Agriculture of Bangladesh

Introduction on Bangladeshi agriculture: An overview

The economy of Bangladesh is primarily dependent on agriculture. About 84 percent of the total population live in rural areas and
are directly or indirectly engaged in a wide range of agricultural activities. Agriculture contributes about 32 percent to the country's
GDP, about 23 percent of which is contributed by the crop sector alone. About 63 percent of the labor force is employed in
agriculture with about 57 percent being employed in the crop sector.
The scope of modern agriculture has been widened significantly. Although agriculture used to be originally defined as the
cultivation of land for producing crops only, now-a-days, any applied activity through proper utilization of natural resources which
relates to the production, development, preservation, processing, marketing and extension of not only crops but also other
agricultural commodities such as fish, meat, eggs, forest products, etc. is universally accepted within the purview of agriculture.
According to the above definition, crop production, animal husbandry, fisheries, forestry, etc. are integral components of
agriculture. But, crops undoubtedly constitute the largest and most important sector of Bangladesh agriculture.
To live we need food and for food we are depending on agriculture. But in Bangladesh, the production of food is problematic due
to the following reasons:
a. Population growth rate is very high
b. Shortage of cultivable land
c. Elasticity of the demand of rice due to lower income of the people.
For the above reasons the main theme of the agriculture of Bangladesh is to increase the productivity of land because total
production will increase if per acre production increases. Production can be increased by an increment of the amount of land,
which is not possible for us. So let’s look for productivity. There are three ways to increase production by the technology:
1. Natural way: Use of natural resources like cow dung, bulls etc. Production increases slowly but in a sustainable way as the
fertility of land remain same for years.
2. Bio-chemical way: Chemical technology like, fertilizer, pesticides, high yield varieties (HYV) are used along with natural way.
Production increases rapidly but not as sustainable as continuous use of fertilizer will reduce the fertility of the land thus
production will decrease in the long run.
3. Technical way: Use of machines like tractors, power tiller, and modern irrigation equipments etc along with chemicals along
with natural way. Production increases sharply but this is also less sustainable. Still it is argued that the technical way is better than
bio-chemical way as same layer of a land will not be cultivated year after year. Use of machines like tractors will help to cultivate
in different layers in different years which will be better for the lands from the fertility point of view.

Features of agriculture of Bangladesh:

We have already mentioned that there is dualism in the agriculture of Bangladesh with a domination of the traditional system of
cultivation or farming. There are few more features listed below:
a. Undeveloped method of cultivation: In our agriculture still we are following the traditional and primitive method of
cultivation. Where cow dung, bulls etc are used instead of tractors and power tillers. Traditional methods are cheap in
nature and mostly labor intensive. A there is unlimited supply of labor with a low wage in the rural area, the agricultural
farms are using them in the traditional method of cultivation. Subsistence motive of farming also induce the farmers to go
with the traditional methods of cultivation. Moreover, risk avoidance behavior of the farmers makes them reluctant to use
the modern technology.
b. Low productivity: Low productivity is caused by the use of traditional methods of production. It was found that the
growth of the agriculture is only 4.67% which is much less. Contribution of agriculture in GDP is around 17% and this
rate is declining continuously shows the less production of agricultural units in Bangladesh. Low productivity is also due
to the unskilled nature of laborer. Moreover, less use of HYV and pesticides are causing the total output level to be
reduced. Besides, natural calamities like, flood, droughts and cyclone are destructing a huge amount of agricultural output
each year.
 c. Heavy dependence on nature: As we are not using any modern techniques in agriculture, we have to heavily depend on
nature for the agricultural decision making. Moreover, the geographical position of Bangladesh shows its more
dependency on nature. We have to wait for a proper rainfall for the production of different crops like jute and tea. For
example, the northern area of Bangladesh is always found output less in a certain time of every calendar year named
‘Monga’. Use of modern technology may help in reduction of heavy dependence on nature.
d. Landless peasants and farmer’s illiteracy: Most of our farmers are landless and cultivating the lands of others (called
Barga). This is simply a wage based system where wage is paid mostly by the product produced in the land. But this
amount is too marginal for the farmers which doesn’t create any surplus thus the farmers always be landless. Moreover,
farmers become discouraged to produce more as they get a small part of the total production. It was practically found that
the productivity of farmers are more in those lands which are owned by themselves compared to the lands where they are
working as daily laborer. Farmer’s illiteracy is another main obstacle in the adoption of new techniques which may add
more value in the production process.
e. Predominance in food crop production: We have earlier mentioned that the Bangladesh agriculture in highly dependent
on crop sector. But the contribution of crop sector is declining sharply shows a problem in the agriculture. For example,
the contribution of agriculture in GDP is only 16.91% and in which 12.19% has come from crop sector. In addition, crop
sector is dominated by the food crops like Aush, Aman, Boro and wheat. Still people are not concentrating on the
investment and development of non-crop sectors like poultry, forestry and fisheries.
f. Subdivision of land: A very common feature of agriculture is backed by the division of father’s land to his many
children. A single land is divided in many parts due to the inheritance rule. Subdivision line (called Aail) are there in
between the lands. A survey shows that a total of 2 lakh metric ton crop production is reduced due to the subdivision of
lands. Moreover, subdivision of land doesn’t permits to go for using the modern technology where economies of scale
could be found if the land size is large. Subdivision of land is making the size of the land small and reduces the chance of
getting economies of scale by using the modern equipments.
g. Disguised unemployment: This is another prime feature of the agricultural sector of Bangladesh economy. A huge
disguised unemployment exists in this sector. Disguised unemployment can be understood with the following example.
Assume, ten people are working in a small land and producing 5 ton of rice. So everyone will get half to n of rice. Now if
they see one of their family member is able enough to work in the farm, they will right way employ him. Unfortunately it
will be found that this person is contributing nothing as ten persons were enough for the cultivation of that land. That
means production doesn’t increase with the addition of this extra labor in the firm. Though this person is working in the
farm and seems too be employed, actually he is disguised unemployed as he is not adding any value in the production
process. Finally it would be found that same 5 ton rive will now be divided among 11 person reducing the shares of
everybody compared to previous share of half ton per person. In fact surplus is reducing too for disguised unemployment.
Disguised unemployment occurs due to system that the farmers want that their children should be working in their own
land even if they have an opportunity to do better in non-farm activities.
h. Subsistence agriculture: The motive of cultivation of our farmers is subsistence. Whatever they are producing is
consume by their family. They don’t have marketable surplus in their hand that reduces their level of savings. That’s why
they are unable to adopt any modern technology in the farming.
i. Share-cropping: Initially share cropping was not found in the agriculture of Bangladesh, rather we were dependent on
single crop cultivation round the year. But now farmers are following share cropping like, two crops at a time in the same
land. Some are having fisheries in their cropped land too. But still multi-cropping is not that much popular in our country
due to the illiteracy and lack of information of the farmers, as they think that more crop production in the same land will
reduce the fertility of the land.

