceability for agriculture products via blockchain, Bangladesh can diversify its export destinations. According to the Bangladesh Fruit, Vegetable and Allied Product Exporters Association (BFVAPEA), Bangladesh exports more than 70 varieties of vegetables and fruits to 53 countries. Notable export markets include Malaysia, Singapore, Hong Kong, Saudi Arabia and UAE. It is important to note, however, that these are markets dominated by expat Bangladeshi consumers. In order to get into high value markets, such as the USA and Europe, Bangladesh has to adopt technologies, such as blockchain, that offer end-to-end product traceability.

Further investment is also required in agro-processing. The agro-food processing industry remains highly concentrated and dominated by a limited number of firms, thus revealing its oligopolistic nature. The concentration of market power enables these firms to use their influence to depress the price of agricultural inputs. They essentially take advantage of the seasonality of agricultural output to fixate the price points. Only with regulatory intervention can this oligopoly be broken. Ultimately, young people are more likely be attracted to a competitive market.

Agro-policymaking with youth at its core: While developing agriculture policies, Bangladeshi policymakers should be asking some simple questions. Will this policy attract more young people to farming? Will this policy reduce cost, uncertainty and increase profitability for farmers? Will this policy help adopt new technologies in farming?

Bangladesh has done a remarkable job in the R&D of agricultural technologies, especially for commodities like rice and jute. But most of the breakthroughs have been input-oriented R&D. Comparatively less attention has been given to production technology, post-harvest and value addition. Policy measures may also address the gaps in the agriculture value chain. This is already shaping up in Bangladesh’s new policies which recommends that new agri-enterprises with a minimum investment of BDT 10 million (the equivalent of USD 120,000) in food processing and farm mechanisation get a 10-year tax exemption. These policies are a good starting point to attract young people towards the agriculture industry.

The agriculture universities in Bangladesh could adopt a harmonised policy to invest in incubation programmes to hands-on test innovative ideas in agriculture. Furthermore, the agriculture universities ought to reform their curriculum to focus on non-core farming activities such as agro-processing, distribution network management and the packaging of agro-products.

A challenge worthy of addressing

In Bangladesh the agriculture sector still possesses significant growth potential which, if seized, could generate good job opportunities for rural youth. However, the abilities of young people to drive a sector-wide innovation are squandered when they are blocked from actively participating in economic activities. As a result, incentivising youth participation in the agricultural sector is promptly needed to energise the rural economy. Unfortunately, many young people do not perceive agriculture as a viable career option. The lack of income from agriculture is simply not attractive enough for the Bangladeshi youth, who instead migrate to cities in search of more highly remunerated work. A coordinated effort is therefore needed to develop a more modern agricultural sector. Such a change would undoubtedly unlock the potential of young people in Bangladesh.

 

Photo ©️ Mahmud Hossain Opu & Fahad Ifaz

 

Fahad Ifaz
Fahad Ifaz is the co-founder and CEO of iFarmer. He is an entrepreneur. He worked at the World Bank, CARE International, Swisscontact and Palladium. He is an Acumen Fellow. He pursued his graduate studies in economics at North South University in Bangladesh.