Why agricultural productivity falls

This is the title of the latest book by Rashed Al Mahmud Titumir (RAMT), a Professor at Dhaka University and an old friend. The subject is extremely relevant to Pakistan where agricultural productivity has been declining over the past two decades. An economy that grows its own food and its agriculture provides raw materials to industry and exports can never be as vulnerable as it is now. Generalisations like the end of input-based green revolution of the sixties, the dams-based water availability in the seventies and the poor access to technology afterwards fall short of a serious explanation. RAMT reviews a vast amount of literature to offer a new explanation. Rather than limiting to inputs or factors of production, formal and informal institutions governing transactions, property rights and accumulation have to be brought in to understand failed agricultural transitions. His context is Bangladesh, but the propositions tested by him have wider applicability.

The most interesting analysis relates to the old adage of the inverse relationship between land size and productivity — the familiar basis of land reform — and the challenge to it. Land reform or no reform, the size of landholdings is becoming smaller and smaller over time. Fragmentation of landholdings has occurred at an increasing pace because of demographic factors. Population growth reduces average land size per holder. There is then the succession of land ownership in families, with large holdings becoming smaller and small holdings even smaller. As the already large average family size increases rather than decrease, the size of the holding is also decreasing. Many smallholders are primary tenants on land not owned by them; the shift is not from less to more productive users. Land gives power. Successors, therefore, keep the land and have sharecropping, leasing or a mixed arrangement. “Findings from the field suggest that tenancy is a less productive scenario while farmers who were both tenants and owners, or who shifted from cultivation dominated by tenancy to cultivation on owned land, witnessed increases in productivity.” Remittances from abroad and non-agricultural savings used to buy agricultural land also lead to less productive use of land. In short, fragmentation has reduced the size of landholding, but without a corresponding increase in productivity. As RAMT puts it, “the distribution of landholdings is not changing in the direction of more productive farmers, be they large or small.” In any case, smallholders’ greater productivity is not optimal due to higher unit costs they have to bear for all factors of production. The productivity of smallholders is inadequate for buying additional land. It is the compulsion to survive, not efficiency, that force smallholdings to be more productive. Demographic changes, inheritance in families and climate change are leading to fragmentation. This increases production cost and land loss for smallholders. Landlessness is increasing. But it has more to do with demographic and ecological factors than a capitalist type agrarian transition.

The warning from RAMT is: “the so-called market-enhancing reforms adopted at the behest of international financial institutions and ‘development partners’ have proved unhelpful to direct producers. The weak position and feeble bargaining capacity of the ruling elite vis-à-vis their international partners have not allowed independent and pragmatic policymaking. In a liberalized market, for example, the bargaining power of poor farmers has deteriorated with damaging effects on poverty reduction.” The book contains more than the space here. It is an insightful read for policymakers, researchers and land reform activists.

Why Agricultural Productivity Falls: The Political Economy of Agrarian Transition in Developing Countries by Rashed Al Mahmud Titumir, published by Purdue University Press, West Lafayette, Indiana.

Published in The Express Tribune, May 5^th, 2023.

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