Problems in Bangladesh Agriculture and Possible Solutions

We know that the contribution of agriculture without fishery is only 16.9% which is very small for the development of an agrarian
economy. Growth of the agriculture is also too low. In fact the agricultural sector of the economy faces different problems for
which still it’s lagging behind. The total problems of agriculture is divided in three broad categories namely, production side,
marketing side and distribution side problems. Next section will highlight on those problems and their solutions:
A) Production side problem: Production in agriculture is low due to following reasons:
01. Traditional cultivation process: In Bangladesh, still the farmers are using the traditional way to cultivate the land. Though
this is sustainable, this can never guarantee a higher production. Bio-chemical and mechanical methods are available in the
country, but the illiteracy and mainly lack of capital doesn’t permit the farmers to adopt newer technologies. The low productivity
of labor is enforced by low level of technology. The use of family labor and the intensive use of labor in the land result in low
MPL. The family farmers are reluctant to take any risk and this risk aversion behavior feeds back on the reluctance of the farmer to
adopt new and improved technology. So, output and total productivity will be low due to this traditional mode of production based
on low productivity of land and labor. In addition many lands are remaining uncultivated due to non-use of new technologies like
tractors and power tillers.
02. Small farms: Most of the agricultural farms are in small in nature in Bangladesh due to the subdivision of land. We know that
the use of modern technology will be beneficial only if we can use them in large land size. The use of technology never becomes
cost-effective if they are use in small farms. This is the reason why the farmers are unable to use the modern technology in their
small lands. It will in fact increase the production cost thus an increment in the price of agricultural products. In contrast if we
could have the large farms, we could easily go for the technical method which might reduce the cost of production. Bio-chemical
technology is not that much effective in small lands too as the returns to scale in bio-chemical techniques is neutral. Even small
size of farm induces the farmers not to take any risk to go for the multi-cropping system. Farmers only produce one product in
their small farm just for subsistence.
03. Unequal distribution of land and landless farmers: Our lands are unequally distributed and the result is that a small number
of people are holding a large share of cultivable land, whereas most of the farmers remain landless. Problem is the people who are
holding the large share, use their lands either for the non-agricultural activities or go for leasing the lands to the landless farmers
with restrictive contracts. Both are against the production of agricultural output. Those landless farmers who are working in the
lands of large land owner are de-motivated to produce more as those landless farmers will have a small share of the total output
produced. The production could be much higher if those lands could be distributed equally to every landless farmer, which in
practice is impossible.
04. Credit problem: One major problem in this sector was identified as credit unavailability to the peasant farmers. The reason is
collateral behavior of the credit. Commercial banks are reluctant to provide credit to the farmers as the farmers can’t keep anything
as security at the time of taking the credit from the bank. Commercial banks recognize this as risky for them. For more production
in agriculture there is a need of investment in seeds, irrigation, fertilizer, pesticides etc. The farmers are unable to buy the earlier
mentioned goods due to their fewer saving which come from the lack of marketable surplus. In addition commercial banks are not
providing credit to those peasant farmers creates barrier in the production process. Few NGOs are now helping the farmers by
providing micro-credit which is not enough for the investment in the agricultural sector. Ultimately lack of HYV seeds, fertilizer,
and irrigation facility are causing the lower production in the agriculture.
05. Bad irrigation system: Water is one of the most important components in agriculture. A good irrigation system can help the
farmers to be facilitated in the production process. But it was found that the irrigation system in our country is not that much well
improved to support the total sector. Irrigation is a matter of huge investment that the poor farmers can’t support. It was found that
still 21% of our total cultivable land is out of irrigation due to less government investment on that sector. Farmers are not getting
proper flow of water thus hinders the production process. We all know about the Ganga Barrage which is just hampering the
production of agriculture of that part of Bangladesh either by extra flow of water causing flood or by making the lands dry when
the barrage is closed. Proper irrigation management system is important.
06. Lack of fertilizer, seeds and pesticides: Some of our farmers are now adopting new technology where there is use of modern
seeds, fertilizer and pesticides. Unfortunately they are not getting enough support to get those mentioned goods. Government has
given the fertilizer distribution system in the private sector which has made the distribution of fertilizer more unequal. Inflation is
quite evidenced in that sector due to weak distribution of fertilizer. HYV seeds are only available in the district headquarters or in
the accessible areas not everywhere. The price of pesticides is too high and beyond the capacity of the landless farmers. All the
above mentioned barriers are creating problem in the higher production of agricultural out put in Bangladesh.
07. Natural disaster: Due to non-use of new technology, our agriculture still depends highly on nature. Every year flood and
drought is common feature in Bangladesh. We know that our agriculture is highly dependent on crops and especially on Aush,
Aman, Boro and wheat. Flood causes a huge destruction on the mentioned crops thus reducing the total kevel of output. It was
found that flood destructs about 20% of our total agricultural output every year. The destructive impact of draught can be observed
