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Rice Article: Bangladesh  

Beneath the Surface
The value of markets for villages

By Abdul Bayes
Daily Star News, February 5, 2003

Some few years back, I read a book on a particular village, called Palanpur, Northern India. There are perhaps very few economists who had not heard about that book, even if they had not read it. After having read that book, I thought, a village is always 'a village' and suspicion could certainly loom large on the applicability of its findings on other villages, even inside India. Such a suspicion can hardly be unexpected from a mediocre graduate in economics who read and heard a lot about represetativeness of observations, the economics and the statistics of census and sampling.

A village again

"Have you read the book, A Rice Village Saga by Yujiro Hyami and Masao Kikuchi?", - my host Mahabub Hossain stared at me and asked. Lest he develops a discussion on the book and I put myself into trouble I said, " No, not so far" and adding of course, " but surely would love to go through if I get a copy of it". Then after few days, A Rice Village Saga -- Three Decades of Green Revolution in the Philippines came to my collection by the courteous cooperation of my constant friend in a foreign land -- Manik Lal Bose.

The village is named East Laguna -- about 25-30 km from the International Rice Research Institute (IRRI). When Yujiro Hyami served IRRI back in 1970s, he was looking for a "typical rice village": modest in size, clearly demarcated from other villages, not exposed too much to urban activities and within a distance from IRRI of not more than two hours so that constant vigilance could be ensured. After whirlwind trips hither and thither, he picked it up as observatory. (Dr Mahabub Hossain told me that the Social Sciences Division of IRRI still continues to monitor the village). To clear the fog that might follow the objectives of the study, the authors of the book said: "The aim was not to add to debates on the economic and social consequences on green revolution but to give a microscopic view of process by which agricultural production systems, village community institutions and rural people's economic well-being change under the pressure of modernizing forces".

And the methodology adopted for the study was quite in tune with expectations of modern day concept of queries. It was based on household surveys -- with structured questionnaires, that economists and statisticians love to lean on, and conducted through eleven times during last three decades between 1966-1997. At the same time, close personal observations and interactions with villagers -- akin to the approach of anthropologists and sociologists -- were on board to understand the role of community institutions and norms that govern economic activities in the rural sector of third world.

Beneath the surface

Reportedly, East Laguna village is as dormant to day under the shade of coconut trees as it was during the time of the first visit in the 1970s. Beneath the surface, however, its economic and social structure underwent radical changes. Besides the dramatic diffusion of modern rice technology in the village, major forces that caused economic and social changes are: (i) continued population pressure on land resources; (ii) implementation of land reform programmes; (iii) public investment in infrastructure such as irrigation, schools and roads and (iv) growing urban influences accelerated by growing improvements in transportation and communication system.

The village was first settled in the 1880s. In a marshy low land area adjacent to Laguna de Bay initial settlers cleared the land and practiced rainfed rice monoculture under sharecropping contracts with landlords -- about two thirds as absentee -- who lived in local towns. Rice was the main source of income due to their specialization and the absence of opportunities to grow other crops in marshy land. Villagers were in market transactions since a long time -- because of colonial Philippine banking on primary exports -- virtually with no cottage industries, and few non-farm opportunities available. "Villagers were poor as they had to give half of their rice output to the landlords, but they were a largely homogenous group, with no significant class differentiation within the village".

As the adage goes, necessity is the mother of invention, so was the reality with East Laguna village. Population growth imparted the most fundamental and sustained force to implement changes in such a community structure. In this village, the opportunity to clear new lands was closed in the late 1950s but the population grew at more than 3 per cent per annum. The immigration of people from the upland villages in surrounding hills and mountains added to the augmentation of the high natural increase. Ipso facto, per capita availability of land declined drastically -- roughly from a quarter of a hectare to one-tenth -- and thus rapidly dashing on the ground all hopes for immigrants and locals to acquire land to establish themselves as farmers. " Thus a class segmentation between farm operators and agricultural laborers began to emerge in the hitherto homogeneous village community".

Meantime, however, some exogenous developments pinned hopes on the horizon. The extension national of irrigation system to this village in 1958 enabled conversion of rainfed single-cropping to irrigated double-cropping. Added to this was the advent of modern rice varieties and along with it, increased fertilizer application between 1960s and early 1980s. It should be mentioned here that East Laguna was the first village in tropical Asia to complete adoption of modern variety in rice, IR8.

