COURSE : AGRICULTURAL ECONOMICS

COURSE CODE : ECON - 1204

CoURSE INSTRUCTOR : MD. SHAHANAWAZ SHARIF

LECTURER

DEPARTMENT OF ECONOMICS, BUP

Presented By : MD. Mahbubul Alam

ID : 16141011

Section : A
Batch : Economics -2016

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 Table of Contents
Abstract. i

1.Introduction ............................................................................................................................................... 6
1.1 Agricultural system ............................................................................................................................. 6
1.2 Types of Agricultural System............................................................................................................... 6
2.Agricultural system: An overview since 1971 ............................................................................................ 7
2.1 Agricultural system in East Pakistan ................................................................................................... 7
2.2 The main causes of subsistence agricultural system in East Pakistan .............................................. 10
2.3 Problems regarding subsistence agricultural system ....................................................................... 11
2.4 Agricultural system in Bangladesh .................................................................................................... 12
2.5 Bangladesh agriculture from independence to present ................................................................... 12
3.Reform in agricultural & other policy in Bangladesh ............................................................................... 13
3.1 Major reform in agriculture in Bangladesh ....................................................................................... 13
4. Agriculture & GDP of Bangladesh ........................................................................................................... 15
5.Problems regarding agriculture in Bangladesh ........................................................................................ 18
6.Recommendation..................................................................................................................................... 20

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 List of Tables

Table 1: Population growth rate in East Pakistan 6

Table 2: The area of major crops in East Pakistan 6

Table 3: Production of major crops in East Pakistan 7

Table 4: Major economic reforms in Bangladesh from independence till 1990s 12

Table 5: Contribution of agricultural sector and other sectors in GDP of Bangladesh 13

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 List of Figures

Figure 1: Contribution of various sectors in GDP of Bangladesh 15

Figure 2: Sector wise GDP of Bangladesh since 1971 15
Figure 3: Bangladesh GDP from agriculture 16

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Abstract:
Bangladesh is an agricultural country. This term paper contains a thorough overview of the agricultural
system in Bangladesh from its liberation to early days. This paper also contains graphs, tables regarding
agriculture in Bangladesh. In the end, problems regarding agriculture in Bangladesh and then some
recommendations have been presented.

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1.Introduction_______________________________________________
1.1 Agricultural system
Agriculture is the science, art or the process of cultivating crops and raising livestock to meet all the
agricultural demands of human wants. Agricultural system is the process, method or way that represents
how an economy utilizing its resources for producing crops or raising livestock in an efficient way.
Agricultural system of a country broadly depends on the government, legislation, socio-economic
condition, resources of that country.

Suppose theres a family farm with a small piece of land & theres a commercial farm with acres of land.
Though the main target of these two farms is to produce crops but the method they would use, level of
production, resource allocation, who consume the produced crops varies from farm to farm. Similarly, if
we assume this example broadly for a country then the agricultural system depends on various factors.
The agricultural system used in developed countries and the system used in developing countries will not
be same as every country varies from various factors. At the same time a country can use different type of
agricultural system in different period of time. The method you are using to rise from a developing
country to developed country will not work fruitfully when you are enlisted in the list of developed
country.

1.2 Types of Agricultural System

There are different type of agricultural system that can be divided in following categories:

Subsistence Agriculture: The type of agriculture in which the farmer focus on producing enough
food for his own family members. The output is too little in this type of agriculture system as
there is no surplus for trading.
Industrialized Agriculture: The type of agriculture in which crops & livestock are produced in
larger quantity by using industrialized methods & techniques. The main goal of this type of
agriculture system is to increase the level of yield. The country or economy using this type of
agriculture system produce agricultural products in larger amount to meet the needs of its own
citizens & the rest products are sold in foreign market.

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2.Agricultural system: An overview since 1971_____________________
2.1 Agricultural system in East Pakistan
After the independence of Pakistan in 1947 from British ruling it was divided in 2 part. The east part of
Pakistan were knowns as East Pakistan (present Bangladesh) & the west part was known as West
Pakistan or Pakistan.

