A survey conducted by the Bangladesh Bureau of Statistics (BBS) some time back found that rural households earn more from non-farm activities than what many believe to be the main source of rural income -- agriculture-centric farm activities. This, no doubt, constitutes a shift in the pattern of activities that characterise rural incomes, in so far as farm activities are concerned.
Farm activities typically refer to four main components -- crops, livestock, fisheries and poultry. The non-farm activities, on the other hand, include all economic activities in rural areas except the aforementioned activities. These, broadly speaking, include mostly manual labour-based activities, self-employed subsistence-oriented cottage industries, wage employment in rural business activities, transport operation, construction labour and so on. Physical and human capital-intensive non-farm activities include commercial type rural industries, including agro-processing, shop-keeping, peddling, petty trading etc. Rural non-farm activity is further qualified by any earning activity that the workers participate in within the village, neighbouring villages, growth centres or rural townships while retaining their households in the village.
According to the BBS survey, of the average annual income of the rural population, 22.77 per cent comes from agriculture and 77.23 from the non-agriculture sector. The reasons attributed to this are believed to be the high production cost for agriculture, problems in marketing and storage resulting in lower prices of produces. As a result, farmers do not get returns proportionate to their investment. To cope with the challenges, there is obviously the need for making the marketing and storage system of agricultural products more efficient, while facilitating production by way of increased subsidies in fertiliser and other production tools like making diesel for irrigation affordable. The main difficulties in post-harvest times are triggered by the dearth of appropriate storage facilities-cold storages, for example, in respect of horticulture products like potato. Coupled with it is the well known problem posed by transportation difficulties of the produce to nearby marketing/wholesale hubs, which automatically gives rise to the increasing intervention of intermediaries who manipulate the prices to the misery of the farmers at large.
Now, to say that less earning from farm activities than non-farm activities is a problem may lead to too simplistic, even erroneous, assessment of the situation. Why is non-farm activities more rewarding is a question the policy planners and economists should examine and analyse critically. It need not be mentioned that with the narrowing down of the urban-rural gap, a substantial economic diversification has been taking place in rural areas over the decades. This has been augmented, in large part, by the introduction of technology and access to a myriad range of activities hitherto unknown in rural Bangladesh. Overseas remittance has also a vital role in this regard. While remittance raises the level of non-farm income of many rural households, it also adds to divert the traditional focus from agriculture to non-agricultural engagements.
There are several reasons why promotion of rural non-farm activity can be of great interest to our policy-makers. Evidence shows that non-farm income is an important factor in rural households and indeed in food security, since it allows greater access to food. In the face of credit constraints, non-farm activity affects the performance of agriculture by providing farmers with cash to invest in productivity-enhancing inputs. Besides, the nature and performance of agriculture can have important effects on the dynamism of the non-farm activities to the extent that the latter is directly or indirectly linked to agriculture. Therefore, importance of the non-farm sector is immense in improving the socio-economic status of rural households.
Gainful returns from non-farm activities cannot be less welcome when farm activities increasingly prove unprofitable. While there is the need for further energising the farm sector, especially the agriculture sector, government policies should also be focused to make the host of rural non-farm activities more and more rewarding. This is particularly so, because non-farm activities are entrepreneurship-oriented. In this context, it is important to see both these sectors as complementing each other. With a view to promoting the farm and non-farm sectors alike and strengthening potential linkages between them, there is the need for reforming the institutions responsible for rural development as well as developing activities and projects that would enhance farm and non-farm linkages.
Bangladesh, like many of the developing countries, is currently caught in a phase of fast emerging changes in the ways and means of generating incomes, especially rural incomes. Observers are of the opinion that the country's rural scene is up for experiencing a lot of shifts in finding suitable means of livelihood in the days to come. A careful understanding of the situation will only help the authorities with the right strategies and tools to facilitate the wellbeing of the rural population.