Land is the most important asset for a rural household and, more often than not, availability of land is linked with living standard. But beside land, livestock is another asset in rural Bangladesh which is not only a major source of livelihoods but also helps cope with crisis. There was a time when the size of the cattle-sheds and the number of livestock used to indicate the level of solvency of rural households. It was assumed that the owners of more livestock assets are the solvent households or families in a village and a lack of it implied poverty.
But available evidences now provide us with a different picture. Nowadays, the proportions of poor households in rearing livestock, goats and poultry birds increased and increased in tandem with the rich. Currently, rural households have, on an average, 2.7 livestock, 2.4 goat/sheep and 2.7 poultry birds. Seemingly, the earlier enthusiasm on the part of the rural rich in rearing animals dissipated to some extent presumably with growing costs of rearing animals due to the scarcity of fodder and increase in the prices of livestock feed. Large and medium farmers have taken resort to agricultural mechanisation and are rearing mostly dairy animals for the supply of milk for the family members.
On the other hand, a larger proportion of small and marginal farm households have been rearing cattle in one or two units based on feed available within the homestead. The ownership of the cattle is financed with loans obtained from micro-finance organisations. It is reported that nearly 40 per cent of the micro-credit is used for livestock and poultry raising.
Rearing of goats is another kind of asset accumulation. In times of crisis, poor households can sell their goats to maintain livelihoods. Over time, the incidence of rearing of goats has increased. If we consider the total value of livestock, we observe that rural households have increased their assets from US$ 247 in 2000 to US$ 427 in 2008 and poor households have increased such assets from $176 to $341 over the same period of time. In the distant past, these poor households fell behind in accumulation of such assets but now, happily, they have moved ahead in this respect. Income from livestock and poultry, for example, increased from $51 to $76 for all households and particularly for the poor, it rose from $34 to $59 between 2000 and 2008. That means poor households can benefit from accessing credit even at a rate of 30-40 per cent per annum.
Rrural people also depend on some non-land fixed assets to eke out their livings. These assets constitute an important component of their capital stock to generate current income. These include power tiller, shallow tube-well, threshing machine, rickshaw van, and so on. Non-land fixed assets emerge as one of the significant determinants of household income.
Noticeably, 8 in every 100 households in rural areas have their own irrigation equipment - mostly shallow tube-wells and power pumps. This compares with about 6 out of 100 households owning such assets in 2000, and 3 out of 100 in 1988. Assuming that the total number of agricultural farms in Bangladesh is 14.5 million, roughly 1.2 million households are now owners of such equipment. Notably, the price of irrigation equipment has fallen to US $161 in 2008 from US$ 179 in 2000 and $729 in 1988. We argue that the import liberalisation policy of the late 1980s played a vital role in the expansion of ownership of irrigation machines over time. Households owning bullock-cart is on the wane. The average value of capital owned by sample households rose from US$ 500 to US$635 between 2000 and 2008 - by more than 6 per cent per annum.
Like land, livestock or non-land fixed assets, access to institutions could also be counted as an asset. For example, access to financial institutions can address the problem of the shortage of working or fixed capital; access to political organisation can reduce transaction costs or promote interests through political links etc. We call them social capital as they help produce output.
Let us now pick up the issue of access to association of the rural households with political organizations. We observe that 2-3 out of 100 households are associated with political parties. But when disaggregated, roughly one-thirds of the richer segments of households are found to have access to any political party. This compares with 6-7 per cent for the poor households. If access to political parties is assumed to contribute to capital accumulation, needless to mention, the rural rich are much ahead of the rural poor. It, thus, appears that disparity of this kind also contributes to disparity in other branches of livelihood strategy.
We observe that about 40 per cent of rural households had access to NGOs in 2008, as compared to about 24 per cent in 2000. But the average hides the disaggregated dynamics. Especially, very poor households (owning land up to 0.40 ha) could significantly increase their participations during that comparable period. That means, roughly four-fifths of poor households now have embraced the umbrella of NGOs that provide access to credit and other services. This might have played a role for the accumulation of other assets like rickshaw vans, livestock or pumps. Thus, access to financial institutions influence livelihoods by enabling the accumulation of other assets.
About one-half of the relatively large and medium land owning groups (owning 1 ha and above) gained access to NGOs in 2008 as compared to one-fifths in 2000. This observation is quite surprising as the NGO-bell was not supposed to ring for the rich. That means, although on paper the functionally landless households are the targets of the NGOs, in practice, a sizeable portion of the better-off households also appear to benefit from NGO activities.
But it should also be borne in mind that mere membership of NGOs might not help creation of asset unless the access helps households with credit for pursuing economic activities. The share of household borrowing from institutional sources of credit increased more than three times over the last two decades. The most dramatic improvement was observed in the case of the functionally landless households: 44 per cent of them now borrow from institutional sources compared with only about 5 per cent in 1988. This means that a respectable proportion of rural households have access to institutional source (mainly NGO) even without any collateral. This enabled them to have access to other assets also. However, although large land owning households had little opportunity in this case, the medium households increased their access by 6 times.
A quite opposite syndrome could be observed in the case of non-institutional sources of credit. Only one-tenth of rural households now borrow from non-institutional sources compared with about one-third earlier. This means that access to highly usurious forms of credit has been replaced by relatively cheap sources of credit. That had positive impacts on all groups, especially on the poor. For example, only one-fourth of the marginal landowning groups borrowed from non-institutional sources in 2008 compared to one-third in 1988. The landless households mostly benefit from this development by availing credit and creating assets for livelihood.
Abdul Bayes is a Professor of Economics at Jahangirnagar University. firstname.lastname@example.org