in the northern part of the country every year known as Monga. At that time farmers can’t produce anything and become jobless.
08. Poverty and illiteracy of farmers: Poverty of the farmers induces them not to use any modern technology to produce more.
Moreover, lack of formal education makes them superstitious in using modern techniques. They don’t like to take risk by using the
modern facilities. In addition, lack of technical knowledge is another barrier in using the modern technology to produce more in
that sector by the farmers.
Production side solutions: Following are the suggestions to overcome the production related problems of the agriculture:
01. Modern cultivation process and technical development: The productivity of any factor depends on the type of technology
used. Now the traditional methods used to grow traditional crop varieties yield lower output per unit of land compared to modern
crop varieties grown by the modern method. Modernization of agriculture is probably the most important solution against the
production related problems. Government has to support the maximum in such respect as the farmers can’t buy those capital
intensive technologies initially. Financial sector should be reformed in a way that the farmers can get enough credit in flexible
return policy to buy those modern equipments. Formal and technical education should be provided to the farmers to use those
technologies properly. Government and NGOs are to play the vital roles in such respects. Information about the new techniques
should be making available to the farmers. Better distribution of fertilizer and HYV seeds are important too.
02. Easy credit system: Government needs to take step regarding reform of the financial sector which will facilitate the farmers to
get credit for investment in an easier way. Large credit should be given to the farmers at a lower interest rate and in an easier
payment schedule. NGOs should be providing more and large amount of credit that will help the farmers to buy and use the new
techniques. In addition to credit, technical assistances should be provided to the farmers.
03. Development of the irrigation system: As private sector will not be willing to invest in this sector, government has to take
initiative for the same. If necessary, government can go for collaboration with donor agencies in the irrigation system
development. A better flow of water should be maintained by a formal and better irrigation system in the country. Cooperative
farming may help in such respect too where many farmers can invest all together for the development of irrigation system in their
own area.
04. Fertilizer distribution: Fertilizer distribution was privatized by the government which didn’t add any value to the farmers.
Rather artificially created shortage uplifts the price of fertilizer. More private agencies should be given permission to import and
distribute the fertilizer in rural area. A monitoring body headed by government official should be there. Government should stop
providing subsidy to the fertilizer producers in Bangladesh and should use that money to import the fertilizer because; it was found
that fertilizer can be imported at a lower cost than producing that in the country.
05. Land conservation: Multi-cropping is supported in such respect. It was seen that the lands are loosing their fertility as same
crop is produced round the year in the same land. Share cropping and multi-cropping ideas should be implemented so that different
product will be produced and the fertility of the land can be conserved. Proper use of fertilizer should be ensured to protect the
land as well as the water bodies.
06. Agricultural training for the farmers: This is the most important task we need to perform. Illiterate farmers should be
provided agricultural training so that they can know how to use the land, how to use the fertilizer and also the use of modern
technologies. Farmers should be convinced that the newer technologies will increase the production in the land. Moreover, training
regarding marketing and distribution of the agricultural products should be provided to the farmers. Timely information
distribution should be ensured by the government.
B) Marketing side problems: Farmers are facing problem in marketing the agricultural output even if they are producing more in
some areas. Lack of formal marketing system deprives the farmers from getting the surplus from the market. Following marketing
side problems were identified in agriculture:
01. Existence of exploitative middle man: Farmers are unable to generate surplus due to the exploitation of the middle man who
hide the price information to the farmers. It is not possible for the farmers to get information about the demand and supply and the
price of the agricultural products in different markets. Moreover, farmers don’t have their own distribution system to distribute the
product in different markets. This gives a chance to the middle man to exploit the farmers. These middle men are buying the
products at a lower price from the farmers and making good profit by selling them at a higher price to the markets. In fact the
farmers are loser in such respect as they are not getting enough and can’t save which may help them to invest more in the next
calendar year. This exploitative system is reducing the surplus of the farmers and keeps them in the same poverty level.
02. Imperfect information about the market: Farmers don’t get the information about the market properly. Government is
unable to provide that information to the farmers. Farmers don’t know the current market price of the agricultural products due to
unavailability of the information. Sometimes imperfect information becomes more problematic for the farmers. Farmers are
illiterate thus don’t read newspapers and have less access to radio and TV due to poverty deprive them in getting perfect
information about the markets. Farmers don’t get the information about the price of fertilizer and other inputs that also exploit
them in buying those inputs.
03. Bad infrastructure: Bad and undeveloped infrastructure is another prime reason against the betterment of agriculture. Most of
the agricultural products are perishable. That’s why a timely distribution is required for them. Unfortunately bad and undeveloped
infrastructure creates barrier in such respect. Undeveloped roads and bridges creates problem in the delivery process. As the
farmers know that they can’t deliver them timely, they have to sell them at a lower price to the middlemen who have better
