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POLICY OPTIONS FOR SUPPORTING AGRICULTURAL DIVERSIFICATION IN BANGLADESH Bangladesh Agricultural Research Institute (BARI) United International University.

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Presentation on theme: "POLICY OPTIONS FOR SUPPORTING AGRICULTURAL DIVERSIFICATION IN BANGLADESH Bangladesh Agricultural Research Institute (BARI) United International University."— Presentation transcript:

1 POLICY OPTIONS FOR SUPPORTING AGRICULTURAL DIVERSIFICATION IN BANGLADESH Bangladesh Agricultural Research Institute (BARI) United International University (UIU) IMPLEMENTING INSTITUTION ToR # 06 Bangladesh Agricultural Research Institute 29 November, 2012

2 Outline of the Presentation  Rationale of the study  Methodology  Profitability and comparative advantage of major commodities  Growth performance of major crops  Diversification in food consumption, agril. production, agril. trade  Constraints to agricultural diversification  Conclusion and Recommendations Bangladesh Agricultural Research Institute 29 November, 2012

3 Rational of the study 29 November, 2012  Agriculture is an important sector of the economy of Bangladesh. It comprises crop, livestock, fisheries and forestry sub-sectors accounting for 55.7%, 13.24%, 22.37% and 8.68% of agricultural GDP respectively  AD towards products with higher value-added contributed to more rapid agricultural income growth and might contribute to local employment creation by stimulating small farmers’ participation in the market.  Diversification in production is also likely to lead to diversification in consumption, which is required for healthier and more balanced diets. Bangladesh Agricultural Research Institute

4 Rationale November, 2012  HIES data shows the overall demands for fruits, vegetables, dairy products, fish, and edible oils have been increased.  Prices of most non-cereal food commodities have been increased significantly.  Imports of non-cereal food commodities have also been increased to a large extent.  Yet, progress in agricultural diversification is not very encouraging. Bangladesh Agricultural Research Institute

5 OBJECTIVES Bangladesh Agricultural Research Institute 1.To assist policy makers in identifying policy interventions that will allow agricultural households to diversify their agricultural production into micro-nutrient rich foods and/or those with a strong income generating potential. 2.To examine the past trends of diversification of crop and non-crop agriculture, and compare the rates of growth to those in neighboring countries to gain some perspective on how rapid (or slow) growth in Bangladesh has been. 3.To examine the socioeconomic and agro-climatic determinants of and constraints to agril. diversification. 29 November, 2012 Bangladesh Agricultural Research Institute

6 29 November, 2012  Primary Data  Examine the determinants of agril. diversification.  Explore the constraints and opportunities to AD.  Secondary Data  Financial and economic profitability over time.  Trend and growth rate in domestic production.  Diversification in consumption, agril. production, and agricultural trade.  Data Sources  Primary data- Field survey  Secondary data- Res. reports, thesis, j. articles, HIES, BBS, and FAOstat DATA AND METHODOLOGY Bangladesh Agricultural Research Institute

7 29 November, 2012 SAMPLING DESIGN Sl. No 12 Surplus district Selected 10 diversified crops Sample households Control group Total sample 1.DinajpurGarlic, Maize, Pointed gourd, Potato RangpurMaize, Banana BograPotato PabnaOnion JessoreOkra, Pointed gourd, Culture fish KustiaBanana, Okra MymensinghCulture fish TangailPineapple FaridpurOnion, Garlic GazipurPoultry ChittagongPoultry RangamatiPineapple Total Bangladesh Agricultural Research Institute

8 29 November, 2012 PROFITABILITY AND COMPARATIVE ADVANTAGE OF AGRICULTURAL PRODUCTIONS Bangladesh Agricultural Research Institute

9 Financial Profitability of Agricultural Commodities 29 November, The productions of all crops and non-crops enterprises are profitable 2. The profitability of non- cereal crop production is higher than cereal crop production. 3. Perennial fruit prod. are the best and livestock & poultry are the least profitable agricultural commodities. Bangladesh Agricultural Research Institute

10 Economic Profitability of different crops at Export Parity Level, Source: Shahabuddin, & Dorosh, 2002 CerealsVegetablesPulses Bangladesh Agricultural Research Institute 29 November, 2012  In economic point of view, the production of cereals, pulses and vegetables are profitable at export parity level.

