Agricultural employment: The next five years
Dr. M. Asaduzzaman


I still remember having read an article in the Journal of Economic History which described how in the I 930s somewhere in Rangpur farmers burnt down the jute-laden carts because the prices offered to them had been too low. If similar things happen now, all that we say here will remain only academic exercises by a privileged few without much impact on the lives of the peasants and labourers,
writes Dr M Asaduzzaman

Here is an exercise on agricultural employment and its prospects over the next five years. It is difficult to deal with a slice of time in this manner as whatever we do or do not do today affects agriculture beyond these five years. Accordingly, I shall raise certain issues which need to be seriously considered if we want agriculture to remain a major employer of labourers as well as a key sector in determining the pace of growth in the country.

What would be the situation of agricultural employment in the next five years or thereafter depends on a host of factors. Some of these affect employment directly while others do so indirectly. Yet some times the indirect factors may be much stronger in their impacts than the direct ones. Having said this, it should be kept in mind that as in most cases there are both demand and supply side factors in understanding changes to agricultural employment.

Supply side factors
Two supply side factors are important: first, the rate of growth of population and secondly, the rate of out migration from rural areas. It may be remembered that the new entrants into the labour force between now and the next five years are likely to have been born since the late nineteen eighties when there had been a very substantial deceleration in the rate of growth of population. So, it is likely that the rate of growth of supply of labour fore in the rural areas is likely to fall or at least slow down over what had been the case a decade or so earlier.

What had been the rate of rural-urban out migration in recent years is not exactly known but there appears to be no clear indication that it has registered a rise. If so, on the whole the supply of new labour into the rural areas is likely to be slower than previously which means that the need for finding employment of lower number of people than might have been the case had these rates been higher.

Demand side factors
The demand side factors are far more complex. Note first that the demand for labour is a derived demand. Labour is employed because any production activity would need some human inputs. Thus, if everything else remains the same, if output grows, so will employment. The question is therefore how far can output grow? The first layer of complexity begins here. Agricultural output is in fact an aggregate of output of at least four separate sub-sectors, viz. crop, livestock and poultry, fisheries and forestry, each with its own peculiarities. The growth in output of agriculture is an aggregate of the output growth in all these four sub-sectors. Second question is how output may grow and if it does, in which sub-sector.

To answer the first question we refer to the PRSP prepared by the Planning Commission. The report correctly stresses the importance of raising the growth rate. However, if the overall growth rate is to be high, the sub-sectors of agriculture also will have to grow at high rates. If, for example, by 2015 the rate of growth of GDP becomes 8% per annum, agriculture has to grow at rates between 4 and 4.5% or so for this to happen, the present rates of growth in each of the sub-sectors have to improve. Crops, for sextuple, has to grow at one percentage point more than that at present. Similarly, the rate of growth for livestock products has to rise by at least 50%. These are very tall orders. Only technological change can make this happen. Indeed, I have shown elsewhere that if there is neutral technological change between I - 1.5% per year, i.e., the same input combinations produce 1-1.5% more gross output each year compared to the preceding year, the desired rates of growth of value added in agriculture is theoretically possible. The rate of technological progress is almost within our historical experience. Even then, it seems that some of the sub-sectors, such as fisheries, may reach a limit of its capacity to grow while growth in crop cultivation may be constrained by both environmental factors and the absorptive capacity of the economy. Hence unless these factors are given attention to, sustained rise in employment generation may not be possible beyond at most a decade.

The technological change that has been considered here is factor-neutral i.e., the productivity of all inputs rise proportionately. What had been the experience in recent years in the country? There had been very substantial mechanisation in the country. Mechanically irrigated land has risen from nearly 2.4 mn ha in 1990/91 to around 4.2 mn ha by 2002/03, i.e., on an average by 4.6% per annum. The positive impact of irrigation on output, income and employment is well-documented and need no elaboration here. Over years, however, other types of mechanisation have taken place. The power tillers now have become a part of the general rural scene. Historically such mechanisation had been associated with labour displacement in many countries.

