Determinants of Rice Income and Access

to Land by the Rice Farmers: The Case of

Bangladesh
Kh. A. Mottaleb, T. W. Tsusaka, M. S. Rahman and S. Mohanty
Presented by
Kh. A. Mottaleb
Postdoctoral Fellow-Agricultural Economist
Social Sciences Division
International Rice Research Institute (IRRI)
August 08, 2012
8/15/2012 1
Importance of rice
Contribution of agriculture to GDP:
20.29%
-Rice to GDP: 11%.
cultivated on 75 % of the total
cropland.
93% of the total cereal production
is rice (335 Mt out of 360 Mt)
Total labor force: 54.1 million
-Into agriculture: 25.59 million (47%)
-Into rice: 19.19 million (35%)
93%
3%
4%
Rice
Wheat
Maize
8/15/2012 2
Need to produce more rice!
Demand for rice has
been increasing--
Need to produce
more rice.
Projection is based on IGRM
8/15/2012 3
31.9
38.16
42.84
0 10 20 30 40 50
2010
2020
2035
rice required
rice required
Real Concern
Rapidly shrinking rice farmland
Area: 147,570 km
2 (
Ranked 94
th
in the world )
Population: 149.77 million (ranked 9
th
in the world)
Population per sq.: 1015

0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
1961 1971 1981 1991 2001
per capita Arable land
per capita Arable land
Source: World Development Indicators, 2012
Source: Bangladesh Bureau of Statistics (BBS): HIES 2000, 2005, 2010
0.78
0.9
1.15
0 0.5 1 1.5
2010
2005
2000
cropland
8/15/2012 4
40.7
49.5
54.1
0 10 20 30 40 50 60
1990
2005
2010
labor force
labor force
Source: Labor force survey 1990 and Bangladesh Economic Review 2010.
Change in global climate
23
24
25
26
27
28
29
30
31
32
33
1956 1966 1976 1986 1996 2006
sylhet
Jessore
Bogra
Chittagong
Figure 1: Monthly avg. max Temp (0C) in four stations
Source: Bangladesh Agriculture Research Council, 2012
8/15/2012 5
0
1000
2000
3000
4000
5000
6000
1956 1966 1976 1986 1996 2006
Sylhet
Jessore
Chittagong
Bogra
Figure 2: Yearly total rainfall (mm) in four stations
40
50
60
70
80
90
100
110
1967 1977 1987 1997 2007
Jessore
Chittagong
Bogra
Sylhet
Figure 3: Monthly total average bright sunshine (hours)
8/15/2012 6
South Asia Needs to Produce more Rice
8/15/2012
7
Actual Required
2012 2035
India 94.99 113.22
Nepal 2.97 3.36
Pakistan 2.5 5.5
Sri Lanka 2.8 3.2
Projection is based on IGRM
And per capita arable land is declining too.
8/15/2012 8
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
1960 1970 1980 1990 2000
Bangladesh
India
Nepal
Pakistan
Sri Lanka
Bangladesh
Source: World Development Indicators 2012
Research question-1
8/15/2012 9
How to ensure higher rice production and income of
the farmers from increasingly declining arable land?
Research question-2
How to reduce burden on arable land?
8/15/2012 10
Climate, infrastructure, household
characteristics, physical and human
capital
Access to agriculture land
market (rent in, rent out,
purchase)
Farm income: rice income fishery,
livestock, forestry and agriculture
wage income
Nonfarm income (salary, nonfarm
wage income, business income,
remittance )
A working model on Rice income and Access to Land Market
8/15/2012 11
Research hypotheses
Major hypotheses:
1. As rice income can be adversely affected by climate
change, high rice income can be ensured by
developing and disseminating more climate resilient
rice varieties.
2. Increases in rice, and nonfarm income, on the other
hand enhances access to land to poor farmers and
indirectly reduces pressure on arable land, as rich
farmers tend to adopt the role of managers by
renting out their land.
8/15/2012 12
Materials and Method
GOB: Household Income and Expenditure survey, 2000,
2005, 2010
Two stage stratified random sampling.
Sample size: HIES 2000: 7440, HIES 2005: 10080 HIES 2010:
12200
In this study: 8630 households who were only rice farmers
(rice income>0).
Coverage: Entire Bangladesh: 7 divisions, 64 districts, 384
sub-districts.
Climate data sources:
-unpublished data collected from Bangladesh Metrological
Office, Agargaon, Dhaka.
-Online data from Bangladesh Agriculture Research Council
(BARC).
8/15/2012 13
Demographic characteristics of the sampled
households over the sampled periods
Year 2000 2005 2010
No. of households 2624 3501 2505
Age of the HH head 45.90 47.01 47.61
% Male HH head 96.3 95.7 92.8
HH heads year of
schooling
3.15