11 Bangladesh Agricultural Research Institute 29 November, 2012 Economic Profitability of Different Crops at Import Parity Level, Source: Shahabuddin, & Dorosh, 2002 PulsesSpicesOilseedsCereals Bangladesh Agricultural Research Institute  Except oilseeds, the production of cereals, pulses and spices are also profitable at import parity level.

12 Bangladesh Agricultural Research Institute Comparative Advantage of Agricultural Commodities 29 November, 2012 Source: Rashid et al.2009 Karim et al Bangladesh Agricultural Research Institute  The values of DRCs for cereal, lentil and vegetables are less than unity.  It implies that BD has comparative advantage in producing these crops for import substitutions and export promotion.

13 Bangladesh Agricultural Research Institute Major findings: 1.The overall impressive growth performances were observed in maize, onion, garlic, potato, pointed gourd, okra, banana and pineapple. 2.Although the GRs of area and production of pulses were negative, but yield GRs were found positive in BD, India and Pakistan due to adoption of improved technologies. 3.The overall GRs of oilseeds were positive in BD and Pakistan, but it was negative for India. The GRs of vegetables, egg and mutton were found inspiring for Bangladesh compared to other two countries. 4.Fisheries sector also performed better both in Bangladesh and Pakistan. Growth Rates of Area, Production and Yield of Different Crops, November, 2012 Bangladesh Agricultural Research Institute

14 29 November, 2012 DIVERSIFICATION IN FOOD CONSUMPTION Bangladesh Agricultural Research Institute

15 Major findings: 1.The highest GR registered in maize availability (36.47%) followed by egg (12.75%), potato (9.77%), and meat (7.38%) during The per capita availability of mango, jackfruit, papaya, pointed gourd, sugar, onion and garlic also registered impressive GRs during that period. 3.The GRs of some vegetables (okra, cabbage, brinjal, cauliflower, bittergourd) were found to be positive that ranged from 2.20% to 5.14%. Growth Rate of Per Capita Food Availability 29 November, 2012 Bangladesh Agricultural Research Institute

16 Major findings: 1.The overall consumption of non-poor people was 24.5% higher than that of poor people. 2.The PCC of livestock products, fruits and fish of non-poor households were much higher (46-87%) than that of poor people. 3.The consumption differences were found less in rice, potato, and vegetables between two groups. Per Capita Consumption of Major Food Items by Poor and Non-poor 29 November, 2012 Bangladesh Agricultural Research Institute

17 Share of Cereal Consumption 29 November, 2012 Bangladesh Agricultural Research Institute  The share of cereal consumption to total food consumption has decreased over the time at rural, urban and national levels.

18 Bangladesh Agricultural Research Institute Share of Calorie Intake (kcal) from Non-cereals 29 November, 2012 Bangladesh Agricultural Research Institute  The share of calorie intake from non- cereal foods has increased over the time at rural, urban and national levels.

19 Bangladesh Agricultural Research Institute 29 November, 2012 DIVERSIFICATION IN AGRICULTURAL PRODUCTION Bangladesh Agricultural Research Institute

20 Trend of Agricultural Diversification in Bangladesh, The overall agricultural diversity is increasing with fluctuating nature. 2.A sharp increase that took place in 2007 which was due to the combined effect of sharp increase in the productions and prices of some vegetables, spices, fruits, and fishes. 29 November, 2012 Bangladesh Agricultural Research Institute

21 ADI of Different Regions ( ) 1.The highest AD took place at Chittagong and Barisal region over the time due to the increase of the productions and prices of some non-cereal commodities. 2.The lowest AD took place at Rangpur and Rajshahi region. Its implying a wide scope for diversifying agriculture through introducing high value crops and non-crop commodity to the existing agricultural farming in future. 29 November, 2012 Bangladesh Agricultural Research Institute

22 Comparative ADI of Bangladesh, India and Pakistan, November, 2012 Bangladesh Agricultural Research Institute  In 2010, the ADI of Pakistan was much higher than BD & India.  The ADI of BD was little bit higher in that period.

