Integrating agriculture with industry

In market economy, the world has become a single market where goods are sold at a competitive price but with quality and buyers don't bother whether they are imported or indigenous. With the advent of WTO movement of goods and capital have been made free almost all over the world. And as such, every country would prefer importing to producing if the import price is more competitive. Accordingly, the economic policy as well as the industry policy of any country should be devised keeping in view the viability and cost competitiveness of products. However, to make the products viable it should posses some inherent advantages of competitive edge to overrule the price in the world market. This advantage may be due to some favourable conditions such as availability of raw materials locally, low project cost, cheap labour etc leading to cost competitiveness which are mostly inherent.

There may be other factors such as minimum lead time, export benefits in the form of cash incentive, tax holiday, subsidised rate of gas, electricity, transport or any special favour from the developed countries / respective importing country resulting from the bilateral treaty etc which may substantially contribute to keep the price of the products reasonably low and to make it competitive in the world market. But these facilities are mostly the logistic supports and temporarily mobilised to favour the sector. Similar advantages such as, Quota offered by US and GSP facilities in EU for our RMG sector actually favoured the exporters to keep the price competitive in importers' countries as we experienced. Besides, the cheap labour of our country, attainment of skills and effective marketing network of the exporters also added further competitiveness in this sector.

If we look at the industrial development in China, India and Pakistan, definitely their textile sector would be in the focal point. But if we go back to the success story of the textile industries in those countries the inherent advantage of the sector would be considered as the key to success, which is the indigenous production of basic raw material i.e. cotton, obviously an agricultural item. In fact, China, India and Pakistan are getting prerogative in textile because of its inherent advantage of cotton production and effective integration of agricultural products with industry. Thus the agriculture sector in those countries contributed substantially for its development. What caused China, India and Pakistan to keep their RMG products competitive is the inherent advantages of local raw materials such as fabrics/yarns/ cotton as well as cheap labour. Obviously, other factors may be there but those are auxiliary not the prime. Thus the countries got absolute prerogative in RMG export. In fact, the effective integration of agriculture with industry in those countries really made it possible to lead the world apparel market. We should also follow the same model to lead the country ahead.

RMG sector in Bangladesh is now in the midst of stiff competition in a quota free regime. Quota has gone in January 2005 as per WTO agreement. Withdrawal of Quota facility has really made the prospect of our RMG export very hard and the future can only tell how good the RMG of Bangladesh will compete in the world apparel market. But one thing is crystal clear that to make our RMG export competitive under WTO, development of backward linkage industry is a must. There is no denying the fact that viability for establishment of such backward linkage in RMG sector will largely depend on the availability of indigenous basic raw material i.e. production of cotton. Hence, for the growth/survival of our RMG sector in the long run, cultivation of cotton has now become imperative and such cultivation has to be undertaken in the selected areas considering the suitability of land. Thus agriculture should be integrated to industry for the development of the country.

The industrial policy of any country is commonly devised in the perspective of its socio economic infrastructure. In Bangladesh beset with over population we should evidently pursue the policy of establishing labour intensive industries than the capital incentive ones to ease the unemployment problem. It is worth mentioning that the effect of unemployment problem is far reaching and may be termed as the root of all social unrest in the country. What we call as the main impediment to development is the lack of security of life and property caused due to frustration among the millions of educated unemployed youths. However, the bare truth is not only to devise best policy but to implement the same and the real success lies in its effective execution, the most difficult and challenging job the country is facing.

In this context, it may please be noted that the agricultural sector in our country is the most accommodating field to ease the unemployment problem using the land in diversified ways to derive competitive benefits. As we know around 80 percent of our people live in rural areas where agriculture is the main occupation and they also depend on agriculture for their livelihood. The infrastructure is already there and it needs proper tapping only. As such, it is easier for the sector to create more opportunities for the rural people to work. Now the decisive factor is to formulate the correct policy and go for its implementation. Once such participation of the rural people can be made effective and meaningful, the real development of the country will obviously take place.

However, agriculture should be the model of economic activities covering wide range of production to feed the industries of the country in the perspective of world market. It should also be ensured that the goods produced by the cultivators should have ready marketability otherwise the sector may lose attraction. And the effective integration of agriculture with industry can ensure proper marketing of the agricultural products. There is also huge potentiality for the export of our agricultural products particularly the vegetables but it needs proper addressing. Once such economic activities are geared up in the rural areas the total scenario of the country would change thereby stopping migration of the rural people to the urban areas.

It is worth mentioning that the traditional system of cultivation is being replaced mechanised and intensive system by making the products although costlier but increased in volume and obviously competitive. This mechanised system of cultivation to some extent is capital intensive and also needs working capital to meet the running cost. But the rural people apparently lack such cash capital. In this respect we may bring into discussion the supportive role of our urban people who may be interested to go for investment in the rural areas because of higher return. The urban people may have idle funds to be invested. As per social structure most of our urban people have rural origin and due to obvious reasons they have inherent weakness for their native villages and also feel obliged to do some thing for it.

In recent times we have seen that many urban people have invested their money in the rural areas in shrimp and or other fish cultivation. Such outlook of urban people needs to be protected and promoted ensuring security of life and property of the investors. This is equally applicable to the total investment scenario of the country. Initiative may be taken from different aspects so that the urban people may occasionally visit their native villages and exchange views with the rural people. This would definitely boost pro-village outlook of urban people and help enrich the rural areas in different ways as well as bridge down the gap between the urban and rural economy.

The balanced growth of economy depends on equitable distribution of resources between urban and rural areas. The government has already realised such reality and emphasised that "our main goal would be to transfer resources to rural areas from urban areas in the budget". Obviously, to increase economic activities in the rural areas is very important to generate income for the rural people which in turn would increase purchasing power of the people creating demand for goods and services. Increased purchasing power of the rural people will have far reaching effect on the economy of the country as majority of the people live in the villages. Many countries, particularly US, Germany and China, have taken up measures to increase the consumption level of their people.

It may further be noted that for the balanced growth of our economy as well as for distribution of income among the rural people, decentralisation of industries has become imperative. The clustering of industries around Dhaka city has caused huge migration of the rural people to urban centres due to unemployment problem in the rural areas. It is difficult to stop such inflow of rural people by enforcement of law if economic activities are not geared up in the villages to support them with income. In fact, creation of avenues for income of the rural people is the real solution our overall problem.

Md Sayeed Hossain is Senior Vice President of Prime Bank Limited