36 an analysis of the extreme poor’s experiences of the contemporary agrarian structures in banglade

Working Paper 36

An analysis of the extreme poor’s experiences of the contemporary agrarian structures in Bangladesh

SK. Tariquzzaman

July 2016

EEP/Shiree House 5, Road 10, Baridhara, Dhaka-1212, Bangladesh July 2016

An analysis of the extreme poor’s experiences of the contemporary agrarian structures in Bangladesh SK. Tariquzzaman “The relation between agrarian structure and development is one complex interaction rather than unilinear causation” Abdullah, 1976

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Introduction

Bangladesh has long been considered one of the world’s poorest countries, with 17.6% of the population living below the lower poverty line (HIES, 2010), the threshold used to distinguish the extreme poor from the poor. However, in recent years the country has achieved good economic growth, and the incidence of poverty was reduced by 36% between 2000 and 2010.

The trend can partly be attributed to the pro-poor strategy of the Government, which has focused on economic growth, the promotion of human development and the provision of social safety nets (IDB, 2011). Consequently, the country is now classified as a lower middle income, according to the World Bank (2015).

The rural poor are historically extremely reliant on the agricultural sector. As the country has become richer, there has been a gradual sectoral shift from farm to non-farm activities, and labour has been employed elsewhere. For example, many poor women in particular have made successful livelihoods in the ready-made garments sector. Despite this, the reliance of the rural poor on agriculture remains high. In 2013, it was estimated that the agricultural sector accommodates 47.5% of the total workforce of Bangladesh and its GDP is around 18% (Unnayan Onneshan, 2013). With such a high proportion of the population reliant on agriculture and land-related activities, landholding plays a vital role in the fight against poverty. Strong inequalities in land ownership are a significant driving factor of poverty and extreme poverty.

Landlessness remains a reliable and strong indicator of extreme poverty.

As Bangladesh becomes a Middle Income Country (MIC), the question of rural employment becomes central. With the right policies and supportive investments at local, national, and global levels, agriculture offers new opportunities to hundreds of millions of rural poor to move out of poverty (World Bank, 2008). However, the World Bank notes that policies have often failed to utilize agriculture to achieve development, as rapid population growth, declining farm size,

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falling soil fertility, and missed opportunities for income diversification and migration waste such opportunities (Ibid).

Nationally 17.6% of the population live underneath the lower poverty line, and are therefore considered to be extreme poor, while 31.5% live below the upper poverty line (HIES, 2010). In rural areas, the percentage of people living under the lower poverty line is even higher, at 21.1% (HIES 2010). The extreme poor are very unlikely to have access to land, with 11% being completely landless and 62% having access to less than 3 decimals of land (EEP/Shiree, 2014).

The results of the HIES for the years 2000, 2005 and 2010 shows that landless 1 populations have always been disproportionately affected by a higher incidence of poverty. The table below highlights this trend.

Table 1: Poverty incidence in rural Bangladesh FY 2000, 2005 and 2010 Average Rural Average Rural and landless

2000 52.3 63.5

2005 2010 43.8 35.2 56.8 45.6 Source: HIES 2000, 2005, 2010

A large proportion of extreme poor households fall out of mainstream antipoverty programmes and social safety nets. Special and dedicated programmes which transfer livelihoods and assets, such as the EEP/Shiree project, have recently been introduced (Zulfiqar, et al 2014). As the majority of extreme poor households have little or no cultivable land, they have to rent farmland from others. Renting of farmland increased nationally from 14 percent in 1988 to 38 percent in 2008 (Agricultural census, 2008). EEP/Shiree data reveals that among the extreme poor households, 30 percent cultivate land as tenants 2. The World Bank’s poverty assessment report (2013) claims that between 2005 and 2010, households with smaller landholding were more prone to fall into extreme poverty. The objective of this paper is to identify what role land plays in supporting extreme poor households’ livelihoods.

This paper is a response to observations made during the implementation of the EEP/Shiree project, which suggested that access to land was a major contributing factor to improvements in the wellbeing of extreme poor households. The paper therefore seeks to provide a predominantly qualitative analysis of land access and agrarian change in rural Bangladesh, focusing especially on the experiences of the extreme poor in the South West region. Examination of their experiences of land acquisition, contributes to our understanding of the implications of land policies (or the lack thereof) for extreme poverty. The main argument here is that economic and socio-demographic trends contribute to creating a favourable environment for the landless to enter the land tenancy market.

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Household that own less than 0.05 acre of land Author calculated this figure analyzing EEP/shiree socioeconomic survey data collected as part of periodic monitoring of the project which has been discussed in the findings section.

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The paper is organised as follows. Section two consists of a literature review, which has three purposes. Firstly, it analyses the history of agrarian change, going back to feudal Indian land management. Secondly, it identifies the contemporary linkages between landlessness and poverty in rural Bangladesh, and thirdly, it analyses the influence of the market and sociodemographic changes on pro-poor land reforms and rural livelihoods. Section three describes the mixed-method approach used for this study, while section four presents quantitative and qualitative findings on the comparative well-being status of households with and without land access. Based on the results, section five then analyses the underlying factors of access and benefits of land and its challenges. It also discusses why and how land plays a role in extreme poor households. The final section concludes with five key arguments for land reform that can benefit the extreme poor.