23 Determinants of AD at Household Levels 29 November, 2012 Explanatory variablesdy/dxSEz-stat Probability Irrigated land (decimal) ** Land suitability (dummy) Training received (No.) *** Extension linkage (score) *** Family influence (dummy) *** Credit facility (dummy) * Storage facility (dummy) Access to market (km) Dependent variable = Value of ADI (0 to 1) Marginal effect of different variables included in the probit model Bangladesh Agricultural Research Institute

24 Determinants of AD at National Levels 29 November, 2012 GLS regression estimates of variables determining AD at national level VariablesCoefficientsSEz-statProbability Constant *** Wage rate (Tk/day) *** Wage rate squire *** Road density (km) ** Road density squire ** Rainfall (mm) *** Agril. credit disburs. (Lakh Tk) ** Bangladesh Agricultural Research Institute

25 29 November, 2012 DIVERSIFICATION IN AGRICULTURAL TRADE Bangladesh Agricultural Research Institute

26 Net Trade of Major Food Commodities of Total Availability and Production, November, 2012 Crop BangladeshIndiaPakistan % of net trade of AvailabilityProductionAvailabilityProductionAvailabilityProduction Rice Wheat Maize Pulses Oilseeds Spices Vegetables Potato Pineapple Banana Note: +ve sign represents net import and –ve sign represents net export Bangladesh Agricultural Research Institute

27 Share of Non-cereal Commodity Trade to Total Agricultural Trade, November, 2012 Note: +(ve) sign represents net import and –(ve) sign represents net export India Bangladesh Agricultural Research Institute  The share of net import of NCC to TAT has decreased over the years in BD.  But, opposite scenario is found in Pakistan.  India is a net exporter in this case.

28 Bangladesh Agricultural Research Institute Share of Non-cereal Food Trade to Total Food Trade, November, 2012 Note: +(ve) sign represents net import and –(ve) sign represents net export Bangladesh Agricultural Research Institute  In the case of non- cereal food trade to TFT, BD, India and Pakistan are net importers.  But, the shares of net import of NCFC have increased in BD and Pakistan over the time.  India is found to be an exporter during

29 Constraints to agricultural diversification Constraints Respondent (N = 360) % of responses Lack of suitable land/land far away Lack of sufficient capital Scarcity of labour and its higher price Higher cost of production Lack of fair price of the produces Lack of training facility339.2 Infestation of insects and diseases328.9 Higher price of fertilizers308.3 Required higher labour298.1 Lack of HYV seed/seedling/check267.2 Lack of short duration crop143.9 High risk in production (bird flu, etc)143.9 Lack of irrigation facility123.3 Higher price of seed/seedling/feed/cheek/fingerling113.1 Natural calamities (drought, rainfall, storm, fog)61.7 Lack of credit facility51.4 Lack of transport facility51.4 Load shading of electricity November, 2012 Bangladesh Agricultural Research Institute

30 1.The cultivation of agril. commodities are profitable both in financial and economic point of view. But, non-cereal productions are more profitable than cereal production. 2.Maize, potato, pointed gourd, okra, onion, garlic, and mango show impressive growth performance both in area and production during The overall growth performance of maize, oilseeds, vegetables, potato, mango & fish found better in BD compared to India and Pakistan. 3.The share of cereal food consumption has gradually decreased over the time. Again, the share of calorie intake from non-cereal foods has increased at all levels. The PCC of livestock products, fruits and fish of non-poor households was much higher (46-87%) than poor people. 4.Despite expanding food supply, agril. production is not becoming more diversified. The average level of ADI has grown from 52% to 58% over the last 18 years ( ). The average ADI of BD is 39% lower than Pakistan and 9% lower than India. So, there is scope for rapid diversification in Bangladesh. 29 November, 2012 CONCLUSION Bangladesh Agricultural Research Institute

31 5. Labour wage, road density, rainfall and agricultural credit disbursement significantly affect the level of AD at the district level. Besides, Agricultural diversity at the farm level is affected by irrigated land, agricultural training, extension linkage, family influence, and credit facility. 6. Except vegetables, BD is a net importer of most food commodities. With demand for non-cereal foods faster than domestic supply, the balances of agricultural trade and food trade in BD have deteriorated manifolds in the past decades. Pakistan’s scenario is little bit similar to BD, but India’s balance of trade for both agriculture and food are mostly positive. 7. Non-diversified farmers have identified different constraints related to production, marketing and social in diversifying their agriculture. 29 November, 2012 CONCLUSION Bangladesh Agricultural Research Institute

32 1.Development of rural infrastructure 2.Strengthening extension services 3.Facilitating agricultural credit 4.Facilitating crop insurance 5.Formulating price support policy 6.Linkage with international market 7.Development of new technologies 8.Encouraging farm mechanization 9.Assuring quality input supply 29 November, 2012 RECOMMENDATIONS Bangladesh Agricultural Research Institute

33 THANKS 29 November, 2012 Bangladesh Agricultural Research Institute


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