After the independence of Pakistan, the infrastructure & other facilities were not upgraded. So, the
agriculture system in newly born East Pakistan was Subsistence. Farmers tends to produce crops &
livestock at a fixed rate only to support their family members. Agricultural products were not included in
trade list. The main focus of government was to produce crops at a rate which can support the citizens of
the country. Most crops were produced only for food purposes. The staple food of Pakistan is Wheat,
though Rice was the staple food in East Pakistan. Other major crops were maize, corn, sugarcane, barley
etc.

Though the production of crops in early Bangladesh was highly influenced by population growth rate.
Table 1 shows the population growth rate in East Pakistan.

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Table 1: Population growth rate in East Pakistan

Year Population (in millions) Average Annual Growth Rate

1951 33.7 n.a.

1961 42.9 2.3

1971 65.2 3.7

Table 2: The area of major crops in East Pakistan

Crop 1951 1971

Wheat 4,639 6,984

Rice 1,181 1,933

Corn 480 769

Chickpeas 1,106 843

Sugarcane 388 825

Cotton 1,293 2,108

Source: BBS, Statistical Yearbook, various issues

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Table 3: Production of major crops in East Pakistan

Crop 1961 1981

Wheat 3,814 11,475

Rice 1,030 3,123

Corn 439 970

Chickpeas 610 337

Sugarcane 11,641 32,359

Cotton 301 715

Source: BBS, Statistical Yearbook, various issues

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2.2 The main causes of subsistence agricultural system in East Pakistan
I. Low level of capital accumulation As a newly born country East Pakistan was not developed
industrially. Profits earned from various sectors was low. So, investment in agricultural sector
was minimum.
II. Increasing population growth Another main cause of subsistence agricultural system was
increasing population growth. Farmers were concerned to provide foods by producing crops for
their own family members rather earning profits.
III. Poor infrastructure As newly born country the infrastructure, transport facilities, irrigation
facility in East Pakistan was very poor. So, because of this poor facility people were less
interested in agriculture.
IV. Minimum level of technology Investment in agricultural research to invent new technologies
was minimum.
V. Political Instability There was growing intolerance among the people of East Pakistan against
the suppression of the government of West Pakistan. People of East Pakistan were deprived from
getting their equal rights. This situation also affected the agricultural system badly.
VI. Less interest in trade & business The newly sworn government were not advanced or
specialized in bureaucracy. Because of their poor bureaucracy trade with other countries were
limited. So, there was lack of agricultural raw materials, pesticides, fertilizers etc.

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2.3 Problems regarding subsistence agricultural system
High dependence on weather: In subsistence, agricultural system the production of agricultural
products is highly dependent on mother nature. If theres not enough rainfall or drought, then
farmers cannot produce enough products for his family.
Small amount of production: In subsistence, agricultural system area that is under farming is very
small. So, the amount of production is low.
Inefficient: In subsistence, agricultural system farmers cannot utilize their factors of production
fully. So, theres inefficient level of production.
Out of date tools & knowledge: Because of minimum technology & low level of human capital
the tools used in subsistence agricultural system is out of date. Because of these outdated tools &
knowledge farmers cannot produce products at an efficient level.
No access to market: In subsistence, agricultural system farmers have low chance to access the
market as theres no surplus production.

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2.4 Agricultural system in Bangladesh
In recent time Bangladesh is following Industrialized Agricultural System. In this type of agricultural
system large quantities of crops & livestock are produced through industrialized techniques for the
purpose of sale. The main goal of this type of agricultural system is to increase the level of yield. Which
means the amount of food produced for each unit of land. Crops & livestock produced through this type
of agricultural system are produced to feed the general peoples and the rest are sold in market.

Though theres lack of technologies & lack of other facilities and because of these problems Bangladesh
is not following this agricultural system fully. In some part of our country farmers are still dependent on
subsistence agricultural system. So, we can say that Bangladesh is following a mixed agricultural system.
But our government is trying hard & soul to make our agricultural system more farmers friendly &
profitable. In recent time government is making huge investment in agricultural research and subsidies for
farmers.

