Contractual Arrangements for Rice Cultivation in Bangladesh

Abstract

Bangladesh has been an agricultural-dependent economy with a growing population and one of the world's lowest per capita land areas. 11griculture sector is the single largest contributor to income and employment generation and a vital element in the country's challenge to achieving self-sufficiency in food, educing rural poverty and fostering sustainable economic development. About 77% of the total population and 78% of rural labor forces are located in rural areas. Agriculture sector provides 63.2% of employment opportunities and 72% of rural employment. Moreover 23.31% of country's GDP comes from agriculture. The production and employment opportunities either in agriculture or outside of it are circled around land due to the lack of off-farm source of earnings in rural areas. Land is the crucial factor of agricultural p1oductio11. Tenant and owner-cum-tenant farms cultivate about 42% of operated land. That is why sustainable agricultural development is impossible without improving the fate of the actual tillers of land. This study is mainly based on primary data collected from 1S0 tenant farms by surveying five areas, Pabna, Kushtia, Thakurgaon, Gazipur and Feni during the period of January to November 2003. A few models, such as Cobb-Douglas production function, regression and step-wise regression models, have been used for this study. In Bangladesh, throughout its history, land tenure system appeared to have been changed in accordance with the aim of ruling authority for improving the fate of landowners, not for the tenants. The pattem of land distribution, structure of contractual arrangements along with resource base for agriculture had changed during the past JJ years of independence. On an average, nearly 2 lack acres of arable lands went out of agriculture every year duni1g the past J decades. Per farm cultivated land has been reduced from 2.00 acres in 1983/84 to 1.50 acres, in 1996. Moreover, a tremendous decrease in average farm size has taken place for all farm sizes. The structure of contractual arrangement has also been changing. The area under share tenancy was 91% in 1960, 74% in 1983/84 and 62% in 1996. Survey findings reveal that 43.27%, 27% and 22% of tenanted lands were transacted under sharecropping, short-term leasing and kat (m01tgage) system respectively. That is, till now sharecropping is dominant but its share is declining. Cash rent and kat system are taking place in lieu of sharecropping. About 47% of landowners in rental market are absentee landlords who supplied 59.29% of total rented land indicating that urban people who are not attached with agriculture owns the major portion of land. About 63% of tenant farms are small farms that are rented-in 43% of the total leased-in land. Almost one-third tenants are absolutely landless and they rent-in 52% leased land. The owner and owner-cum-tenant farms' area has been decreased by 9% and 14% respectively during the period of 1983/84-1996. Moreover, the number of tenant farms had increased by 250% and area by 251%. So, land tenure situation and structure of contractual arrangements have also undergone substantial changes. Social values and norms, structural and socio-economic factors influence on decision to rent-out of land by the landlord. About 58% tenants reported that they had taken land for using their labor endowments. Another 2 7% respondents reported that they had leased-in land for getting excess crop to make a safety net against food shortages. A regression result shows that Aman production is positively related with labor, capital and fertilizer but negatively with rent However, output elasticities of inputs is less than 1, indicating the decreasing returns to scale in Aman production. Output is positively related to input but there is a decreasing returns to scale in Boro production. there are great differences in cost of Aman and Boro production among the regions due to the variations in labor cost and hired cost of land and it indicates that employment opportunities in all regions and rental market are not even. The main cause of disparities in cost is the result of variations of rent. However, both per acre cost and revenue of Boro is high than that of Aman. Rent, labor, capital and fertilizer constituted about 42%, 36%, 13% and 10% of per acre cost respectively. About 34%, 26%, 24%, 9% and 9% of per acre cost are constituted by rent, labor, irrigation, capital and fertilizer respectively. Average return from Boro production is higher than that of Aman in all regions. There are enormous variations in cost, production, revenue and profitability of tenanted land among the regions both for Aman and Boro Survey findings reveal that productivity under Kat arrangement is higher than other arrangements both in Aman and Boro. Meanwhile, productivity under sharecropping is the least. Form of contractual arrangement and quality (par acre revenue) play vital role in landlords share on Aman production and in Boro production, from a tenancy, cost-sharing in p10dudion and land quality have much impact on landlord's income. Tenant's net return from tenanted land is influenced by per acre revenue, labor cost, cost of capital and cost of fertilizer in Aman production and in Boro cultivation it is influenced by per acre revenue, labor cost, tent, cost of irrigation, cost of capital and cost of fertilizer. Efficiency measurement of different contractual arrangements shows that landlord gets the highest share from sharecropping and the lowest from kat system. In Baro cultivation landlord gets highest rent from sharecropping and the lowest from fixed crop rent system. On the contrary, tenant gets highest net returns from kat system and the lowest from sharecropping both on Aman and Baro cultivation. Tenancy cultivation is profitable to the tenant either it is on cash rent basis or on crop rent. But it is more profitable on cash rent basis. Moreover, sharecropping and crop rent arrangements are an inefficient mode of production in terms of productivity and resource a/location for both Aman and Baro production. Alarming decline of cultivable land, the increase in functionally landless farm from 46% to 56%, the increase in tenanted land from 17% to 23% and increased number of marginal and small farms (70% of farm holdings) show the growing marginalization and pauperization. With negligible scope for area expansion and tremendous decline of cultivable land due to population pressure and the pavement of rural infrastructure, future growth will have to depend on raising productivity of per unit of land. The limited scope for increase in cropping intensity due to the pressure of soil fertility and the excessive use of chemical fertilizer needs mixing agriculture with livestock farming that can sustain the natural fertility of land. Since per acre production of Boro is higher than that of Aman and it is also for flood-free area to flood-prone area, policy should be taken to ensure efficient use of water resources. That is, agricultural growth should come from the efficiency in the use of inputs, not from the expansion of input use. Because of the low land-man ratio and the pattern of ownership there is little hope for gaining redistribution of land. However, at the dawn of the new millennium, in order to meet the challenges of globalization, the government, NGOs and the private sector should establish a research partnership in this field for having a sustainable agricultural growth as well as smooth and balanced development of the economy of Bangladesh.