Reevaluating agriculture sector and need for an agriculture commission

One of the major obstacles to increasing agricultural production in Bangladesh is the limited availability of arable land. Currently, the per capita availability of agricultural land is only 0.11 acres. The total number of agricultural farms is 16,881,757. Of these, 91.70 percent are small and marginal farmers who collectively control 69 percent of the total agricultural land. The remaining 8.3 percent are medium and large-scale farmers who cultivate 31 percent of the land.

In recent years, the number of medium and large farmers has been declining, while the number of small farmers has been increasing. This trend has had a negative impact on overall crop production. According to the latest Agricultural Census (2018–19), the number of farms increased by 11.19 percent in 2019 compared to the 2008 census. However, land under the control of large farms decreased by 46.18 percent, while land held by medium farms declined by 36.06 percent. Conversely, small farms have taken control of 32.24 percent more land.

These small farms typically operate at a subsistence level and do not generate significant marketable surplus. They are less interested in using modern agricultural inputs or investing in land improvement. Their access to institutional credit and agricultural machinery is limited, resulting in lower productivity per unit of land. On the other hand, medium and large farmers are gradually losing interest in cultivation due to rising production costs. They are becoming disillusioned and reducing their investment in farming, leading to stagnation in their production.

The agricultural marketing system is also not favorable to farmers. It is controlled by large traders, millers, and syndicates organized by them. These groups determine the prices of agricultural products in the market, to the detriment of both producers and consumers. There is a significant gap between the farm-gate prices received by farmers and the retail prices paid by consumers. Middlemen exploit this gap by processing, adding value to, and storing the produce to sell it at inflated prices, thus reaping the profits.

For example, the high price of rice is illustrative. During the harvesting season, traders buy paddy from farmers at low prices, convert it to rice, store it in warehouses, and later sell it in the market at much higher prices. A study shows that Bangladeshi farmers receive the lowest prices for their crops compared to neighboring countries. Due to the dominance of middlemen, farmers are deprived of 71 percent of the consumer price of rice, while millers benefit the most. These millers are a powerful and well-organized group. Government intervention has limited impact in this regard, mainly because the government lacks sufficient capacity to store food grains. In contrast, traders and millers have much greater storage capacity, allowing them to dominate the market.

Currently, the government's food grain storage capacity in Bangladesh is only 2.2 million (22 lakh) tons. In contrast, traders and both small- and large-scale millers have a combined storage capacity of around 10 million (1 crore) tons. Moreover, millers also dominate the government’s procurement process of paddy and rice. They are the ones who mostly benefit from supplying rice to the government. There is little emphasis on purchasing paddy directly from farmers. In recent years, the government has failed to meet even a quarter of the paddy procurement target it sets during the harvesting season. As a result, farmers are deprived of the opportunity to sell their paddy at government-fixed prices. Left with no choice, they are often forced to sell to millers at much lower prices — sometimes not even enough to cover their production costs.

This situation is not limited to paddy and rice. Farmers are also deprived of fair prices for other crops. This year, the prices of potatoes and vegetables have collapsed, causing severe losses for producers. After incurring high expenses for land preparation, labor, seeds, fertilizers, pesticides, and irrigation, many farmers have been left financially devastated. With major losses in agricultural production, some have even been pushed to the brink of ruin.

Bangladesh is often described as self-sufficient in food, but this claim holds little weight. Every year, the country imports a substantial quantity of food grains and other agricultural products. For food grains alone, the annual import volume is around 7 to 8 million tons. Additionally, we are heavily dependent on imports for oil, pulses, onions, and other spices. On average, Bangladesh spends around $5 billion annually on agricultural imports.

The domestic agricultural market in Bangladesh is worth approximately $10 billion. When imports are added, the total market size expands to about $15 billion — of which one-third depends on imports. To reduce this external dependency, internal agricultural production must be increased. This requires adopting modern technology through research and ensuring its rapid dissemination. Investment in agriculture must be increased, and in some cases, subsidies should be expanded to reduce production costs for farmers. Institutional credit access for farmers also needs to be ensured to support their continued engagement in agriculture.

The global agriculture sector is currently going through a critical period. One of the main reasons for this crisis is the ongoing conflicts over the past few years—initially the Russia-Ukraine war and more recently Israel's aggression in Gaza. These conflicts have disrupted supply chains and reduced production. Oil prices have surged, leading to increased inflation. Before that, during the COVID-19 pandemic, food grain production declined significantly. The pandemic disrupted supply systems, and the subsequent wars further hampered food transportation and distribution. As a result, global food prices have risen.