2. History and Trends of Agrarian Change in Bangladesh 2.1 The Colonial Era The rural economy is dependent on agriculture, and landownership has been a historically important factor in rural social and political power structures. Under British rule, land distribution and management was a means to avoid or respond to peasant disturbances and protect colonial revenues. The question of agriculture was central to feeding the growing population in the face of challenging climatic conditions. In village societies, hierarchy reflected land relations, with the jajmani system consisting of elite castes having a strong hold on rural landholdings. The traditional hierarchy reflects a division of labour across socio-economic castes: dominant caste of petty landlords, intermediate groups of tenants, village artisans, uneducated and low-skilled labourers. It is difficult to assess the level of landlessness in Bengal before 1871, as the first census conducted in India was in 1872 which reported seven million landless peasants (Maddison, 2013; Mukerji, 1957) 3.

Scholars such as Abdullah (1976) argued that Bangladesh inherited a “backward agrarian structure” from colonial exploitation and that this played an important role in the persistence of poverty in the country (1976). The 1950s feudal society was organized in such a way that portions of estates could be under the management of several layers of rent-collecting intermediaries who would collect rent from one another. Most of the land of what is now Bangladesh was under the tight control of zamidars followed by talukdars, patni talukdars and dar-patni talukdars and so on. The former would often be considered by the colonialists as the landholding families in charge of the land who together with some independent talukdars, constituted the large majority of the “proprietor class”. Only the share-croppers, landless

3 Some authors reported that Sir Thomas Munro declared that there were no landless peasant in India before 1941 when the Scottish colonial administrator died in 1827.

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agricultural labourers and raiyats, would have an actual interest in cultivating the land. Abdullah estimated that in 1950’s, the raiyats operated 70% of the land in the country, and that over 45% of raiyats managed family holdings that were below 2 acres.

Between 1951 and 1956, a series of land reforms were introduced. The 1951 and 1961 censuses reported 1,513,629 landless labourers in 1951, which amounted to approximately 15.3% of the population, and about 2,547,806 in 1961 (Abdullah, 1976). Boyce’s detailed analysis (1987) of the relatively slow growth of the agricultural sector between 1949 and 1980 helped contextualise the need for new crops and technologies to boost productivity. Favourable weather conditions and environment were not sufficient to support a growing population and engage with rising inequalities within the agrarian power structures.

2.2 Improved Productivity The late 1970s reforms had two major purposes. The first was to limit illegal land extraction and acquisition and to control sub-lettings more closely to minimize abusive rent-seeking behaviour.

The second purpose was redistributive, to ensure economic subsistence through khas land. The parcels of khas land were taken from large landholding families and given (not for free) to the landless, although the land was often found to be uncultivable, inaccessible, and/or of little value and productivity potential. The impact of the land tenancy reforms is difficult to estimate precisely, and shall be contextualised within a context of mechanisation and modernisation of land use.

The evolution of land use was characterized by the use of new technologies, such as new and better management of high yielding seeds varieties (boro paddy notably), in combination with shallow tube-well irrigation systems, and the intense use of fertilisers (Rawal and Swaminathan, 1998; Harriss, 1992, 1993). The number of shallow tube wells increased from 93,000 in 1982 to 260,000 in 1990 with a 200% growth, which is still increasing (see Annex 1) (IDE, 2014).

Although statistically between 1961 and 2007 cultivable land reduced twofold, production actually increased (Unnayan Onneshan, 2014). Mechanization policies from public to private sector changed agrarian practices significantly and effectively despite challenging climatic events. Justice and Biggs (2011) report that in 1988, after two cyclones had hit the country, only two and a half years apart from one another, President Ershad took action to replace the deleted oxen population with machinery. He liberalised markets and lowered tariffs, which enabled small engines and associated tillage, pumping and other equipment to “flood” the rural areas (Justice and Biggs, 2011). This mechanization improved the productivity of the land.

In Bangladesh, 157 million people are dependent on 8.8 million hectcres of arable land which employs half of the labour force in the country. This figure is high comparable to similar developing and most developed countries. However, significant seasonal labour scarcity and increasing rural wages mean production costs are higher. Rural real wages increased rapidly after 2005, while urban real wages stagnated due to the rise in food prices, causing the gap between rural and urban real wage to narrow. According to HIES, since 2005, the pace of female

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real wage growth has overtaken the pace of its male counterpart. Thus, the male to female wage gap has also narrowed (World Bank, 2013). Kynch’s calculations for daily wage rates of male agricultural labourers in terms of rice estimates an increase from 2.56 in 1983 to 5.07 kilos in 1990 (cited by Rawa and Swaminathan, 1998). The total cost of production of dry season paddy in Bangladesh is USD418.87/ha compared to USD336.28/ha in West Bengal, USD253.17/ha in Punjab, 223.65/ha in Thailand, and USD274.45/ha in Vietnam (CIMMYT/iDE, 2012). At the same time, wages have risen dramatically. This has led to a reduction in profitability for medium and large scale farmers.