Summary of success

While it is not possible to put in the pros and the cons of the gains -- given short space and time -- we shall attempt to highlight a few. First, adoption of modern rice technology initially increased farm employment with higher employment output elasticity due to its labor absorptive nature. Later, as tenant farmers became affluent and their children received education and subsequently traveled to towns for seeking more skilful jobs, hired labor was substituted for family labor. In this way, the disproportionate gain at the early stage of the green revolution spilled over to agricultural laborers. Again, non-farm employment shot up following construction of roads and highways where agricultural laborers' income went up. Third, the construction of the road linking Laguna with nearby markets provided access to hitherto closed village an access. It lower transaction costs. Farm prices were up, input prices were down. Fourth, with communication development, subcontracting arrangements from exporters in Manila or some other places came to the village. Some rural industries also came up. Fifth, the land reform that gave land to the tenants created inequality among peasants with agricultural laborers hurt. And finally, remittances constituted an important source of household income. By and large, a village where only rice crop activity was the only source of income, witnessed a fall in income form rice related activities.

The income of agricultural labor households increased slightly faster than that of large farmers, although substantially lower than small farmers during the two decades, 1974/76 to 1995/96. Population under poverty line decreased from 68 per cent in 1974 to 56 percent by 1995. The income from non-farm origin where the share of self-employment income was lower increased much faster than that of non-farm origin.

Meaningful markets

To the authors, the market has proven to be the best mechanism of trickling down significantly the benefits of urban-based economic development. "However, it must be clearly recognized that this trickling down mechanism was critically supported by investment in public infrastructure such as roads and schools which increased villagers' opportunity to access the market and their ability to exploit the opportunity. Throughout our long association with East Laguna, we are convinced of the villagers' capacity in handling the market so as to make major advancements in their well being if such infrastructure support are provided adequately".

"From Thomas More's Utopia to Russian Narodniks and US populists in nineteenth century, and further to the recent "moral economy school", a popular belief has repeatedly been asserted, that is the encroachment of market into traditional agricultural communities tends to result in greater inequality and misery among rural poor. Such a view does not seem to find support in the history of East Laguna village over the past several decades, however. Instead, the experience of East Laguna village since 1960s suggests strongly that the misery of the poor would have been magnified further by rapid population growth with closed land frontiers, if the village had continued to rely on traditional agriculture in isolation from urban market activities"

Main messages

Rice is the source of richness of the Asian rural households -- both in terms of income and energy intake. Rice is, however, not the only source of survival. It is rather a starter -- so to say -- of the engine that must be fueled by other developments.

Introduction of modern technology in rice production per se does not ensure the sustainability of the system. However, infrastructure like roads, highways, electricity and telecommunication could dent into the system to make the difference. Especially, electricity could contribute the most. For example, when electricity was first extended to East Laguna village in 1973, immediately, electric bulbs replaced kerosene lamps; televisions became the focus of entertainment in place of transistor radios etc. Electricity provided longer hours to read and write as well as the access to the image of urban lifestyles and urban needs and thus educating the people. " An older villager mischievously said to us that electric light reduced the population growth rate as it cut down young couple's time in bed. His remarks might contain a germ of truth, since the birth rate in the village began to decline rather sharply from the mid-1970s". All of these developments over time integrated East Laguna with the centre and the integration was so induced that there was hardly any difference between the movements of agricultural and non-agricultural wages.

Second, markets matter most for villages. Markets might be imperfect, but indispensable.

Rural people always rely on markets for livelihoods -- either in factor or in product markets. Imperfect markets are pro-rich whereas the perfect markets are pro-poor. The "missing-markets" could be the cause of grave miseries unless manned by proper rules and regulations.

Third, land reforms that redistribute lands to tenants could hurt both landlords as well as landless agricultural labourers. This happens when tenancy market assumes thinness following the flight of the absentee landlords and the emergence of tenant turned owners who leave little to the tenancy.

Fourth, public investments on physical and social infrastructure crowd in private investments. All that happened in Laguna is public sector investment on irrigation, electricity, roads and highways, schools and hospitals. The thrusts spearheaded a lot of linkages both forward and backward. These developments paved ways for the residents to reduce the risks from investment. It also enabled Laguna to be linked to a number of sub-contracting arrangements in industrial pursuits.

Finally, whether it is Palanpur in India or East Laguna in the Philippines or for that matter Darika Kandi of Bogra, Bangladesh, the message is same. Modern technology, institutions and markets interact with each other where technology seats on the cockpit.

Pain and postscript

I was returning to my dormitory leaving the experimental green plots of agricultural lands behind. The sun was setting on the ridge of mountain and a question came up to my mind: Can't a Bangladesh village become a book that sees three decades of green revolution? Well, man proposes and God disposes.

Abdul Bayes is professor of economics, Jahangirnagar University

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