distribution facility.
04. Problem in reservation: There is shortage of cold storage in the rural areas for which the farmers can’t preserve their output in
a better way. Many agricultural products become expired before they are sent to the market due to problem with proper reservation
in cold storage. The number of cold storage is very small and moreover the cost of reservation in those cold storages is quite high
that the farmers can’t effort. All these are creating problems in the marketing of agricultural output in Bangladesh.
Marketing side solutions: Sooner solution of the marketing side problem is required for the better marketing of the agricultural
product in time. Following suggestions can be taken:
01. License for agents: Middlemen should be given license to do the business from the government. There should be a price list of
the agricultural products with the middlemen and the farmers will sell their products to only licensed agents at the government’s
given price. This will reduce the level of exploitation of the farmers. Licensed agents may be salary based workers of the
government who will be monitored by the Deputy Commissioners. That means the total marketing system will be controlled by the
government. In private sector the same system can be implemented by commission-based activity.
02. Cooperative farming for better marketing: Cooperative marketing where many farmers will be working together is another
very good solution of the marketing related problems. In this case many farmers can form a cooperative farm and can buy vehicles
like small trucks and vans to distribute their products to the district markets. This will eliminate the middlemen in the distribution
process. Moreover, the cooperative farming will encourage the farmers to abolish their dividation line in the lands to use modern
technology. Better information can be collected through this process which will reduce the level of exploitation.
03. Development of the storage system: Government needs to invest to build new storage system in the rural areas of
Bangladesh. Even private sector can come forward in such respect as this business is profitable. Ultimate policy should be to build
more cold-storage so that reservation system will develop.
04. Better distribution of information: Farmers are deprived of more surpluses due to the information gap. This is totally the task
of the government to provide timely perfect information about the price of the products in the different areas of Bangladesh. This
will help the farmers to make decision regarding the distribution of their output in the areas where the price is high. Agricultural
development department should take steps like miking in the rural areas about the price of the different markets.
05. Stability in the price of agricultural products: Price stability in the agricultural products is important for better security of
the farmers. In fact again government has to take step in such respect. For example, government should buy the extra products if
supply is more than demand so that price will not go down. At the time of less production the government should supply the
initially reserved outputs so that price will not go up. All these will help the price level to be stable in the agriculture. In addition
government needs to protect the sector from the problem of price syndication.
06. Proper marketing network: It will be established to facilitate timely marketing of agricultural commodities. To this end,
development programs will be taken up to promote processing of agricultural commodities and ensure fair prices of crops to both
the growers and the consumers.
- The Department of Agricultural Marketing will be restructured with the provision of required manpower for its smooth
functioning. A separate institution named ‘Agriculture Price Commission’ will be established for preparing adequate marketing
programs, giving proper guidelines and implementation of marketing activities along with strengthening of the Department of
Agricultural Marketing.
C) Distribution related problems: Beyond production and marketing side problem, we are facing distribution side problem too.
Some of those are listed below:
01. Sectoral production: Different agricultural goods are produced in different areas in abundant. In one area one good is
produced and supplied at a higher volume whereas this product is less in supply in other areas. This sectoral production creates
problem in the total distribution process thus the price goes up. On the other hand this sectoral production problem could be solved
if the transportation system is developed. Undeveloped infrastructure and higher cost of transportation cause a distortion in the
demand-supply and pricing mechanism. Moreover, extortion in transportation causes the price level to go up.
02. Differences in purchasing power: Purchasing power is different in different areas of Bangladesh which induces the farmers to
distribute the products in the high income areas to earn more profit. It can be seen that high purchasing areas like the metropolitan
cities get better products than the rural areas. All these differences are quite evidenced in the agricultural sector of Bangladesh.
Distribution side solutions: Based on the distribution related problems, following measures can be taken:
01. Open market operation by the government: Government should buy the extra products if supply is more than demand so
that price will not go down. At the time of less production the government should supply the initially reserved outputs so that price
will not go up. All these will help the price level to be stable in the agriculture. Government can also introduce food support
programs like food for work at the time of higher price of the agricultural products. This support from the government will provide
a security to the farmers and thus will encourage them to produce and distribute the goods in a better way.
02. Land distribution among the farmers: We have already mentioned that many of our farmers are landless. Government
should take step in such respect to better distribute the lands to the farmers with easy leasing system. Government can lease their
Khas lands to the farmers for 99 years that will make a better distribution of lands among farmers. Moreover, distribution of
government owned haors and water bodies will also encourage the development of the fishery sector.