2.5 Bangladesh agriculture from independence to present

Bangladesh achieved its independence & started as a new country in 1971. Bangladesh is one of the
highly populated & most densely populated countries around the world. Bangladesh is an agricultural
country. The countrys primary source of nutrition & food is agriculture. It is also the source of livelihood
for almost 80% people of our country. These people are directly or indirectly related to agriculture.
Although the present sectorial share of agriculture is only 18% of GDP, though it was approximately 44%
in 1971-1980. (Bangladesh Bureau of Statistics, Statistical Yearbook of Bangladesh (BBS), various
issues). In terms of generating employment agriculture can be credited to absorb 46% of the labor force,
with its employment share being much higher in the 1980s (58%) and the 1990s (63%) (BBS,various
issues).
Though the GDP and employment share is declining over time, Now a days the agriculture sector is more
diverse and intensive. The fishery and livestock, has witnessed a tremendous growth. Finally, the
agribusiness market encompassing processed agricultural inputs and outputs is evolving as a sector with
considerable domestic and export growth.

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3.Reform in agricultural & other policy in Bangladesh________________
3.1 Major reform in agriculture in Bangladesh
Two major reform in agriculture took place from the early 1980s to mid-1990s. First reform took place in
1980 till the middle of the decade. During this time govt cut back subsidies in input & liberalized
domestic trade of inputs. Later from the mid-1980s till the mid-1990s, government liberalized import of
inputs, they also subsided distribution of grains in public and increased supplemented private trading
locally and internationally in grain markets and decreased grain distribution through public programs.
This was the second wave of reforms that took place from mid1990s.
Just after independence like other developing countries Bangladesh also focused on a tightly regulated
micro-policy environment.
Table 4 shows the major economic reforms that took place in Bangladesh from early 1980s to 1990s.

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Table 4: Major economic reforms in Bangladesh from independence till 1990s

1. Agricultural Policy

Liberalization of input markets

Decreased role of government in input distribution
Deregulation of input prices
Reduction of subsidies on agricultural inputs
Liberalization of agricultural import
Liberalization of output markets with producers price incentives
Gradual elimination of distribution of food at subsidized prices
Price stabilization through procurement policy
Liberalization of import on food grain

2. Trade and Industrial Policy

Reduction of maximum tariff rates

Rationalization and simplification of the tariff structure
Elimination of quantitative restrictions on imports
Simplifications of industrial regulations
3. Privatization and Public Enterprise Reforms

Denationalization
Reduction of excess labor in State Owned Enterprises
Rationalization of jute mills
Improve operational performance of public utilities
Privatization of selected public manufacturing and commercial enterprises
4. Fiscal Policy Reform

Expand the base of the value-added tax

Reform personal and company direct taxes
Strengthen the tax administration
Adjust prices of current expenditure to less than the growth of nominal GDP
Reduce subsidies and administrative costs
Improve project aid utilization
Reduce the operating deficit of Bangladesh railway

5. Financial Sector Reform

Implement reforms aimed at a market-oriented system of monetary management

Privatization of NCB and allowing banking in the private sector
Interest rate liberalization
Strengthen commercial bank loan recovery programs

Source: North South University (NSU) research proposal, Understanding Economic Reform
[unpublished document]

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4. Agriculture & GDP of Bangladesh______________________________
Just after the liberation war agriculture was the largest sector that helped our economy to stand on its feet
again. Industries, infrastructure were completely destroyed and millions of people were unemployed.
Capital formulation was very low so it was hard to make any new investment. Before independence of
Bangladesh food production capability was minimum because of the absence of modern technology and
low quality seeds and lack of irrigation facility. After 1971 the agricultural growth rate of Bangladesh has
increased in terms of output, labor, land and other phenomenon.

Table 5: Contribution of agricultural sector and other sectors in GDP of Bangladesh

Years Agriculture Industry Service Total

1971-1980 44 11 45 100

1981-1990 32 12 56 100

1991-2000 25 15 60 100

2001-2010 18 30 52 100

Source: BBS, Statistical Yearbook, various issues

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Figure 1: Contribution of various sectors in GDP of Bangladesh

Contribution of various sectors in GDP of

Bangladesh since 1971

30%

53%

17%

Agriculture Industry Services Sourc

e:
Source: BBS, Statistical Yearbook, various issues

Figure 2: Sector wise GDP of Bangladesh since 1971

SECTORWISE GDP OF BANGLADESH

SINCE 1971
Agriculture Industry Services
60

50

40

30

20

10

0
1971-1980 1981-1990 1991-2000 2001-2011

Source: BBS, Statistical Yearbook, various issues

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Figure 3: Bangladesh GDP from agriculture

Source: BBS, Statistical Yearbook, various issues

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5.Problems regarding agriculture in Bangladesh____________________
Agriculture is one of the largest employment sectors in Bangladesh. Agriculture employs almost half of
the labor force (47%) and it contributes 16% of our GDP.