2.3. Landlessness In the modernisation and urbanisation process, it is common to see the profit from land-related activities decline. Islam (2002) argues that in Bangladesh, land no longer brings enough income.

There is increasing evidence that rural livelihoods of the poor have diversified and become less agriculture-dependent, influenced by growth in the non-agricultural sector (Toufique, 2002), technology improvements and increased landlessness (Saha, 2002). Moreover, manual work is generally prejudiced against and farmers, when they can afford to, refrain from manual labour.

This has led some authors, such as Riggs (2006), to argue that that the lives and livelihood of the poor in the rural South are increasingly divorced from farming. Such arguments are supported by studies that showed that nowadays young people do not aspire to be farmers. Such changes mean that the livelihoods of the poor now often depend on a set of different non-farm income sources (Zillar, 2002). This shift not only increases their income and employment security but also reduces their vulnerability to variations in income flows over the whole year.

However, although the prospect of becoming a farmer may no longer inspire younger generations, there is little evidence to suggest that the demand for land is decreasing. It is important to distinguish between agricultural employment, which is dependent on productivity and contracted wages, and land “ownership�, which for the poor is an actual tenancy secured through payment of a fixed rent. If the poor stratum of the population does not aspire to enter and remain in agricultural labour, they certainly seem to aspire to become landowners which brings more prestige and stable rent (Thorner, 1956). For landless households particularly, the ability to to rent land and to manage and cultivate a parcel of land is important. Continued pressure of population on limited land has led to farm sizes getting smaller overtime and caused the number of landless farmers to grow (Wiggins et al., 2010). As such landlessness remains a major concern, and has increased from 8.7% in 1983/84 to about 15.6% in 2008 (Agricultural census, 2008; Raihan et al., 2009).

To combat landlessness and tackle rural poverty, public policies have recently focused on the transfer of state-owned land, khas land. Unfortunately, the policies have been unable to distribute land adequately to the landless and meet the growing demand for cultivable land.

Acquiring state-owned land as a right became the focus of a political process of social

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mobilization (Tariquzzaman, 2014). The common strategy of the landless’ is to work enough to be able to access land through rental market transactions (Rahman, 2010).

2.4. Land Tenancy While demand among the landless is high, for well-off land owners in search of more profitable non-farm activities, it is more beneficial to rent out their land to poor relatives or former agricultural labourers (Islam, 2002). Although the tenancy market remained relatively stagnant until 1996, it has become more vibrant in recent years. In 2008, nearly 44% of Bangladeshi farmers were tenants 4 and they managed nearly 45% of the cultivated land in the country.

Rented land is mostly used for crops. The total land area taken up by the tenancy market was only 18% in 1960, increasing slowly to 20% in 1983-84, but then more rapidly to 33% in 2008 (Hossain, 2012). Similarly, although owned farm land decreased among marginal farmers (defined as farmers cultivating up to 0.4 ha), the total cultivated land under their command has increased because they have accessed land through the tenancy market (Hossain and Bayes, 2009).

The land is rented in small portions to landless, marginal or small farmers through tenancy, which enables them to retain ownership rights. This means that the number of small and marginal farms continues to increase and the farm size gets smaller. Table 2 below compares BBS National Sample Surveys for 1983-4 and 2008. It shows that over the 25-year time period, the proportion of large and middle-size farms has gradually declined in Bangladesh. This gives space and opportunities for landless, marginal and small farmers to enter the tenancy market. As table 2 shows, the number of marginal farms increased from 40% of all farms in 1983-84 to 50% in 2008. The part of marginal and small farms together holding up to 1.0 ha (less than 2.5 acre) increased from 70 to 83%. Their uses of land increased from 28.7% to 49.6% between 1983-84 and 2008. On the other hand, the proportion of farm holdings with over 2.0 ha has declined form 11.8% to only 4.5%, and their share of used land from 43.8% to only 22.7% over the same 25year period.

Table 2: Changes in the structure of farm holdings, 1983-84 to 2008 Farm size 1983-84 National Sample Survey 2008 National Sample Survey (ha) % of farms % of land Tenants % of farms % of land Tenants (%) (%) Up to 0.4 40.1 7.6 26.7 50.1 15.3 32.3 (marginal) 0.4 to 1.0 29.9 21.1 44.7 33.0 34.3 47.3 (small) 1.0 to 2.0 18.2 27.5 48.8 12.5 27.8 46.3 (Lower

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Hossain and Bayes (2009) categorised tenants as pure and part-tenant. They defined pure tenants as those who do not have any cultivable land but operate farms entirely rented from others.