03. Government’s steps towards solving the problems: We have repeatedly mentioned that the agriculture is a big sector in any
economy and as the return from agriculture is lower than that of industry, government has to take steps for the development of
agriculture. Mainly the development of infrastructure should be the prime focus. So far government took different steps in solving
the problems of agriculture. Some of them are listed below:
a. Subsidy for agricultural development: Government is providing huge subsidy on agriculture. It was suggested by the
economists and policy maker that, it is wise to provide subsidy o agriculture not on subsidy because we can import the fertilizer at
a lower cost than the subsidy we are providing on that. Subsidy of the government is used in fertilizer, irrigation system, storage
system, land conservation, HYV invention, agricultural research etc. 1200 crore taka is allotted as subsidy for fertilizer, electricity
for agriculture and for agricultural assistance. This value is continuously increasing. Moreover 30% cash facility is provided to the
export of agricultural goods. In addition 25% subsidy will be provided on the import price of the fertilizers.
b. Irrigation development program: Government has taken integrated irrigation development program for the development of
agriculture by setting up more tube wells and pumps in the rural areas. Following table will show the area under irrigation by the
government programs in Bangladesh.
Table: Total amount of land irrigated (In Hector)
Irrigation system 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05
1. Above-land
Major irrigation 422656 469575 492666 571243 548347 605570
LLP 645053 647300 761439 764300 766153 838377
Local methods 224172 222000 182240 176280 175200 107000
133887
Total by above 1291881 5 1436345 1511823 1489700 1550947
2. Underground
Deep tube well 522066 524330 581599 583692 583692 654189
267394
Non-deep Tube well 2645474 4 2747098 2756558 2778557 3159899
Others 46902 86906 62518 58122 44397
Total by underground 3214442 328518 3391215 3398372 3406646 3814088
 0
462405
Total land under irrigation 4506323 5 4827560 4910195 4896346 5365035
Source: Economic Review-2006, pp. 69.
c. Invention of HYV: In the new agricultural policy government is concentrating on increasing productivity of land through
invention of HYV. Government has included private and other NGOs in this regard. Moreover, agricultural research institutions
like BADC, BRRI etc were given extra allotment for agricultural research process.
d. Credit system restructuring: Government is increasing the amount of credit in agricultural purpose. In 1991-92 the total credit
for agricultural purpose was 798 crore taka and that has become 2851.29 crore in the year 1999-2000. this credit is mainly given to
the subsistence level farmers. In the year 2004-05 a total of 4956.78 crore taka was disbursed from a targeted amount of 5537.91
crore taka. A total credit of taka 5542.21 crore was disbursed in the year 2005-06 by Bangladesh Krishi Bank, Rajshahi
Agricultural Development Bank, four government commercial banks, BRDB and Bangladesh Cooperative Bank.
e. Rent withdrawal: Government has withdrawn rent of up to 25 bigha to encourage the people to invest more money in
agriculture. But to get this facility the land should be under cultivation.
f. Land distribution: Government has distributed Khas land among the landless farmers with the joint effort of NGOs. Moreover,
according to new rule, a person can hold a maximum of 100 bigha of land. The remaining land will be distributed among the
landless farmers.
g. Fertilizer distribution: Government has privatized the fertilizer distribution process already. Fertilizer Monitoring Cell is
established which is headed by the Deputy Secretary. Moreover, Post Landing Inspection team was formed to ensure the better
quality of fertilizer to the farmers.

