Bangladesh Agricultural University, Mymensingh

Bijoy-71

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 18-19 June 2014.

M A S Mandal, 2013, BAU 3

Outline of the Lecture

Context settingChanging structure of farms & labour marketExpansion of agricultural mechanizationRice production & poverty reduction impactPrivate sector as the key actor Major policy focus and issues for mechanization

Where is Bangladesh?

M A S Mandal, 2011, BAU 5

Land-scape of Agricultural Mechanization

Rice transplanting(Negligible)

Tillage/ land preparation

80% +

Irrigation80% +

Seeder(Moderate)

Combine harvester

(Insignificant)

Rice threshing

90% +Reaper harvesting(Moderate)

Maize shelling100%

Hand weeder(Moderate)

M A S Mandal, 2014, BAU 6

How Big is Bangladesh Agriculture?

Items 1983/84 1996 2008

No. of farm HH (mil)

10 11.8 14.87

No. of non-farm HH (mil)

3.8 6.0 10.48

Homestead area (‘000 ha)

391 533 807

Cultivated area (‘000 ha)

8522 7192 7614

Av. farm size (ha) 0.81 0.60 0.50

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

Farm size (ha) and Land Distribution, 2008

Up to 0.4 0.4-1.0 1.0-3.0 3.0+0

10

20

30

40

50

60

51

32

14

2

17

44

37

12

% of farm % of Operated area

Percetage

M A S Mandal, 2014, BAU 7

Changing Labour Market (15 yrs. +)

1999/2000 Both (mil.) Male (mil.) Female (mil.)

Total 39.0 31.1 7.9

- Agriculture 20.0 16.2 3.8

- Non-agri. 19.0 14.9 4.1

2010

Total 54.1 37.9 16.2

- Agriculture 25.7 15.2 10.5

- Non-agri. 28.7 23.0 5.7

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.

Growth in Agricultural Wage Rate

Ag. wage increased 8.4% & rice price up 4.86% annually.

M A S Mandal, 2014, BAU 10

17,7

85

18,2

55

18,3

41

18,0

42

16,8

33

17,6

87

18,8

80

18,8

62

19,9

05 23,0

67

25,0

85

24,3

00

25,1

68

26,1

89

25,1

83

26,5

30

27,3

12

28,9

30

31,3

17

32,2

60

33,6

40

y = 15678e0.0346x

R2 = 0.9278

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

'000

MT

Total rice Aus Aman Boro Expon. (Total rice)

How Has Agriculture Done in Rice Production?

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

What Does Increased Rice Production Mean for Food Security of the Poor?

3.5 3.64.4 4.5

3.6 3.74.3 4.1 3.7

4.45.0 4.8

5.7 5.75.2 5.3 5.6

4.9

6.06.4

8.4

9.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

10-11

11-12

Rice

(Kg)

for a

dai

ly w

age

Rice wage in Bangladesh (1990-91 to 2011-12)

Poverty HCR declined from 56.6 % in 1991-92 to 31.5 % in 2010, while extreme poverty rate declined from 41% to 17.6 % over the same period

Irrigation Mechanization as the Key Driver of Rice Growth

Machines Numbers (2012-13)

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.

5.37 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.

Source: BADC Survey, 2012-2013

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STW provides 60% irrigation70% STW owned by SF <1ha

Irrigation-led MechanizationMachines Number

Tractor (4WT) 35,000; 6000+ imported/yr

Power tiller (2WT) 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, 2000+ 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)

Use of power tillers by farm size group

Page 15

Source: Ahmed, IFPRI, 2013

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What Role for Public Policy?Privatization of agriculture

Technology & productivity gains

Support to farmers

Food security from domestic production

Policy Changes Influencing Irrigation Expansion

1976-77

1978-79

1983-84

1986-87

1990-91

1996-97

2002-03

2008-09

2012-13

0

1000

2000

3000

4000

5000

6000

491824

10851343

1956

3204

3661

49925212

Irrigated Area (000 ha)

Area('000 ha)

1951-1974: Public Sector Initiation - Subsidized 4-cfs 380 DTWs installed - 2 cusec DTWs by farmers cooperatives

1974-79: Public Sector Rationalized - Pump rental stopped, STWs subsidy reduced - Credit liberalized for STWs purchase

1979- 84: Private Sector Expansion - STW import duties reduced, liberal credit - Private sector gathered momentum - Reduced public sector control continued

Policy Changes Influencing Irrigation Expansion

1976

-77

1978

-79

1983

-84

1986

-87

1990

-91

1996

-97

2002

-03

2008

-09

2012

-13

0

1000

2000

3000

4000

5000

6000

491824

10851343

1956

3204

3661

49925212

Irrigated Area (000 ha)

Area(000ha)

1984- 87: Reversal to public sector control

- Temporary drawdown of aquifer in 1983 - Ban on STW sales & embargo on engine import - Imposed engine standards & Pump spacing rules

1987-- : Rapid expansion by private sector

- Withdrawal of equipment import ban and spacing regulation - Elimination of import duties - Removal of engine standardization - Credit and extension supportContinuat ion of l iberal

import of engines pushed overal l mechanizat ion.

Slowdown of irrigation

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

4000 2WT 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.

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RD&E for Ag. Mechanization

BAU- REFPI project (2000- 2003): • 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

Issues for InterventionsFarmers 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.

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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.

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Thank you