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middle) 2.0 to 3.0 (Upper middle) Over 3.0 (large) Total

6.7

17.5

40.6

3.0

11.6

40.4

5.1

26.3

34.3

1.5

11.1

38.9

100

100

37.4

100

100

39,3

The terms and conditions of tenancy have also undergone significant changes over the last two decades. Until the mid-1980s, the main tenancy arrangement was sharecropping. Under this arrangement, the landowner and tenant shared the harvest, usually with a 50:50 ratio (Hossain, 1977). The sharecropping arrangement helped share the risk of cultivation between the landowner and the tenant (Basu, 1992). Table 3 compares data from the BBS National Sample Survey 1983-84 with that from 2008.

Table 3: Changes in the importance of different tenancy arrangements in Bangladesh, 1983-84 to 2008 Tenancy Arrangement Share Tenancy Fixed seasonal rent Lease arrangement Khai-Khalasi Land on Mortgage

1983-84 Agricultural Census Percent of tenant Share (%) of farms rented land 70.2 74.0 10.1 10.0

2008 Agricultural Census Percent of tenant Share (%) of farms rented land 43.0 41.3 25.3 23.8

4.2

4.0

10.6

11.0

4.1 11.4

4.0 8.0

4.1 17.0

4.3 19.6

The table shows a clear fragmentation in landholdings and a large decline in sharecropping in favour of more fixed-rent arrangements and other longer-term lease contracts (leasing and or mortgaging). Sharecropping declined from 70.2% in 1988 to 41.3% in 2008.

For sharecropping to be a successful enterprise, landlords generally select sharecroppers that have large or medium-farms and own tilling and irrigation machines and technology, as this minimizes the financial risk. Compared to marginal small-farmers, extreme poor households have less farm experience and are seen as less productive and reliable (Hossain and Byes, 2009), and lack reliable social and economic networks. Medium and large-farm owners who sharecrop recruit day labourers often from among the extreme poor. This is the traditional way through which the extreme poor, who have a reputation for being hard working and obedient, engage

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with the land cultivation of larger or medium farmers. The barriers to entry to the sharecropping market have generally been too high for landless households.

Leasing and mortgaging land at fixed rates enable medium and large-scale landowners to minimise the risk of dealing with the poor. As a result, extreme poor are able to use land for cultivation even though they do not have ownership over the land they cultivate or the farms they operate. Leasing and mortgaging has multiplied by almost threefold (2.7) over the last 20 years (14% in 1988 to 38% in 2008). Nationally, their total share of cultivated land increased from only 7% in 1988 to 19% in 2008 (Hossain et al, 2014). Mortgaging land requires households to invest larger amounts of money up front, in comparison to leasing (although this varies according to the quality of the land). Leased land parcels tend to be larger than mortgaged land- with the average size of the former approximately 64% higher than the latter. Despite these factors, extreme poor respondents argued that mortgage-type arrangements allowed them to invest their money while benefiting from the crops they cultivate. This therefore helps increase the value of their productive assets and contributes to mitigating the impact of hazards and shocks on their livelihoods. Unlike mortgages, the money used to lease land is not refundable.

Extreme poor households consider it a riskier strategy as this is considered an expensive investment. To get a lease, each household judges the productive quality of the plot to ensure profit maximization.

This trend coupled with the diversification towards non-farm livelihoods in rural areas has, to some extent, reduced the supply of agricultural day labour, as the poor increasingly work on rented/leased/mortgaged land (which represents only a portion of their income). This changes the agrarian structure and drives the agricultural wages up. The 2013 World Bank poverty assessment report argues that this has contributed significantly to poverty reduction between 2005 and 2010.

2.5. Linkages between land tenure and productivity

Our review of the literature suggests that small farmers in Bangladesh are generally effective at maximising their productivity if and when they receive proportionate benefits from it. In small farms it is common to observe all adult family members contributing in some ways to production in order to maximise productivity with as few external costs as possible. Labour intensive production techniques and the availability of cheap labour can make the productivity of smallhold farming high if the financial returns are healthy. Labourers can also earn from other people’s plots. Thus small-hold family farming gets higher benefit and is more productive than mechanized farming when productivity is measured per hectare (Unnayan Onneshan, 2013).

We have seen that although Bangladesh and its agrarian structure are transforming, land is still significant for a large population of rural poor. With a large rural population, many of whom are landless and unemployed, land is an important source of work and social security. Agricultural livelihoods of rural people also promote local rural economies, as small-holders are inclined to spend most of their income locally (Unnayan Onneshan, 2013). Thus Toufique and Turton

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(2002) argue that land, ‘is still by far the most important sector for rural livelihoods. Especially so for the poorest households – most of the poorest people continue to earn a living as agricultural labour.’

