Nobel Laureate Arthur Lewis maintains that developing countries grapple with the problem of unlimited supply of labour. The evolving agricultural practices in Bangladesh apparently defy this postulate.
Facing a wage hike and shortage of labour, they have become increasingly mechanised with the passage of time. The spree of mechanisation has swept almost all kinds of operations - lifting water from underground to tilling the land, to threshing crops. Ploughs no more play a big role. In this article today, we shall take up the issue of irrigation equipment, particularly dominant shallow tube wells (STWs) based on a sample survey of about 400 STWs. We reckon that the findings from the survey, although undertaken few years back, would provide interesting insights on the characteristics of the machines, sources of finance and the socio-economic background of the owners.
It could be observed that, (a) four-fifths of the operating sample equipment were acquired new; average period under operation was about seven years with an expected life span of 15 years; (b) almost all the owners of equipment had farming as main occupation; half of them were illiterate or had education up to primary level; (c) three-fourths of the machines were rented out that indicated development of a growing rental market of irrigation machines in rural areas. This should not sound surprising since two-thirds of farms were below one acre in size and 90 per cent of them operated land under one hectare and thus could not afford to invest in the purchase of machines; (d) the average age of a machine owner was 41 years and the price of the machine was Tk. 20,000 (US$ 256). However, a rough estimate shows that the rate of STWs expansion was 24 per cent per annum during the last two decades, and total amount of investment on account of only STWs in 2012 was about Tk.3.0 billion (US$ 384 million) a year.
About source of financing STWs, three-fourths of the costs of STWS was met from own accumulated savings followed by 12 per cent by loans from non-governmental organisations (NGOs), and mutual support from friends and relatives accounted for 8.0 per cent. Although remittances from members working abroad comprise a major source of income for households, surprisingly, only 2.0 per cent of the cost of machine was shared by such remittances.
Over time, there has been change in the structure of ownership of the machines. Shallow machines are mostly owned by medium and large farmers - accounting for one-tenths of all rural households. For all farm-size groups, only about one-tenths of all rural households reported to have owned a STW in 2000; the share almost doubled in 2014. At disaggregated level, the share of the large land owning (owning 2 ha+) group who own machines rose from 61 to 65 per cent while that of medium farms went up from one-thirds to 40 per cent during 1988 to 2014. It is, however, interesting to note that marginal and small farms (operating up to 0.4 ha or one acre) had also raised their ownership from only 2.0 per cent in 2000 to about 18 per cent in 2014.
Income generated from a STW was estimated to average Tk.50,000 per year (US$ 641) of which two-thirds came as rent received and one-thirds as imputed income for own use. However, total cost of operating a machine stood at Tk.43,076 (US$ 552) per year of which operating cost (fuel, imputed cost of family labour, wage bill for hired labour, electricity etc.) was estimated to be Tk.35,912 or about 85 per cent of the total cost. Fuel accounted for the main operational cost (53 per cent) followed by 35 per cent for labour (imputed 25 per cent; hired 10 per cent). At the end of the year, machine owner took home Tk.7,751 (USD 99) as profit. The estimated benefit-cost ratio stood at 1.18 and the time taken for recovering investment was approximately three years.
The rental arrangements of the machines were more interesting. There was a time when rental arrangements were imposed on the users by the so-called water lords owning Deep Tube wells (DTWs) and Low Lift Pumps (LLPs). In the absence of competitive supplier, the price of water at times was exorbitant, and supply as well as price depended on the whims of the water lords. With the passage of time, the market for equipment turned out to be competitive and STWs accounted for about 90 per cent of all equipment in the field for which several arrangements were available. Historically, crop sharing (surrendering one-fourths of harvest for accessing water) had been the prime mode of payment for irrigation water. But, of late, the system witnessed a sunset with only 12 per cent of the cases reporting crop sharing as main mode of payment. In more than half of the cases, the prevailing arrangement shifted to fixed rental per season (Tk.12,00 per acre or US$ 154/acre). The rent is almost equivalent of crop sharing (Tk.11,500) but the emerging payment pattern (fixed rent) seems to be riskier as the farmer has to bear the loss of output while under crop sharing arrangement, the loss could be shared between the machine owner and the farmer. Again, to see that the risk is not passed on to the machine owner, the cash rent in many cases is collected in advance of the harvest. Recently another arrangement has been gaining ground and it is the renting out service of STWs on hourly basis. The rental charge depends on who pays for the fuel. If the machine owner pays for the fuel, the rent is Tk.12 per hour of operation; it is Tk.7.0 per hour if farmer pays for the fuel. This arrangement especially applies to the cases of supplementary irrigation during pre-monsoon aus/robi crops and monsoon amon season crop. By and large, hourly system was reported by 35 per cent of the cases. The transformation in the mode of payment clearly reflects a transition to market-based system which seems to be relatively more efficient and less costly than earlier modes.
Abdul Bayes is a former Professor of Economics at Jahangirnagar University.