Review of Previous Agriculture Sector Policy Reforms

The ministry has undertaken successfully a number of policy reforms in the past for which it has received considerable recognition
both within government and its development partner. Agriculture sector, by this time has already achieved the cherished and
desired long term goal of self sufficiency in the production of rice. The major success of the ministry is its unquestioned success in
spurring the growth of crop agriculture while saving considerable amount of local currency through eliminating the subsidies on
fertilizer and also allowing private trade in fertilizer, minor irrigation equipment and seed sector. Structural adjustments started
with the liberalization of different agricultural input delivery systems of public sector, such as-
(a) Liberalization of trade in minor irrigation sector and encourage the private sector for supply of minor irrigation equipment's of
the country. This happened gradually in steps with the removal of restriction of import of small diesel engine in1986-87 followed
by the withdrawal of duty on such imports in 88-89.The subsidy on DTW were removed in 1992and BADC-the government
organization was removed from the procurement and distribution of minor irrigation equipment. These reform measures had a
tangible effect on increasing the demand for irrigation equipment and consequently the rate of increase in area under minor
irrigation.
(b) Privatization of trade in fertilizer with an objective to transfer the fertilizer management and distribution services exclusively in
private sector; Imports of all fertilizers are now being done by private sector except urea. The private sector is not restricted from
importing urea. All fertilizers are being distributed through private sector dealers through their network. The Government is
providing no subsidy on fertilizers at the farm level and is selling all fertilizers at full cost pricing. The government has issued the
revised Fertilizer Control Ordinance in 1995 in consultation with private sector and IFDC for quality control and regulation of
fertilizer prices. This has led to the increased availability and wider adoption of chemical fertilizer at the farm level and economic
activities in rural areas have also increased manifold due to the withdrawal of government from fertilizer distribution.
(c) Liberalization of trade and foreign exchange for enhanced participation of private sector in Agricultural machinery of
agriculture business. The Government has been continually reviewing conditions affecting competitive trade and taking action to
remove barriers.
(d) Liberalization of production, processing, distribution and import of seeds to ensure the participation of private sector seed
dealers in seed industry development. The private sector is now allowed to import any improved germless for research and
development and to develop its own facilities for producing foundation seeds. They are also allowed to import and sale seeds
except five notified crops (rice, wheat, sugarcane, potato and jute). As regard to notified crops, there are procedural formalities to
be observed by the private sector before any import. Private sector has now taken up programs for production of hybrid rice seeds
in the country.
(e) Import of agri-machines, including power tiller, was liberalized - resulting in the positive effect on import of power tiller. The
area under power tiller utilization also grew at about 3.5% per annum after introduction of the liberalization policy.
(f) Structural changes were also made in food supply and management system. Open Market Sale (OMS), procurement of food
grains from the farmers at market prices, abolition of rural rationing system and allowing import of food grains by the private
sector were the measures so far implemented.