3. Methodology The paper seeks to understand the importance of land access for the wellbeing of the extreme poor in contemporary agrarian structures. Through a mixed-method approach, the study explores the types, patterns and trends of access to land for extreme poor households as well as the benefits that land access brings. The study makes use of the data collected as part of EEP/Shiree’s five-part Change Monitoring System (CMS) 5. Both quantitative and qualitative data are used for our analysis, as the research draws on findings from the socioeconomic and anthropometric survey (CMS 3) 6 and the longitudinal household tracking survey (CMS 5) 7 respectively. The quantitative data analysis was done using SPSS software. For the purpose of this study, we focused on data from 247 extreme poor households scattered across rural Bangladesh 8. These households were divided into two categories of households: those with access to cultivable land and those without it. The former was further sub-divided based on type of land. Based on selected well-being indicators, the households’ status was measured.

Beyond the CMS data, two rounds of primary fieldwork were conducted to scrutinise specific processes and perceptions of the extreme poor. We selected two sites: Dinajpur District in the North was chosen because it is a key rice-producing district of the country, and Satkhira District in the South was chosen because it is heavily influenced by shrimp farming and affected by environmental challenges. In both locations focus group discussions and key informant interviews were held. Table 4 summarises the primary fieldwork Table 4: Research methods used during primary data collection Method Focus group Key informants interview Social mapping

No. of activities 5 4 3

Participants Lease and mortgage holder, land lords Elderly farmer, Agriculture officer Farmers

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For more details, see www.shiree.org The socio-economic and anthropometric survey was administered to assess longer-term change in extreme poor household’s socio-economic and nutritional status. For the Scale Fund NGOs, a system of regular surveys commenced in October 2009 and anthropometric was collected on an annual basis. The panel survey includes a statistically significant sub sample of beneficiary households.

7 CMS5 is a qualitative longitudinal tracking tool which documents the dynamics of extreme poverty as it is experienced and changes in beneficiaries’ lives. It looks at the original positions of households before project intervention (through Life Histories) and then tracks change throughout the life of the intervention (through Reflections on the Interventions).

8 We excluded households from the Chittagong Hill Tracts from our study.

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4. Results and Data Analysis Household wellbeing In order to see how land affects household wellbeing, we assessed the two groups of households against Shiree’s wellbeing indicators. These indicators include average monthly income (in BDT), the value of income-generating assets (in BDT), the number of non-productive assets, the amount of cash savings (in BDT), access to safe drinking water, access to sanitary latrines and the prevalence of anaemia. The quantitative dataset used includes 62% rural extreme poor households who have access to cultivable land (under a broad range of terms), and 38% without.

Our analysis of wellbeing using financial, economic and health indicators show that within the extreme poor category, the landless poor are systematically and significantly worse-off than households with access to land (Table 5).

Households with land access have reported mean monthly income which is 26% higher than their landless counterparts, and cash savings that are 25% higher. Economically, their productive asset value is 39% higher and they own 2.4 times more non-productive assets. Health wise, the data shows that households with access to land are more likely to have access to safe drinking water (92.8%), sanitary latrines (73%) and of being non-anaemic (54.5%) than the landless (reporting 89.6%, 58% and 46.8%, respectively).

Table 5: Well-being comparison between households with land access and the landless Wellbeing indicators Average monthly Income (BDT) Value of Productive asset (BDT) No. of non-productive asset Total cash savings (BDT) Access to safe drinking water Access to sanitary latrine Non-anaemic (hh head)

Land access households Non-access households (N=263) (N=164) 8076 5995 25372 15380 14 11.6 5559 4190 92.8% 89.6% 73% 58% 54.5% 46.8% Source: EEP/shiree CMS 3 data

The land tenure market As discussed in section 2.4 above, the significance of sharecropping in rural areas in Bangladesh has declined in the space of 20 years giving more room for the extreme poor to enter the land tenancy market. Our analysis of secondary literature and empirical data shows that medium and large-scale farmers are increasingly unable to cultivate their own land because of rising production costs. They however rarely sell the land, preferring to rent it out to others and using the rent to invest in non-farm activities in or outside rural areas (Hossain et al, 2014). The

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literature also suggests that large-scale land owners now tend to lease and mortgage land at fixed rates as it minimises their risk of dealing with the poor.

The qualitative data collected substantiates the trends outlined in section 2, estimating that 30% of the extreme poor households are currently using land as tenants and that 5% have started renting land since 2010. The quantitative and qualitative data collected also shows that mortgaging is used by the extreme poor landless as a way to enter the land tenancy market.

Decisions to rent land are based on a number of reasons including sliced type of production expenses, the availability of one’s own human capital, the capacity to bear expenses from other sources and the freedom to make key production decisions. Meanwhile, the qualitative data reveals that the extreme poor believe that mortgaging land is the most desirable and convenient option, preferable to sharecropping and leasing even if it does not necessarily translate into mean higher earnings.