3.24

3.08

% Rural HH 92.5 83.1 84.6
No. of family members 5.61 5.28 5.01
Source: BBS, HIES 2000, 2005, 2010. Authors own calculation.
8/15/2012 14
Sources of Income and Income from Rice of the
Sampled Households (BDT 000)
Year 2000 2005 2010
Yearly total income (farm+
nonfarm) 60.78 71.38 137.12
Income from rice % 23.5 21.8 31.8
Non-farm income % 56.7 56.9 40.1
8/15/2012 15
Source: BBS, HIES 2000, 2005, 2010. Authors own calculation.
Farm size and Information on Land Market access by
the Sampled households over the years
Year 2000 2005 2010
Farm size (ha) 1.15 0.90 0.78
% Purchased land 4.23 5.17 5.47
% Rented in land 49.77 50.47 59.32
% Rented out land 20.08 20.82 22.28
8/15/2012 16
Source: BBS, HIES 2000, 2005, 2010. Authors own calculation.
Characteristics of the HH based on their access to land market
Land purchased
Rented in
No Yes No Yes
No. of households 2368 137 1019 1486
Farm size (ha) 0.76 1.24 0.82 0.76
Income from rice 42.14 68.43 45.88 42.01
Non-farm income 31.75 50.68 37.64 29.46
8/15/2012 17
Source: BBS, HIES 2000, 2005, 2010. Authors own calculation.
Characteristics of the HH based on their access to land market
Rented in Rented out
No Yes No Yes
No. of households 1019 1486 1947 558
Farm size (ha) 0.82 0.76 0.73 0.96
Income from rice 45.88 42.01 41.04 52.45
Non-farm income 37.64 29.46 29.88 42.93
Both rice and nonfarm income is positively related with land
purchase
-tively with rent in
+tively with rent out
8/15/2012 18
Source: BBS, HIES 2000, 2005, 2010. Authors own calculation.
Correlation between Rice & nonfarm income with some
climate variables
Rice income Nonfarm income
Rice income 1
Nonfarm income 0.03*** 1
(0.00)
Distance to Dhaka 0.07*** -0.10***
(0.00) (0.00)
Length of metal road -0.03*** 0.05***
(0.00) (0.00)
Monthly avg. max. Temp 0.21*** 0.02
(0.00) (0.14)
Monthly average humidity -0.07*** -0.03***
(0.00) (0.01)
Yearly total rainfall -0.03*** 0.07***
(0.00) (0.00)
8/15/2012 19
Model specification
Y = 1 if purchased land 0 otherwise
Y=1 if rented out land, 0 otherwise
Y=1 if rented in land, 0 otherwise
X is the vector of variables: age, sex, location, dummies for administrative
divisions, and year dummies
Z is the vector of exogenous variables: strictly correlated with income from
rice (RI and nonfarm sector (NFI) and uncorrelated with the error term of
equation (1): climate variables, distance to Dhaka and the length of metal
roads at the district level.
Simple linear probability model is used to estimate the model with clustered
standard errors.
8/15/2012 20
) 3 ( ) 2010 ( ) 2005 ( ) ( ) ( ) (
) 2 ( ) 2010 ( ) 2005 ( ) ( ) ( ) (
) 1 ( ) (
) 2010 ( ) 2005 ( ) ( ) ( ) (
2 1 0
2 1 0
4 3 2 1 0
+ + + + + =
+ + + + + =
+ +
+ + + + + =
it i ti it it
it ti it it
it i ti
ti it it it
dummy Year b dummy Year b X i Z b NFI
dummy Year a dummy Year a i X i Z a RI
X
dummy Year dummy Year i X NFI RI Y
o
e |
u
| | | | |
Determinants of rice and nonfarm income
Rice income Non farm income
Distance from Dhaka to district headquarter

0.02***
(3.00)
-0.08***
(-6.59)
Maximum temperature monthly average

26.68***
(3.12)
-19.31
(-1.27)
Variation in monthly average maximum
temperature in the last 5 years
6.78***
(3.89)
-3.72
(-1.32)
Square of monthly average maximum
temperature
-0.40***
(-2.86)
0.35
(1.53)
Years of schooling of HH head

0.97***
(10.65)
2.61***
(14.75)
Total annual rainfall

-0.14
(-0.04)
0.42
(0.08)
Variation in annual rainfall in the last 5 years

-0.01*
(-1.88)
0.002
(0.44)
No. of observations 8630 8630
First stage F 43.89 18.98
8/15/2012 21
2SLS-Determinants of land market participation
Land purchased
(yes=1)
Land rented
in (yes=1)
Land rented
out (yes=1)
Rice income

0.002*
(1.79)
-0.01*
(-1.86)
0.01***
(3.45)
Nonfarm income

0.001*
(1.66)
-0.01***
(-6.38)
0.005***
(4.73)
Distance from Dhaka to district
headquarter
0.0001
(1.51)
-0.001***
(-4.30)
0.0002
(1.15)
Maximum temperature monthly average

-0.29***
(-3.75)
-0.19
(-0.85)
-0.13
(-0.73)
Variation in monthly average maximum
temperature in the last 5 years
0.01
(0.52)
-0.004
(-0.09)
-0.04
(-1.37)
Square of monthly average maximum
temperature
0.004***
(3.92)
0.004
(1.19)
0.001
(0.54)
Hansen J statistic
4.99 3.92 2.95
Chi-sq(6) P-val
0.54 0.69 0.82
8/15/2012 22
Major findings
Change in global climate may affect rice income negatively
and significantly.
Years of schooling of the HH head significantly and positively
determine both rice and nonfarm incomes.
Increase in rice and nonfarm incomes allows farmers to take
managerial roles by rent out their land.
8/15/2012 23
Policy implications
To reduce burden on farmland, both rice and nonfarm
income should be increased. It can be done through
the development and dissemination of more climate
resilient rice varieties.
Expansion of general education can play important
roles.
The provision of training can be an alternative.
Intervention by the government with the help of
International donor agencies.
Short term/medium term
8/15/2012 24
Policy implications
Climate resilient rice varieties should be combined
with super high yielding traits (may be C4 rice) to
break the yield ceiling.
It can ensure more production/income even from
small parcels of land -> even under volatile climate -
>reduce extra burden on land.
Long term
8/15/2012 25
Thank You
8/15/2012 26