This chapter presents the study findings on changes in economic livelihood of rural households, and assesses the impacts of microfinance on observed changes. The presentation is ordered in line with the broad types of economic activities, undertaken by the rural households. Theses include crop production, livestock, fishery, wage employment, self-employment, and ownership of assets and access to other sources of income. As noted in the previous chapter, comparisons are made across various types of participant and non-participant groups. Findings from all three rounds are collated together to show the changes in the relevant variables for different groups. Since provision of microfinance is expected to impact upon economic livelihoods of rural poor primarily through changes in the labor market and employment structure, this chapter is brief on the subject and the details are picked up in the following chapter.

4.2 Ownership of Land, Access to the Land Rental Market and Income from

Total land owned (including waste land and those in river-beds) by an average household remained stable around 1.09 acre over the three rounds of survey.22 Two interesting observations may be made from the findings presented in Table 4.1. They are,
(i) it is the land-poor households who are regular participants in MFI programs, while the absolute non-participants are (relatively) land-rich households;
(ii) those who have completely dropped out of the MF network are found to have been net sellers of land. The first is clearly a plus point for the MFIs, since it suggests that relatively more of the poor are involved in their programs.

The second is quite puzzling, and may mean more than one thing. It is quite possible that the

same factors led to their pauperization as well as withdrawal from the MF programs, and the program failed to change these factors. These are factors, which make a person less worthy a client for the bank, as well as, less capable a person in running the household smoothly. Alternatively, getting out of the program may have reduced households accessibility to the credit market, and thereby, led to depletion of asset.

Table 4.1
Changes in (total) Land Ownership

Note: All figures are in decimals. Estimates for a particular round are based on landownership reported in the previous round and on sales and purchases in between the two rounds. We started with round 1. One could do the same, starting with round 3. The difference observed between estimates and actual reporting is largely due to access to land obtained from other sources (parents, or, government land), which have been included in ownership even though the legal ownership does not lie with the household (or any of its members).

There are several aspects to be noted with regards to changes in the land rental market over the survey period (see Table 4.2). Relatively, the land-poor households, comprising both the regular participants and the complete drop-outs in our sample, are found to be moving out of cultivation – their average size of operational holding has persistently declined over the three rounds of survey. There is no such secular trend for the land-rich households. The latter, however, is found to be holding onto their land for self-cultivation during years of natural calamity (such as, the flood in 1998). Even though the figures (in Table 4.2) on regular participants may suggest of microcredit’s role in diverting household activities away from the land and crop sector, the opposite is suggested by the findings on new participants. The latter, first-time participants in the third round, are found to have increased the size of operational holding through increased participation in the land rental market. In general, however, the findings from the three consecutive years suggest of reduced size of the land rental market, implying increase in own-cultivation.

In spite of decline in share of rented land in total operational holding, its share in gross income has not reduced (Table 4.3). This may be indicative of higher (gross) productivity on rented land, which has not been probed into in details in this report. In monetary term, sales account for almost half of total produce, which showed very marginal decline during the three years. The pattern does not vary significantly across various sample groups

Table 4.2
Changes in Land Rental Market and Operational Holding

Note: Information on land mortgages during the first and the third rounds is stock concepts, while those reported for the second round are flows during the period between the first and the second round (shown in parentheses). The latter failed to take account of adjustments on previous mortgages. We take the simple average of the first and third round figures to arrive at the stock during the second round.

Table 4.3
Gross Income from Crop and its Distribution by Source and by Use

Note: The figures on consumption and sale (sold) do not add upto 100. The remaining part includes wastage, and that retained for future consumption or sale, and seed stock. Gross income figures are in Taka, and all others are in percentages of gross income.

4.3 Livestock and Poultry

There is no significant difference in the percentages of households owning poultry across different sample groups (Table 4.4). However, the differences in these figures between ever (regular participant, recent drop out and occasional participant) participants and non-participants (or new participants) are quite evident in cases of goat/sheep and other cattle. While around 30 percent of ever participants own goat or sheep, only around 20 percent of the non-participants and recent participants (i.e., participants during the last round only) own such asset. Interestingly, ownership of such asset has been on decline for the complete drop-out group. Over a period of two years, percentages of households owning goat/sheep and cattle have been on decline, and the decline is more prominent in case of other cattle. While such declines are valid for all groups of households, a higher percentage of regular participants and occasional participants are found owning other cattle, compared to other groups.

Table 4.4
Percentages of Households Owning Livestock

An interesting finding emerges from the year-wise information provided in Table 4.4. In all cases, we find a larger percentage of households owning poultry & cattle during the flood year (1998-99), compared to the other two years.23 This appears to be contrary to a commonly held perception that there is a major depletion of cattle stock due to such reasons as, death during the flood, reduced supply of pasture, financial pressure forcing many to sell their cattle (much of which are consumed), etc. However, this observation is consistent with a hypothesis that suggests of a negative relation between participation in household-based economic activity with availability of market-based opportunities (and also with overall economic condition of a household).

While income from by-products of livestock and poultry is more easily measurable, it is not so in case of gains through poultry/livestock raising and cattle-fattening. This is because, even a single specie is not homogeneous, making any valuation exercise quite difficult. We did, however, realize the problem during the first round and therefore collected information on the value of stocks in subsequent rounds. Based on average stock value of each specie during the second round, total value of stock in the first round was approximated. Accordingly, gross incomes during two periods in between the three rounds were estimated; and these are reported in Table 4.45. Imputed income from other products (eggs, milk, etc.) are reported in Table 4.6; while the expenses incurred for rearing the stock of poultry and cattle are noted in Table 4.7. On an average, the minor produce of the sub-sector accounts for 50 percent or more of the gross income from this sub-sector. This may suggest that cattle-fattening is not all that attractive. On the contrary, cattle is quite often owned in rural Bangladesh for use in land preparation, and the value of such cattle declines with ageing and use (as animal power), which is subsumed in our calculation of gross income. It is therefore quite likely that actual income from cattle-fattening is higher than that shown in our estimate. Even though net income from poultry and livestock sector remains quite low, a significant number of regular and occasional participants have benefited from MFI loans in sustaining their activities in this sector (see Table 4.7).

Table 4.5
Income from Livestock