Present Agricultural Policy Reform

Crop Production Policy: Although the intensification of food grain production, especially rice-based production system is
apparently profitable from the farmers’ point of view, this approach has appeared to be harmful in protecting the land productivity.
At present, rice covers about 75 percent of the cultivated land in Bangladesh. Area coverage by other crops are as follows: pulses
(4.64%), wheat (3.92%), oilseeds (3.77%), jute (3.71%), sugarcane (1.23%), potato (1.11%), fruits (0.84%) and vegetables
(1.39%). The production system dominated by a single crop (i.e. rice) is neither scientific nor acceptable from the economic point
of view. It is, therefore, necessary to increase the cultivation and production of other crops. However, considering the increasing
demand for food grains and with a view to ensuring food security, production of rice will continue to get priority in the food grain
production programs. In order to increase rice production, supportive programs will be taken to raise per hectare yield through the
use of modern technology and improved cultural practices along with the increased use of HYV seeds.
In Bangladesh, only 4.14 percent of net cultivable land remains as current fallow which means that there is hardly any scope for
increasing cultivable land. Currently, cropping intensity is around 185 percent. Thus, the only possible option for increasing
agricultural production is to increase both the cropping intensity and yields simultaneously. In this respect, policies adopted by the
government are to:
• take supportive programs for inter-cropping in a field instead of single cropping; and
• take appropriate measures in reducing the gap between potential yield and farmers’ realized yield of different crops to
raise the present level of production significantly.
Crop diversification is one of the major components of crop production policy. For the overall development of crop sector,
special emphasis will be given to crop diversification program under the crop production policy. The government policies in
this respect are as follows:
• Area under wheat has meanwhile reached at 0.8 million hectare. Given the potential for expanding wheat acreage, efforts
will continue to encourage farmers to grow more wheat.
• The production of maize has shown prospective results in last two years. Maize has also gained popularity as human food
side by side with the poultry feed. Public sector procurement of maize has been introduced like rice and wheat in order to
encourage farmers in maize cultivation. The efforts for increasing area and production of maize will be strengthened.
• The program for increasing area and production of other crops, e.g., potato, pulses, oilseeds, vegetables, fruits and spices
will gradually be extended under the crop diversification program.
• Production of different cash crops including jute, cotton will be increased and efforts will be made to expand their
multiple uses.
• Special development programs will be taken with a view to increasing production of potential crops suitable for the
coastal areas and the hill tracts.
Seeds Policy: At present, only a small portion of the required quality seeds for different crops is supplied by the Bangladesh
Agricultural Development Corporation (BADC). Rest of the seeds are produced, preserved and used under private management,
especially at the farmers’ level. Government has already declared the National Seed Policy with the objective of promoting seed
industry in the private sector. In pursuance of the seed policy, government has revised the Seed Act of 1977 and also formulated
seed rules in the light of the Seed Act (Amendment) 1997. In this respect the government will follow the policies mentioned
below:
• In the light of the prevailing seed act and seed rules, the government will retain the opportunities already provided to the
private sector for production, import and marketing of seeds side by side with the public sector.
 • Appropriate mechanism will be devised to improve the technical skill of the private sector with regards to seed treatment,
seed preservation at specific moisture level and seed storage management so as to ensure the highest quality of seeds.
• The act of favorable policy preparation, technical supports, training, etc. will be strengthened in order to encourage
private sector participation in seed development and seed preservation.
• Improved technology-based seed production, seed multiplication and related farm activities have been declared as
industrial enterprises in the present industrial policy. For the development of seed industry this policy will be continued
and adequate government support will be provided.
• In addition to the production and marketing of seeds in the public and private sectors, the policies relating to seed
production and seed preservation at the farmers’ level will continue so that the farmers can easily use good quality seeds.
The government has, meanwhile, taken initiative for strengthening the activities of BADC in this regard. Necessary steps
will be taken during the Fifth Five Year Plan period to raise BADC’s seed distribution program to the extent of ten percent
of the total demand.
• Already introduced seed buffer stock system will continue to ensure the normal supply of seeds of major crops at the time
of natural calamities or any other disaster.
• The conditional opportunity that has already been given to the private sector to import hybrid rice seeds for increasing
rice production will be further consolidated on the basis of performance analysis. But, special care will be taken to ensure
that the private sector produces hybrid seeds locally and that the hybrid seeds offer higher yield and more financial
benefits to the farmers on a sustained basis.
• At present, Seed Certification Agency (SCA) is the only legal authority to certify seeds. With a view to increasing supply
of quality seeds, private sector agencies participating in the seed production programs will be allowed to market their
"truthfully labeled seeds" side by side with the government agencies. The Seed Certification Agency will have the legal
authority and responsibility to closely monitor the entire seed labeling and certifying process of the respective private
sector organizations. The Seed Certification Agency will take membership of the International Seed Testing Association
(ISTA) so that the opportunities for exporting internationally standard seeds are created.
Fertilizers Policy: Chemical fertilizer is one of the main inputs required for increasing crop production. The expansion of modern
agricultural practices together with intensified cultivation has led to an increasing demand for fertilizers. It is, therefore, necessary
to ensure timely supply of fertilizers to match the demand. As a result of unbalanced use of fertilizers, the fertility of land is
declining on the one hand and the potential yield is not achieved on the other. In this respect, it is extremely important to adopt and
implement such policies so as to encourage the farmers in using balanced fertilizers and at the same time protecting the soil
fertility. As a broad principle of fertilizer use, a sustained increase in the productive capacity of land and its preservation in the
long-run will get priority over the immediate yield improvement. In order to strengthen fertilizer management, following policies
already adopted by the government will be continued:
• Steps already taken to popularize the use of granular urea as a means of reducing excessive use of urea fertilizers will be
strengthened.
• The rules on 5-grades already introduced by the government in order to ensure the use of blended fertilizers will remain in
force.
• Enforcement of concerned rules and regulations will be strengthened in order to ensure good quality of fertilizers at the
farmers’ level.
• Appropriate programs for training, field demonstration, publicity, etc. will be extended further so as to encourage farmers
in using balanced fertilizers.
The use of organic manure, bio-fertilizers and compost will be encouraged. Measures will be taken to upgrade agricultural
extension, training and motivational work at the farmers’ level so that the farmers can follow suitable cropping patterns to
maintain the natural balance of soil nutrients.
• Production, importation, sales and distribution of any fertilizer harmful to soil environment will be banned.
• Distribution system of fertilizers in the private sector will continue. But, the public sector will import fertilizer, if
necessary, to ensure its supply and availability in time.
 • The District and Thana Committees already formed by the government will continue to monitor fertilizer distribution at
the farmers’ level.
• The present practice of fertilizer buffer stock system will continue.
Realistic steps will be taken to ensure the use of phosphatic and potassium fertilizers as well as various micro-nutrients. The use of
DAP (Di-amonium Phosphate) fertilizer, already introduced by the government, will be encouraged in this regard.
The Soil Resources Development Institute (SRDI) will be strengthened and soil testing programs will be started in five-year phases
based on soil and Agro-ecological Zones (AEZ). Besides, the use of existing ‘Soil Health Card’ will be further extended for
improving soil quality.

Future Agricultural policy

As price of rice and jute has fallen, the farmers are discouraged to produce more rice now. Now our agriculture is shifting towards
demand management policy where we are trying to create additional demand of the agricultural products by taking some
marketing and pricing strategies. Even we were thinking about to export rice. Following are the new and future agricultural policy
of Bangladesh:
1. Price support policy: Government is encouraging the farmers to produce more by buying the additional or extra supply
beyond the total demand to stabilize the market price.
2. Export: Trying to expand market as our cost of production is low due to cheap labor.
3. Crop diversification: Government is encouraging the farmers to produce cash crops as the price of the food crops are
going down. Side by side we are encouraging to have more poultry and cattle production.
4. Increment in allotment: Government is continuously increasing the amount of budget for agriculture.

