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close this bookNeedless Hunger - Voices from a Bangladesh Village (FF, 1982, 74 p.)
close this folderThe making of hunger
close this folder4. Siphoning the surplus
View the document(introduction...)
View the documentThe trials of a poor peasant family


Just as Bangladesh is often called a land of small farmers, so the country's agriculture is sometimes described as "subsistence farming." The implication is that the peasants grow barely enough to feed themselves, with little left over for anyone else. Once again, reality is more complex. Much of the wealth which the peasants produce in the fields is siphoned by large landowners, moneylenders and merchants. The hunger of Bangladesh's poor majority is intimately related to the ways this wealth is extracted and used.

Who Works, Who Eats?

Surplus is siphoned from poor peasants and landless laborers by the twin mechanisms of sharecropping and wage labor, production relationships which determine who works the land and who eats its fruits.

Sharecropping, according to a 1977 AID study, covers at least 23 percent of Bangladesh's farmland.1 In Katni's vicinity, landlords and rich peasants generally cultivate about three-fourths of their land by means of sharecroppers and the remaining one-fourth with hired labor. The landowner and sharecropper normally split the crop equally, although in some districts the landowner often takes two-thirds.2 The sharecropper usually must bear the costs of seed and fertilizer, so that in practice his share is really less than half the crop.

Although the rewards from sharecropping may seem meager, those of wage labor are even less. In Katni the standard wage for male laborers is about 33 U.S. cents per day, paid in a combination of rice, cash and a morning meal which insures that the laborer has enough strength to work all day in the fields. Women from poor families who work processing crops in well-to-do households earn even less-about 20 cents for a day's hard labor.

The number of landless laborers in Bangladesh is rising rapidly due to population growth and the displacement of small farmers. The dramatic rise in landlessness has not been matched by a rise in employment opportunities. As a result, in 1974 real wages for agricultural laborers had fallen to less than two-thirds of their 1963 level.3 As Dalim, a landless laborer, told us: "I earn two pounds of rice, one taka (about 7 cents) and a meal for a day's work. With that taka I used to be able to buy two more pounds of rice, with a little left over for oil, chills and salt. But today one taka won't even buy one pound of rice. Employers used to let their workers take a few free vegetables when they went home in the evening, but nowadays they aren't so generous. Times are getting harder for men like me."

With wages declining, it is becoming more profitable for the landowner to cultivate with hired labor than to give land to sharecroppers. The large landowners in Katni's vicinity calculate that wage labor only costs them one-fourth to one-third of the crop. They are slowly shifting more and more land to hired labor.

In some countries this shift has been associated with the "green revolution"-the introduction of new crop varieties, chemical fertilizers and irrigation-which by raising yields also makes wage labor more attractive to the landowner than sharecropping. But in Katni the main reason for the shift is not that yields are going up, but rather that wages are going down.

Poor peasants and landless laborers are caught on an economic treadmill. No matter how hard they run they keep slipping backwards. The siphoning of the surplus makes it almost impossible for them to save enough money to buy land of their own. Instead, illness and unemployment often force them to sell their remaining tiny plots of land and their meager household possessions (The Trials of A Poor Peasant Family, p. 27). Though they devote their lives to growing and processing food, they face perpetual hunger.

What happens to the surplus once it passes into the landowners' hands? If it were used productively, the suffering of the poor might not be entirely in vain. After all, any society must generate a surplus for investment if the economy is to grow. But in Bangladesh very little of the surplus finds its way into productive investment. Luxury consumption absorbs much of the income of the rural elite. For example, Nafis, a big landlord, bought himself a new Japanese motorcycle while we were in Katni. It cost him as much as a laborer working on his land would earn in 20 years.

Large landowners are reluctant to invest in agriculture, for farming is a difficult and risky business. They may buy more land, but this is simply a transfer of resources (usually from small farmers), which adds nothing to the nation's productive base. Even less of the surplus is mobilized for investment elsewhere in the economy through taxes or savings because the government does not want to tax the large landowners for fear of losing their political support, and the interest paid on savings deposits cannot compare with other more profitable uses to which the landowner can put his money. Trade and moneylending-both of which siphon surplus from the peasants while leaving the production process untouched-offer by far the most lucrative and easy avenues for investment.

The Market

Through the exchanges of the marketplace, merchants are able to siphon surplus from Bangladesh's peasants. Receiving low prices for the crops they sell and often paying high prices for the goods they buy, the peasants lose whether they enter the market as producers or as consumers. The transfer of wealth is often hidden by the seemingly impersonal movement of prices, but in Katni we found several examples which throw the relationship between peasants and merchants into sharp relief.

"In Bangladesh we call our jute ‘the golden fiber,’" said one peasant. But tell me, who gets the gold?"

Jute, the fiber used to make rope, burlap and carpet backing, is the main cash crop of Bangladesh's peasants and provides about four-fifths of the country's export earnings. After independence jute prices stagnated, while rice prices soared. As a result, peasants grew less jute and more rice, so that by 1975 jute acreage had shrunk to two-thirds of its pre-independence level. Worried about export earnings, the government announced a floor price for jute which it hoped would check the decline in production. Government purchasing centers throughout the country were instructed to buy jute from the growers for about 90 taka per maund (one maund is about 80 pounds).

One such purchasing center was located three miles from Katni. Nevertheless, the villagers sold their jute in the local markets for 60 taka per mound, two-thirds of the government rate. At this price jute was decidedly a losing venture. As the rich peasant Kamal complained: "I sold my jute for less than half of what it cost me to grow it!"