Land tenure and productivity for the landless extreme poor Access to lease and mortgage options raises the question of how the extreme poor can benefit from access to and use of land. The qualitative data indicates that landlords can produce one kilo of HYV BORO rice and HYV T. AMAN spending 15.18 Taka and 12.6 Taka, respectively by using hired labour. Extreme poor tenants, using their own labour, spend 10.91 Taka and 12.87 Taka to produce the same amount. HYV T. AMAN is less labour intensive to cultivate than HYV BORO. Box 1: Cost-benefit analysis in one acre of land A landowner who solely depends on hired labourer makes a profit of 7,550 Taka against an investment of 36,450 Taka. He invests this amount for three months in HYV BORO rice cultivation. The profit comes from the price of straw. However, if a tenant cultivates the same land with his own labour, he can make a profit of 15,800 Taka excluding paying rent and straw share of 11,000 Taka. This calculation shows that the labour wage is a key consideration for extreme poor people thinking about securing access to land. (See annex 2 for details) Farmers who solely depend on hired labourers make a profit of 9,070 Taka against an investment of 21,430 Taka. He invests this amount for three months in HYV T. AMAN rice cultivation. The 55 percent profit comes from the price of straw. However, if a tenant cultivates this land and does the work himself, he can make a profit of 8,620 Taka excluding paying rent and straw share of 25,250 Taka. As with the case of BORO cultivation, tenants profit more than land owners because of the differences in labour wages. (See annex 3 for details)

In an extreme poor household with an average family size of 3.8, the total annual rice demand is around 16.65 mounds, i.e. 23.78 mounds of paddy at a cost of around 14,271 Taka. If an extreme poor household holds an average of 43 decimals of leased land (see Table 2 above), they might be able to get 44.51 mounds of paddy for each acre of land they cultivate. Therefore, a

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household can earn a yearly amount 26,706 Taka which is 24 percent of their average income.

The household also gains or retains 20.73 mounds of paddy (worth around 12,438 Taka) which is invested to lease the same plot of land (at a cost of approximately 9,444 Taka). The remaining 3,000 Taka that comes from the sale of straw is invested in AMAN cultivation, other asset creation or spent on feeding cattle. Thus an extreme poor tenant farmer holding the average 43 decimals of leased land is able to meet the yearly demand of rice in his own household, the demand for fodder for his cattle, and the payment for the re-lease of the land.

In mortgage holding households, if one household holds an average 27 decimals of land (see Table 2 above) he may be able to secure a yield of 28 mounds of paddy. In this scenario, the household earns 16,200 Taka per year which is 22% of their average monthly income. After meeting their yearly demand the households retain 4.22 mounds of extra paddy and straw. This can be invested in AMAN cultivation, other asset creation or for feeding cattle. Thus an extreme poor tenant farmer holding an average of 27 decimals of mortgaged land are able to meet their household’s yearly demand for rice and also provide fodder for their cattle.

In 2014, according to the World Food Programme (WFP) of Bangladesh, the average price of each kilogram of coarse rice was 33.47 Taka. So, as highlighted in the above discussion, an extreme poor household needs 22,291 Taka to meet their yearly demand for rice. However, if the household can cultivate rice, then they need 14,271 Taka – 8,020 Taka less than his counterpart who does not cultivate his own rice. The income analysis of households shows that although land contributes around 1/4th of their monthly income, it also ensures households have sufficient rice to eat.

Benefits of cultivation Table 6 below is based on FGDs with land users. The data shows that extreme poor households are using land in different ways and not just for rice cultivation. The cost-benefit analysis below shows the income the households are able to make in a year from various types of land use.

Table 6: Cost-benefit for land use other than rice cultivation (1 decimal/year) Type of land use Paddy and fish cultivation Fish cultivation Fish and vegetable cultivation Vegetable cultivation

Production cost 530.30 343.31 482.8 125.41

Gross Income 2,248.48 1450.48 1,545.37 524.99

Net income 1,718.18 1,107.17 1,062.57 399.58

The table shows that using land for paddy and fish cultivation is the best way to increase profits.

However, only a few extreme poor households are able to use the land in this way since rich farmers capture the larger plots for fisheries. Our data shows that households who use land for fisheries usually only cultivate shrimps, but households who use land for fish and vegetables, cultivate lobster with white fish and vegetables on the embankment. Shrimp harvesting starts

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three months after the release of fries whereas the lobster takes nine months. So the income from shrimp is higher than that from lobster and white fish. Thus the net income from land cultivating only fish is higher than that used for fish plus vegetable cultivation. Households that only cultivate vegetables get comparatively low returns but their net income is three times higher than households which only cultivate paddy.

Challenges of access to land While collecting data, we identified three major challenges faced by beneficiaries when accessing land. Firstly, the extreme poor increasingly find themselves competing with the moderate poor and non-poor in order to secure access to land. This is because when incomes rise, the demand for food also increases reflecting higher purchasing power. The average per capita income rises at least 4.4 percent yearly. This increase correlates to at least 2.0 percent rise in the demand for food each year (Asaduzzaman, 2009). One landlord told us, “I have 45 decimals of land. One of my villagers is cultivating this land on a two year lease. Three other villagers have offered a higher rate to get use of the plot. I will lease out to the highest bidder”.

