Bangladesh Agricultural University, Mymensingh. Bijoy-71

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1 Bangladesh Agricultural University, Mymensingh Bijoy-71

2 Agricultural Mechanization in Bangladesh: Role of Policies and Emerging Private Sector Dr. M A SATTAR MANDAL Professor of Agricultural Economics Bangladesh Agricultural University Mymensingh asmandal11@gmail.com A presentation delivered at the NSD- IFPRI workshop on Mechanization and Agricultural Transformation in Asia and Africa: Sharing Development Experiences, held in Beijing, China on June 2014.

3 Outline of the Lecture Context setting Changing structure of farms & labour market Expansion of agricultural mechanization Rice production & poverty reduction impact Private sector as the key actor Major policy focus and issues for mechanization M A S Mandal, 2013, BAU 3

4 Where is Bangladesh?

5 Land-scape of Agricultural Mechanization Tillage/ land preparation 80% + Irrigation 80% + Rice transplanting (Negligible) Seeder (Moderate) Hand weeder (Moderate) Combine harvester (Insignificant) Reaper harvesting (Moderate) Maize shelling 100% Rice threshing 90% + M A S Mandal, 2011, BAU 5

6 How Big is Bangladesh Agriculture? Items 1983/ No. of farm HH (mil) No. of non-farm HH (mil) Homestead area ( 000 ha) Cultivated area ( 000 ha) Av. farm size (ha) Cultivated area is decreasing at 0.43%, but no. of farms increasing at 2% per year. Av. farm size is 0.5 ha, decreasing, but no sign of decreasing productivity High degree of land fragmentation, 3.2 plots per farm, av. size of plots 0.16 ha. Non. farm HH no. is increasing at 7% per year. Homestead agriculture is becoming important M A S Mandal, 2014, BAU 6

7 Farm size (ha) and Land Distribution, P e r c e t a g e Up to % of farm % of Operated area M A S Mandal, 2014, BAU 7

8 Changing Labour Market (15 yrs. +) 1999/2000 Both (mil.) Male (mil.) Female (mil.) Total Agriculture Non-agri Total Agriculture Non-agri Total employment +38.5%, ag. employment +28.5%, non ag. employment +51.0% Total male lab. employment +21.8%, employment in ag. -6.2%, +54% in non-agri. Total female lab. employment +105%, +176% in agri, +39% in non-agri.

9 Growth in Agricultural Wage Rate Ag. wage increased 8.4% & rice price up 4.86% annually.

10 How Has Agriculture Done in Rice Production? Total rice Aus Aman Boro Expon. (Total rice) '000 MT 40,000 35,000 30,000 25,000 20,000 17,785 18,255 y = 15678e0.0346x R 2 = ,341 18,042 16,833 17,687 18,880 18,862 19,905 23,067 25,085 24,300 25,168 26,189 25,183 26,530 27,312 28,930 31,317 32,260 33,640 15,000 10,000 5, Maize, wheat, potato, jute, vegetables & fruits prod. also increased. Per capita foodgrain prod. up from 165kg/yr in 96/97-228kg/yr in10/11. M A S Mandal, 2014, BAU 10

11 Rice (Kg) for a daily wage What Does Increased Rice Production Mean for Food Security of the Poor? Rice wage in Bangladesh ( to ) Poverty HCR declined from 56.6 % in to 31.5 % in 2010, while extreme poverty rate declined from 41% to 17.6 % over the same period M A S Mandal, 2014, BAU

12 Irrigation Mechanization as the Key Driver of Rice Growth Machines Numbers ( ) DTW (Diesel) 2,109 DTW (Elec) 32,412 STW (Diesel) 1,270,136 STW (Elec) 253,473 LLP (Diesel) 159,713 LLP (Elec) 10,856 In early 80s, only 14,000 DTWs & 93,000 STWs. STWs cover 60% land mha. (70%) irrigated area, 97% mechanized irrigation, mostly rice, also wheat, maize, potato and vegetables. 64% land irrigated by diesel & 36% by electricity, both diesel and electricity have modest subsidy.