In the past two years, global warming has also intensified. Notably, in 2023, the global temperature rose to 1.48°C above pre-industrial levels, and in 2024 it crossed the 1.5°C threshold. This rapid rise in temperature has severely affected agriculture, including the production of rice and wheat, due to extreme heat and drought. On the other hand, excessive rainfall and flooding have also damaged crops. As a result, the world is currently facing one of the worst food crises and supply shortages in recent times. The average growth rate of food production is declining, which is contributing to the rise in food prices.

Bangladesh has also been affected by these global developments. At the beginning of 2024, the country experienced drought, followed by floods. In some areas, there was excessive rainfall and waterlogging. Agriculture suffered greatly. Then came Cyclone Remal, which further worsened the situation. With multiple natural disasters striking in quick succession, food production fell sharply.

Under such circumstances, the country needed to import large quantities of food. However, due to the ongoing dollar crisis, necessary imports could not be made. Opening Letters of Credit (LCs) became difficult, and the local currency depreciated. These factors further pushed up the prices of food grains. While food imports had been increasing in the years prior, they declined over the past two years—not because domestic production had significantly increased, but due to constraints like the dollar shortage and other financial challenges. This led to a supply crisis. As a result, the prices of essentials, including rice, have gone up sharply.

On one hand, we are unable to produce enough agricultural and other essential goods to meet demand; on the other hand, we have also been unable to import them. This has led to a rise in inflation. In November of last year, food inflation reached 13.8% — the highest in a decade. Although it slightly declined in December, it remained close to 13%. By February, it came down to 9.24%, which is still very high. In such a situation, boosting production in the agricultural sector has become critically important. Given the global instability, Bangladesh’s financial crisis, and high inflation, there is no alternative to increasing agricultural output. Without it, food inflation cannot be contained.

Agricultural production is facing numerous challenges. A comprehensive evaluation of these issues is necessary. Following recent political changes in the country, a new government has been formed under the leadership of Professor Dr. Muhammad Yunus. To assist the new administration in addressing the current crisis, a full review of the agricultural sector is essential. We must assess where we currently stand in agriculture. For that, an Agricultural Commission is needed.

This commission should present a detailed review of the current agricultural system and, in light of the present situation, provide a thorough analysis backed by data and evidence. Based on that, it should recommend short-, medium-, and long-term strategies to ensure sustainable agricultural development. The new interim government has already formed 11 commissions. These were necessary steps. A few of them have already submitted their reports, including some crucial recommendations.

Agriculture is the largest and most vital sector of production. In fact, when we speak of the productive sector, we primarily refer to agriculture. Historically, agriculture has always been identified as the key productive sector. Other sectors—such as industry, services, and manufacturing—are essentially complementary. Industries rely on agriculture for raw materials, and our food security is entirely dependent on it. It is now evident that, like in the past, relying on foreign sources cannot ensure food security for the country. Therefore, agricultural production must be increased.

At present, agricultural output appears to have stagnated to some extent. A similar trend of underestimating agriculture was observed in the early 1970s and 1980s. Later, in 1988–89, with the support of the United Nations, a comprehensive review of the agriculture sector was conducted, which was published in two volumes. This review shed light on all sub-sectors, including crops, livestock, fisheries, forestry, and mechanization. Agriculture was examined holistically, with in-depth analysis and specific recommendations.

In the 1990s, when Professor Rehman Sobhan served as an advisor to the Planning Commission, several task forces were formed. Their findings were published by UPL (University Press Limited) in four volumes, one of which focused on agriculture. However, since the 1990s, no thorough review of the agricultural sector has been undertaken—for nearly 34 years. A comprehensive and in-depth analysis is urgently needed.

We are more or less aware of the existing problems in the agricultural sector. There was a time when we heavily relied on the crop sub-sector. Around 80% of the Gross Domestic Product (GDP) used to come from crops alone. Over time, we have somewhat moved away from that dependency. At present, approximately 50% of agricultural GDP comes from crops, while the remaining 50% comes from livestock, fisheries, and forestry. However, the pace of this transition has been very slow.

We have prioritized rice production far more than other crops. Currently, about 72% of arable land is used for rice cultivation. We have more or less achieved self-sufficiency in rice. When production is good, there’s no need to import. In the fiscal year 2023–24, total rice production stood at around 40.5 million metric tons, which meant no imports were necessary. However, in 2024–25, due to droughts, floods, and cyclones, production has significantly dropped. As a result, we are once again compelled to import food grains—at least 1 million metric tons this year. We also have to import large quantities of other crops, such as pulses, spices, and oilseeds. We must break away from this trend and adopt an import substitution policy.