A visit to the local jute procurement center yielded some clues as to the reasons for the striking discrepancy between the official support price and the actual market rate received by the peasants. The purchasing center consisted of a half dozen large warehouse buildings which had once belonged to a West Pakistani company. The buildings were piled high with rough bales and loose mounds of the golden fiber.

The manager, a heavyset young man dressed in Western clothing, was happy to explain how the jute is graded and how to operate the baling press. But when asked where the jute in his warehouse came from, his reply was guarded: "We buy from the growers."

"At what price?"

"We pay the government rate, 91.50 take per mound."

"How curious. In the markets a few miles from here, the growers are selling their jute for only 60 taka."

"Oh, they must be selling to the merchants."

"Ah, the merchants. And do you buy from them too?"

"Yes, we buy from the licensed traders." The manager stressed the word "licensed," to emphasize the legitimacy of such transactions.

"The jute in this warehouse-did you buy most of it from growers, or from merchants?"

The manager began to look uneasy. "Well, actually we buy mostly from the merchants. You see, these growers only bring in eight or ten mounds at a time, so it is very inconvenient to buy from them. From the merchants we can buy hundreds of mounds at once."

The manager declined to elaborate as to why the growers are willing to sell so cheaply in the local markets, if they could receive the much higher government price simply by coming to the warehouse a few miles away. The villagers were less reticent. "If I bring in a cartload of jute," said one middle peasant, "the warehouse people say, 'Today we are closed-come back tomorrow.' So my time has been wasted. If I return the next day they will have another excuse: 'We've already bought our quota for the day,' or 'We have to wait for funds from Dacca.' We can never sell our jute to the government."

Why do the warehouse people turn the peasants away? Our middle peasant friend explained: "We sell our jute in the market at 60 taka. The merchants then sell it to the government at 90 taka, making a 30 taka profit on each mound. They share this profit with the warehouse manager, giving him maybe half. So of course he won't buy from us!" Besides paying kickbacks, the merchants are said to pay the warehouse manager a monthly retainer in order to ensure his cooperation. The manager accordingly buys only from those who make it "convenient" for him to do so. Perhaps he does buy directly from a few growers-local landlords who make suitable arrangements.

In previous years jute prices in the local markets had been somewhat higher, because much jute was smuggled to India and this demand had helped to keep prices up. But in 1975, following the assassination of Sheikh Mujib, the political connections which had protected the smugglers unraveled and the illegal flow of jute across the border slowed to a trickle. In collusion with the government authorities, a few merchants were then able to strengthen their control over the local jute market, pushing prices to the abysmally low level of 60 taka per mound.

"In Bangladesh we call our jute 'the golden fiber,' " said one peasant. "But tell me, who gets the gold?"

While some merchants buy cash crops from the peasants, others sell various goods to them. No villager is entirely selfsufficient; all rely on the market to meet some of their needs. Landless laborers and poor peasants must buy food, everyone has to buy salt and cloth, and those who can afford them purchase such items as medicine and footwear. The prices the villagers pay are often high, in part because of hoarding by merchants.

Sometimes hoarding is a reaction to genuine scarcities, but other times it is a means to deliberately raise prices. Merchants not only manage at times to control the supply of a particular good within a given locality; on occasion they are able to corner a market throughout the country. For example, in the autumn of 1974 a cartel cornered the market for salt in Bangladesh. The price rose to 50 times its normal level, and salt riots broke out in major towns. For two weeks the merchants who hoarded the nation's salt reaped tremendous profits. Then they loosened their grip, and prices returned to normal.

Most hoarding is less spectacular, and it is often hard to say where natural scarcities end and artificial ones begin. For example, rice prices are generally lowest at harvest time and highest just before the next harvest. This predictable fluctuation makes speculation in rice attractive to merchants. If they hold stocks in anticipation of rising prices, this in itself helps to lift prices. Landless laborers and poor peasants, who rely on the market for much of their food needs, must pay the price. Middle peasants often lose coming and going: they sell their rice cheaply at harvest time because they need cash for consumption, investment in the next crop and repayment of debts; a few months later they have to buy rice at inflated prices.

The rice trade was not particularly lucrative in the 1960s, but after independence this changed. In 1974 the price of rice climbed to 10 times its pre-independence level. Peasants were particularly vulnerable in parts of the country where floods had damaged crops. As prices rose, many sold their animals, their land and their household possessions in order to buy rice. The poorest, with nothing left to sell, came to the towns in search of work or relief. An estimated 100,000 people starved to death.

A villager recalls: "Lalganj (a town five miles from Katni) became a town of beggars. Whole families were living, sleeping and dying in the streets. Each day there were new bodies along the roadside."

Officially, the government blamed the famine on floods, but many observers believed that hoarding by merchants and a breakdown in government administration were responsible for turning a manageable, localized shortage into a catastrophe. According to an AID official in Dacca: "The food supply was there; it just didn't get to the right people."

The 1974 famine brought terrible suffering to many people, but to some it brought profit. The merchants who hoarded grain were not the only ones to benefit. Moneylenders did a brisk business, and large landowners were able to buy land cheaply from their poor neighbors. In the hardest hit areas land registry offices had to stay open late into the night to handle the record sales.

The villagers are well acquainted with many of the merchants who profit at their expense. The men who buy their jute, for example, are local landlords who have diversified into trade and moneylending (Shaha Paikur: Landlord, Merchant and Moneylender, p. 19). A pyramid of trade extends above these local merchants to regional, national and sometimes even international economic interests. At the base of this pyramid are the peasants. They sum up their situation with a simple phrase: "The merchants drink our blood."