13 STW provides 60% irrigation 70% STW owned by SF <1ha M A S Mandal, 2011, BAU 13

14 Irrigation-led Mechanization Machines Tractor (4WT) Power tiller (2WT) Number 35,000; imported/yr 0.7 mil Thresher (manual + powered) 350,000 USG applicator 17,000 Rice transplanter 25 (?) Sprayer (Local + Imported) 1.2 mil Maize Sheller 8,000 Rice milling 1,000 semi/auto, 15,000 husking & 0.1 mil traditional huller 70 foundries, manufacturing & 20,000 repair workshops, 0.6 mil rural mechanic; Ag. machinery market size is US$ 800 mil+ PT density: 68.58/1000 ha. (Bangladesh); Tractor density: 4.61/1000 ha. (West Bengal); 17.03/1000 ha. (India) Source: Alam, et al. (2013), DAE Survey (2012), BARI(2014),Tewari (2013)

15 Use of power tillers by farm size group Source: Ahmed, IFPRI, 2013 Page 15

16 What Role for Public Policy? Privatization of agriculture Technology & productivity gains Food security from domestic production Support to farmers M A S Mandal, 2014, BAU 16

17 Policy Changes Influencing Irrigation Expansion A r e a ( ' h a ) : Public Sector Initiation - Subsidized 4-cfs 380 DTWs installed - 2 cusec DTWs by farmers cooperatives : Public Sector Rationalized - Pump rental stopped, STWs subsidy reduced - Credit liberalized for STWs purchase 0 Irrigated Area (000 ha) : Private Sector Expansion - STW import duties reduced, liberal credit - Private sector gathered momentum - Reduced public sector control continued

18 Policy Changes Influencing Irrigation Expansion 6000 A r e5000 a ( h3000 a ) Irrigated Area (000 ha) : Reversal to public sector control - Temporary drawdown of aquifer in Ban on STW sales & embargo on engine import - Imposed engine standards & Pump spacing rules Slowdown of irrigation : Rapid expansion by private sector - Withdrawal of equipment import ban and spacing regulation - Elimination of import duties - Removal of engine standardization - Credit and extension support C o n t i n u at i o n o f l i b e r a l i m p o r t o f e n g i n e s p u s h e d ove r a l l m e ch a n i z at i o n.

19 Private Sector as Main Actor- 2WT & 4WT Recent CIMMYT- IDE study reports: 7/8 suppliers import duty free 60,000 2WT each year, all from China. Monopoly by one importer (80%). One local manufacturer produces each year around WT with imported Chinese engines. 2WT fits well with tiny fragment plots, compared to 4WT 9 large importers of 4WTselling from their own outlets. 50% new entrepreneurs are commission agents for 4WT, mostly tractor drivers and helpers, receiving brokerage commission. M A S Mandal, 2014, BAU 19

20 RD&E for Ag. Mechanization BAU- REFPI project ( ): Pioneer initiative for research capacity building, training, networking & dissemination of small- scale farm machinery. BARI/BRRI/RDA: Develop/ improvise large no. of farm machinery, field demonstration & training, BRRI s focus on rice related equipment. DAE-Ag.Engg: Promotes machinery sales with 25% subsidy & provide training & field demonstration. CIMMYT/ IDE: Design scale appropriate machinery for RC agriculture and business development in agricultural machinery. Private workshops (SME): manufacture small- scale cheap equipment, spare-parts, repair services. M A S Mandal, 2014, BAU 20

21 Issues for Interventions Farmers are ready to adopt/adapt, but need appropriate machines. Immediate emphasis is needed for transplanting & harvesting mechanization due to rising wages for labour. Rice transplanters need synchronization of tillage, raising seedlings & planting by individual farmers. Combine harvesters chop up rice straw and also need synchronizing harvest time in the neighbourhood. Multi- crop Reaper binders cut long straw, but still need collection & threshing labour. Adaptation of machines to increase returns to investment (i.e. adding feasible options, axial flow pumps (BARI- CIMMYT work). Rationalizing duties & definition of ag. machinery items. M A S Mandal, 2014, BAU 21

22 What Do We Learn or Unlearn? Wide spread farm mechanization does not fit in small fragmented landholding agriculture is not necessarily true. Appropriate size, design and management of machines are important. Innovative contractual arrangements can act as operational consolidation of small holdings. i.e. Irrig. water market, tractor/ thresher hire services. As competition increased Land lords, Water lords or Tractor lords did not develop, rather a new breed of young entrepreneurs emerged as tomorrow s farmer. With mechanization, there are no signs of declining productivity or ag. employment, especially women employment in ag. increased. Important pull factors i.e. labour shortage, rural roads & electricity connections, availability of technology, while push factors i.e. growth of local manufacturing, income attraction to educated rural youth, sales drive by companies accelerate mechanization. Look beyond agril. mechanization to rural mechanization. M A S Mandal, 2014, BAU 22

23 M A S Mandal, 2011, BAU 23

24 M A S Mandal, 2011, BAU 24

25 M A S Mandal, 2011, BAU 25

26 Thank you