Farmland in Bangladesh is shrinking. A comprehensive agricultural census was conducted in 1984. According to the most recent agricultural census of 2018–19, agricultural land has been decreasing at an average annual rate of 0.58% over the last 35 years. With land disappearing at this rate, we must ask ourselves: what can be done?
There is a law that prohibits the use of double- and triple-crop agricultural land for non-agricultural purposes, but it is rarely enforced. We need to rethink our rural development and housing patterns in a way that protects agricultural land. Preserving farmland is crucial to ensuring uninterrupted future production.

Bangladesh is one of the poorest countries in the world, and yet we rank among the highest globally in food waste. Each person in Bangladesh wastes about 82 kg of food per year—more than in the United States, the United Kingdom, Russia, or India. This is mainly due to our significant shortcomings in food processing, grading, transportation, and storage. There is also a lack of scientific and technical knowledge in these areas.

Bangladesh has an abundant supply of agricultural labor, but there is a significant lack of modern inputs for production. At one time, it was believed that the country had ample gas reserves, which would make fertilizer production feasible. Several factories were established, and the domestic production of urea was quite promising—covering 70–80% of national demand. Over time, however, this production has declined, and reliance on imports has increased. Currently, only about 20% of the required urea is produced domestically; the rest is imported. However, due to various global factors, fertilizers are no longer readily available in international markets, making foreign dependency increasingly difficult. Therefore, domestic fertilizer production must be increased by all means. Closed factories need to be reopened, and self-reliance must be achieved in other agricultural inputs as well.

We are almost entirely dependent on foreign sources for mechanization, even though agricultural machinery could be manufactured jointly within the country. Every year, we import 3.5 to 4 million tons of pesticides. We know the ingredients required to produce pesticides, so it is quite possible to import the raw materials and manufacture them domestically.

Currently, nearly one-fourth of the irrigation equipment in use is non-functional. About 30–35% of these machines are electric-powered, while the rest run on diesel. With the rising cost of electricity and diesel, production costs have also increased. In this context, the use of solar energy could have been a highly cost-effective solution. These issues demand serious consideration.

Compared to many other countries, agricultural subsidies in Bangladesh are relatively low. Although we have been providing subsidies for years, and still do, 92% of our farmers are smallholders who cannot afford necessary investments. In China, each farmer receives a subsidy of $159, whereas in Bangladesh, it is only about $7.8—an extremely low amount.

Financing is a major challenge in the agricultural sector. Poor farmers need financial support. In recent years, agricultural loans have grown at an average rate of 7–8% annually. However, despite this growth over the past 15–20 years, more than 40% of farmers in Bangladesh still do not have access to institutional credit. The bulk of the funds are being absorbed by wealthier individuals. These issues must be identified and addressed through in-depth analysis of the agricultural sector.

Government statistics on agricultural production in Bangladesh are often unreliable. From food grain production to data on per capita consumption of fish and meat, much of the information lacks accuracy and objectivity. This year, due to floods and other natural disasters, at least one-fourth of the Aus crop was damaged. Aman production also suffered significantly. Compared to the target, Aman was cultivated on 300,000 fewer hectares of land. In many areas, farmers had to replant Aman two or even three times. Due to delayed planting, overall yields declined.

Despite this, the Department of Agricultural Extension (DAE) reported that Aman production reached around 17.1 million tons. Given the current market situation, it seems unlikely that this much rice was actually produced. If production were truly that high, rice prices wouldn’t be soaring the way they are. Similarly, the official figures for potato, onion, eggs, milk, and meat production often don't match the ground reality. There is also a lack of accurate statistics regarding the consumption demand of various commodities. The methodology used in compiling data on production and consumption needs to be scrutinized thoroughly. A systemic reform is required to ensure more accurate and credible agricultural statistics.

The stagnation in agricultural production, coupled with heavy reliance on imports, is a cause for concern. Additionally, farmers often do not receive fair prices for their produce, leading to a decline in motivation to continue farming. The erosion of agricultural land ownership and the increasing number of small and marginal farmers are further barriers to commercial farming. Dependence on foreign sources for agricultural inputs is another major concern.

Our agricultural system is undergoing continuous transformation. To keep pace with these changes, we urgently need updated and comprehensive data. For this, an Agriculture Commission must be formed. This commission should provide well-researched recommendations that the current government can begin implementing, while the remainder can be carried out by the next elected government. If the current interim government can initiate a thorough review of the agricultural sector, it would be a highly valuable contribution to the country's future.

Dr. Jahangir Alam: Director, Dhaka School of Economics and Former Vice-Chancellor, University of Global Village