GDP from Agriculture in Bangladesh increased to 9922.80 BDT Million in 2016 from 9748 BDT Million
in 2015. GDP From Agriculture in Bangladesh averaged 8622.84 BDT Million from 2006 until 2016,
reaching an all-time high of 9922.80 BDT Million in 2016 and a record low of 7017.10 BDT Million in
2006. Bangladesh now needs to shift toward high-value agriculture, including horticulture, livestock,
poultry and fisheries to foster future growth and further reduce poverty.

As we can see from above tables and graphs that the contribution of agriculture sector in our GDP is
falling day by day. Due to recent political chaos like hartal, blockades our agriculture is being
hampered. And most importantly our government failed to take incentives to support our farmers. In some
recent news, we have seen that farmers are not getting enough profit. The cost they are making is much
higher than the profit they are getting. So eventually many farmers are losing their lands due to high debt
and at the same time lack of irrigation facilities, high price of seeds, fertilizers, pesticides, political
instability is discouraging our farmers.

So, the phenomenon that hindering our agriculture can be divided into following categories:

Increased number of population: Population in Bangladesh is growing at a rate of 1.15% per year.
So, increased number of population eating up all the achievements in agricultural sector. Number
of people living below the poverty line is increasing and peoples standard of living declining day
by day.
Declining amount of agricultural land: Every year 1lakh hectares agricultural land is being used
in non-agricultural purposes like roads, housing, industries etc. So, the production of
agricultural products is falling day by day.
Erosion of river banks: Every year due to river erosion millions of people are losing their lands,
house and everything.
Degradation of natural resources: Continuous degradation of natural resources has caused huge
damage to agricultural production. These degradations include soil erosion, sedimentation,
deforestation, excessive use of fertilization, decrease of fish species etc.
Global warming & climate change: Due to continuous global warming, there have been
significant changes in climatological pattern of Bangladesh. Natural calamities like drought,

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 cyclone, storm, and flood are occurring more frequently. And all these calamities are affecting the
crop production of our country.
Diminishing human resource: Due tom poor facilities of career development more than 400
researchers are migrating to developed countries every year. And this migration rate is increasing
tremendously. There are many causes behind this like limitation of career development, lack of
higher education & trainings, poor lab facilities, technological retreat and early retirements etc.

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6.Recommendation__________________________________________
Agriculture is the backbone of the economic development of our country. Almost 90% people of
Bangladesh are directly or indirectly involved with agriculture. So, problems in this sector cannot be
ignored. Development of our country depends broadly on agriculture sector. As we have discussed earlier
there are various problems that affecting the production of our agricultural sector. So, there should be
various steps taken by our government and the general people also have responsibilities.

Some steps that can be taken to improve the condition of agriculture in Bangladesh are given below:

Crop diversity: Farmers need to produce more diverse crops that can improve the condition of our
trade. A positive trade balance will increase the income of foreign currency.
Cash crops: Farmers need to focus more on the production of cash crops like increase the rate of
import.
Production of byproduct: Crops from which we can get more byproduct should be produced in
larger amount. By producing this type of products farmers can be more benefited.
Reducing middleman involvement: One of the main causes of behind decreasing interest in
agricultural production is the involvement of middleman. Government should arrange some direct
buy & sell stores in where farmers can buy necessary seeds, fertilizers & sell their products
directly.
Agricultural research: Government should increase investment in agricultural research. High
yielding seeds, fertilizers, and pesticides can increase the production of crops.
Technological research: Developed countries are using technologies to increase the production of
crops. We should also focus on using technologies to use in agricultural production to increase
production & reducing risk.
Government policy: Government can also take farmer friendly policies that can make our farmers
more interested in agriculture & make them financially solvent. Government also should be
concerned whether farmers are getting exact price for their production or not.

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