This competition may make it difficult for the extreme poor and even for some moderate poor to secure access to land.

Secondly, in comparison with land that is used to cultivate double or triple crops, mortgage-lease contracts tend to be limited and as such reduce the benefits extreme poor households can attain.

Thus large scale farmers tend to keep or take the land which allows the cultivation of shrimp or a combination of fish and paddy Often they will cultivate fish for nine months, generating significant profits, and then lease out or mortgage out the same land for three months to marginal and extreme poor households. In such scenarios, the extreme poor are disadvantaged. One extreme poor households group told us, “Fish-farming is usually a larger project which needs large cash flows for preparation and cultivation. To collect money, the landlords’ mortgage-out land. Under the conditions of the mortage, the mortgage holders will have to lease-out the same land to the landlord but cultivate paddy in the BORO season. For instance, 4 households in a group get 1 bigha (33 decimals) of land for 40,000 Taka and lease the same land out for 4,000 Taka for one year. From this land, each household receives 1,000 Taka plus 3.5 mounds of rice which meets 4 to 5 months of a household’s demand for rice.”

Thirdly, because irrigation is not required and minimum tillage is needed to cultivate paddy during the Aman season, many small and medium landholders do not lease out their land and prefer to cultivate their own crops. This limits the access for landless and marginal farmers. One extreme poor household-head living in Dhaka city reported, “I have leased one bigha (33 decimals) of land in my village for BORO cultivation. My landlord is a shopkeeper in my village.

Since he runs his own shop, he cannot cultivate Boro but he grows Aman since it is easier for him”

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5. Discussion Between 2003 and 2013, 2.65 million acres of agricultural land in Bangladesh has been turned into non-agricultural land. This means that 692 acres of agricultural land is being lost every day (ALRD, 2014). A further 0.0038 million hectares of land is affected by salinity each year (SRDI, 2010). GDP derived from agriculture and employment in the industry is also decreasing. Thus, the literature argues, farming is losing its attractiveness, alternative occupations are multiplying and nonfarm investments are providing higher returns. The youth have no aspirations to be farmers and their parents do not want it for them either (Riggs, 2006). However, nearly half of the country’s labour force continues to work in agriculture and while the total annual labour income only grew by 1.7%, this figure rose to 9.8% between 2000 and 2005 (World Bank, 2013).

Landlessness and poverty have a negative correlation. The extreme poor are still unable to obtain rights of landownership because of the nature of rural structures and institutions. This has given rise to tenant farming by the landless. The number of pure tenant farms, i.e. those operated by farmers with no cultivatable land of their own, increased from 14% in 1988 to 30% in 2012 (Hossain, Malek and Das, 2014). Among the extreme poor rural study participants, 62% have access to land and half of them are tenants.

In rural Bangladesh, extreme poor households are traditionally engaged in agricultural labour and earn enough to run their household expenses. However, farming does not need regular labour and all the capital is not used at once, which means it is possible to farm while engaging in other work. Overtime work, diversification and increased involvement in non-farm activities have all strengthened the economic position of the extreme poor but also created a labour crisis and increased agricultural production costs. This has led to the disappearance of larger farmers, the fragmentation of landholdings and the increase of fixed rental contracts. Of the extreme poor households in our study, 30 percent entered farming through lease and mortgaging arrangements.

This allows farmers to ensure that their household demand for food is met and to make additional profit by taking on multiple jobs.

Debates on land tend to centre on issues of productivity increase. Due to low productivity, largescale farming may not attract non-poor, but land ownership remains popular and total crop production in Bangladesh is increasing. As figure 1 below shows, crop production in the 201314 financial year was estimated to be 37.782 million metric tonnes from 8.8 million hectares of cultivable land. This is needed to feed 157 million people.

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Figure 1: Production status of crop in Bangladesh

Metric ton

Production status of crop in Bangladesh 400 350 300 250 200 150 100 50 0

Production (MT)

Financial year

Source: Ministry of Agriculture, March, 2014

A higher amount of tenant farmers are key to future increased production. This implies that marginal farms in Bangladesh are efficient in increasing agricultural productivity. Many extreme poor households have become more resilient because of the changes that have taken place in the agricultural market and the availability of rental land. A number of households are being supported to rent land so that they can move out of extreme poverty. This has significant policy implications for Bangladesh. A number of extreme poor households in northern and southern Bangladesh lease land individually or mortgage land as a group with the assistance of nongovernment organizations.

6. Conclusion: Rural livelihoods in Bangladesh are still dependent on agriculture, with landownership being important in rural power structures. However, landlessness is increasing and this is considered to be a key cause of poverty and extreme poverty. Land reforms attempt to secure access to government land but the policies are yet to be properly implemented. The landless extreme poor are therefore using alternative means to access land, which explains the rise in tenant farming in Bangladesh. This context highlights the significance of land in the lives of the extreme poor.