In 1996, there were an estimated 150 thousand power tillers and tractors. By end of 2005, the number has grown to just short of 700 thousand. This is an explosive growth. Most interestingly, marginal and small farmers (operating up to 2.5 acres of land) own 69% of these machines. Large farmers operating more than 7.5 acres of land own only 6% of them. These figures of ownership may seem surprising at first. But it may be noted that among marginal and small the tendency to rent the machines out to other farms is very strong. Thus on an average a power tiller owned by a small farmer is likely to be used by about 10 households. For large farmers, such machines are rented out to at most one more farmer.

What does such large-scale diffusion of mechanised tillage mean in terms of labour employment? Note that the tillage machines are just that. These are used for tillage, not for any other farming operation. Bulk of the labour employed in agriculture is used for harvesting output. Hence such large-scale use of tillage equipments is unlikely to put a dent into the employability of labour. Indeed, quite a few years back I argued that such equipments help in breaking the time barrier in cultivation of land and helps raise an extra crop and thus will have net positive impact on labour employment even if some labour is displaced in ploughing operations.

I have in one of my recent research shown that when the effects of other variables are held constant, farmers using mechanised tillage and mechanised irrigation achieve nearly 33% more output than those using bullock tillage and little or manual irrigation. That means technology is no barrier to higher output and consequently higher employment. What is more, the differences in productivity are much larger in case of larger farms switching from low to high technology regime. The productivity differences vary from 6% for the smallest to 46% for the largest farms. As larger farms employ on the whole more of hired labour, technological change, even if it deepens the use of capital, the employment of hired labour is likely to grow in such a situation. In agriculture, capital deepening in Bangladesh is not something to be afraid of, at least not yet.

I have earlier pointed to environmental constraints to growth in agriculture. This is continuing unabated. Recent and past fertiliser crises have probably made the problems much worse as farmers have been forced to use fertiliser probably in unbalanced doses or not at all. In any case, the losses due to land degradation are substantial and we may1 be losing up to 3% of crop output every year. That means we are losing the consequent employment.

Two more points need to be thought about in understanding the agricultural employment situation and its prospects. The first relates to its seasonality and the second to its spatial aspect. Aus (which originated from the word ashu or immediate and which is harvested quickly in between major crops to fill up the period of deficit in the harvest cycle) has more or less vanished from the scene except for jute and to an extent sugarcane. That means that the labour employment is now concentrated at the anzan and boro harvest periods. Boro being the period when boro paddy and a lot of other rabi crops are grown, there may be acute shortages of labour as various anecdotal evidence suggest including inter-district migration and arrangements for entertainments of labour. Previously new safety measures were suggested for dry-period lack of employment. The situation is now different. It is wet-period lack of jobs which needs to be given more policy attention.

There is also the spatial aspect of labour part of which is manifested in the migration of labour. But more importantly, this means a lack of diversification in many areas in some areas such as Meghna flood plain where two-thirds of farmers cultivate only rice.

Interestingly such proportions are the lowest in the North-west where only 28% of farmers are found to be monoculturists. What these mean is that the employment prospects may be also finely balanced in some areas. In such a situation, any major shock to the system, natural or man-made, can lead to major disasters in terms of losses to output and employment. We know little about the reasons for lack of diversification despite long-term policy goals towards it. We do not know if it is lack of knowledge inertia or problem of profitability, or what? But the fact remains that unless crop diversification takes place, it is very difficult to ensure stability of employment.

Diversification means that new crops and new non-crop farm activities are coming up and shall continue to come up. New does not necessarily mean new to Bangladesh, but new to the area or the ecological setting. And, in many such cases, these are high-value activities and the products are often perishables. Given this and the other issues discussed earlier, how far the country will be able to reap the benefits of growth and create additional employment shall depend on the appropriate policies related to technology expansion and various support to agriculture such as marketing and extension and maintenance of soil health; and the sooner the better. Particularly, marketing is one issue which should receive serious consideration because if farmers begin to cultivate high-value crops and other non-crop high-value products but cannot sell them and get remunerative prices and incurs losses they may not venture into such areas of enterprise any more. I still remember having read an article in the Journal of Economic History which described how in the I 930s somewhere in Rangpur farmers burnt down the jute-laden carts because the prices offered to them had been too low. If similar things happen now, all that we say here will remain only academic exercises by a privileged few without much impact on the lives of the peasants and labourers.
The writer is Research Director, BIDS