Government steps in Agricultural Modernization /Mechanization:

The serious scarcity of draft power necessitates the use of mechanical power for agricultural production activities. The government
has, therefore, attached special importance to agricultural mechanization. To encourage the use of machines in agriculture, testing
and standardization restrictions have already been withdrawn in the free market distribution system. As a result, the use of
agricultural machinery has increased significantly and immense potential is created for further increase. In order to accelerate the
current trend of agricultural mechanization, various facilities including exemption of import duties on agricultural machinery have
been provided and the same will continue.
The following steps will be taken to promote agricultural mechanization:
• The type of agricultural machines or the level of mechanization needed in any region depends on the socio-economic
condition of the people, number and quality of draft animals and availability of agricultural labor in that region. Measures
will be taken to collect and publicize these information through the mass media in order to attract private investment in this
sector.
• In order to gradually reduce dependence on draft power, efforts will be made to grow farmers’ interest on mechanization as
well as to provide credit facilities. To achieve this goal, information relating to increasing potential demand for and
profitable investment in agricultural machinery will be publicized through the mass media so that the private sector can play
an active role in creating a competitive market.
• Despite increasing use of mechanical power in agriculture, the use of animal power will continue in future depending on the
socio-economic conditions of the farmers in different regions. Therefore, improved ‘power delivery system’ (meaning
delivery of energy from the shoulder of the draft power to the agricultural implement) will be evolved through research so
that the scarce draft power can be utilized more efficiently.
• Production and import of agricultural machines will be specially encouraged so that the farmers can procure machines from
the market according to their choice and convenience. Machinery workshops and industries engaged in agricultural
mechanization activities will be provided with appropriate taxes/duties facilities for the import of necessary raw materials.
This is expected to keep the machine prices within the purchasing capacity of the farmers.
• To speed up the process of agricultural mechanization both producers and users of machines will be provided with
necessary credit supports.
Use of machines, which are usually expensive, is not often affordable by the individual farmers. In order to popularize
mechanization in addition to the use of draft power, farmers will be motivated in purchasing or taking lease of agricultural
machines through the cooperatives. Formation of such self-motivated cooperatives will be encouraged and necessary supports will
be extended to mechanized cultivation based on cooperatives.

Agricultural Holdings in Bangladesh

In Bangladesh most of the agricultural holdings are small. Though it is said that, we have some large forms; that is actually for
biased definition of agricultural holding. If compared with the developed countries, most of our forms are marginal in size having
less production. Probably that is the main reason for which mechanization was not implemented in BD agriculture. for example ,
average size of land holding by farmers in Bangladesh was 1.43 hector and .91 hector in 1960 and 1985 respectively .that means
average holding of land is declining , reflecting that BD has mostly small agricultural holdings. Still we are dividing the total
holdings in two groups:
1. Small farms: Agricultural holdings whose area size is from 1-21/2or less than that is characterized as small farms. Following
are the features of small farms:
• Traditional cultivation method for subsistence
• Mainly family based laborer
• Use of land as many time as possible
• In dry season laborer work in non-agri sectors.
• Avoidance of modern technology.
• Use home produced inputs.
• Marketable surplus is almost zero.
Advantages: Following are the advantages of the small farms
 Least capital investment
 Productivity of holdings remain fertile
 Level of waste is low due to own supervision
 Intensive cultivation by owners’ provide maximum production by labor
 Use of local invention.
Disadvantages:
 small holding thus no mechanization causing less production .
 no division of labor , so no specialization .
 no competition among farmers
 zero marketable surplus thus less contribution in GDP
 for credit only land is used as mortgage which results to a landless farmer
 no share cropping , rather one-crop production .
 Side by side some other problems are seen in small sized agricultural farms. Like
 Problems of investment
 Zero use of HYV
 Credit unavailability due to their uncertainty in repayment
 In efficient use of labor in absence of technology
 Problem of mechanization due to diseconomies of scale and lack of investment.
 Marketing and distribution problem is there.
2. Large farm: Agricultural holdings having area greater than 3 hector (3+) is called large farm.
Characteristics: following features are observed:
 Mainly hired labor and few family labor
  Mainly capital intensive /use of technology
 Take marketing initiatives to sell the products produced
 Use of HYV and bio-chemical technology
Advantages: Large farm is supported for the following reasons:
 contribution in GDP is more
 division of labor provides specialization thus maximum production
 encourage to mechanization
 production cost is low due to economies of scale
 more capital and labor ensures more production ‘diversification of crops
 more employment is possible too
Disadvantages: Some people are against large farm as:
 it is capital intensive
 hired laborer are less intensive to produce more
 if laborer are inefficient , loss is ultimate result
 no intensive cultivation rather extensive one .
Comparison between small and large farm:
1. Production in large farm is high due to its intensive capital. But as Bangladesh lacks capital, better go for smaller one.
2. In large farm, workers don’t get incentives to work efficiently as they are wage based. But in small forms they provide
maximum as full will be consumed by them.
3. In small farms, we can observe intensive cultivation which reduces risk .but in large farms, extensive cultivation may increase.
4. Large forms can create employment but level of skill is high in small sized farms. For lower skill due large farms could not use
modern technology.
5. Initially production cost is low in larger farms than the smaller one. But use of machines and fertilizer gradually reduce the
fertility, which will increase the cost of production.
6. Use of machines can even reduce the employment in large farms