Below we highlight five key summary arguments.

Wage hikes of labour opened options for the extreme poor to access land - Food prices went up due to the global financial crisis of 2007-2008. This price hike led to increased wages in agriculture that contributed to increased production costs. Rural households with larger plots of land were unable to cultivate crops. They preferred to rent the land on lease or mortgage rather than sharecrop. This increased the number of landless households who did not have any

15

cultivable land but rented farms from others. This trend increased from 14% in 1988 to 38% in 2008. Thus the extreme poor were able to benefit when the land rental market opened.

Diversification has allowed half of the extreme poor households to enter agricultural farming - Dependency on day labour in the informal sector as a main source of income makes extreme poor households severely vulnerable. Thus special and dedicated programmes such as livelihood productive asset transfers have been developed for the extreme poor. This resulted in increased sources of income for the extreme poor. According to our quantitative data, 62 percent of rural extreme poor households had access to different types of land. Of these, 30 percent entered agricultural farming as tenants taking on an average of 42.44 decimals of land on lease 27 decimals on mortgage.

Households with access to land are in a better position compared to households with no access to land - The average monthly income of households with access to land was 8,076 Taka, which is 2,081 Taka more than households with no access to land. Among the different types of households with land, leaseholders had the highest average monthly income of 9,298 Taka, whereas mortgage holding households had the highest average value of productive assets.

Extreme poor tenant farmers have contributed significantly to the economy because they hold significant sizes of land plots and receive higher returns compared to other households with access to land.

There are still a number of barriers to land access for the extreme poor - Land degradation caused by salinity and moves to non-agricultural activities are serious concerns for Bangladesh.

Large fish farming also limits the benefits the extreme poor can achieve. Many middle or small landholders do not rent out land during the AMAN season because Aman is convenient to grow and they prefer to cultivate it themselves. This reduces the availability of tenancies. Another important factor however is rising household incomes which impact upon the level of demand for food grains (and then on the cost of food grains). This leads to competition for access to land and in such circumstances, the extreme poor often lose out.

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Annex 1: Irrigation equipment trend (Source: IDE, 2014)

Annex 2: Cost of production of HYV boro rice per acre of land

Stage

Seedling

Item

Required unit

Unit (Tk)

Cost Total Cost(Tk)

Seed

15kg

50

750

Preparation of seed bed

3 labour

250

750

Fertilizer cost

200

Irrigation cost

400

Uproot from seedbed

6 labour

Transplanting to Land preparation by power tiller Harvesting Cost Seedling transplanting

20

300

1,800

2,500 12 labour

300

3,600

Fertilizer application

Tk/Kg

Urea: 100 kg

20

2,000

TSP: 30kg

22

660

MOP: 15kg

20

300

Gypsum: 16kg

15

240

Zinc sulphate: 1kg

100

100

Others (Cowdung+Boron): 140kg Fertilizer application

250 5 labour

300

Irrigation cost:

9,000

Weeding (Two times):

14 labour

250

Pesticide

Threshing Cost

1,500

3,500 800

Pesticide Application

3 labour

250

750

Harvesting

14 labour

350

4,900

Threshing

7 labour

350

2,450

Total Cost of Production

36,450

Gross Income (Tk/Acre):

21

Product

Yield/Acre

Price Rate Total price (Tk/Kg) (Tk/Acre)

Grain

2.4 ton

15

36,000

Straw

4 ton

2

8,000

Total Income

44,000

Net Income= Gross Income-Total Cost of Production= (44,000 - 36,450)Tk = 7,550 Tk

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Annex 3: Cost of production of HYV T. Aman rice per acre of land

Stage

Seedling

Item

Required unit

Unit (Tk)

Seed

20kg

50

1,000

Preparation of seed bed

3 labour

250

750

Fertilizer cost

200

Irrigation cost

0

Uproot from seedbed

5 labour

250

Land preparation by power tiller Seedling transplanting

Transplanting Harvesting Cost

to

Cost Total Cost(Tk)

1,250

2,000 12 labour

250

3,000

Fertilizer application

Tk/Kg

Urea: 60 kg

20

1,200

TSP: 20kg

22

440

MOP: 10kg

20

200

Gypsum: 30kg

15

240

Zinck sulphate: 2kg

100

200

Others (Cowdung+Boron): 75kg Fertilizer application

150 4 labour

250

Irrigation cost:

1,000 500

Weeding (Two times):

8 labour

250

Pesticide

2,000 500

Pestide Application

2 labour

250

500

Harvesting

14 labour

300

4,200

23

Threshing Cost

Total Cost Production

Threshing

7 labour

300

of

2,100

21,430

Gross Income (Tk/Acre):

Product

Yield/Acre

Price Rate Total price (Tk/Kg) (Tk/Acre)

Grain

1.7 ton

15

25,500

Straw

2.5 ton

2

5,000

Total Income

30,500

Net Income= Gross Income-Total Cost of Production= (30500 - 21430)Tk = 9,070 Tk

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