Session Six: Microfinance and Food Security

Updated on December 10, 2015 - By InM - No Comments

Two research papers were presented in the sixth session of the conference to address issues on “Microfinance and Food Security”. The first paper entitled “Impact of Microcredit on Household Food Security in Bangladesh- Evidence from PRIME” was presented by Professor M. A. Baqui Khalily, Executive Director, InM. The second paper of the session entitled “Impact of Microcredit on Agricultural Farm Performance and Food Security in Bangladesh” was presented by Professor Md. Abdul Wadud, Department of Economics, Rajshahi University.

Professor Dr. M. A. Sattar Mandal, former Member, Agriculture, Water Resources & Rural Institutions Division, Planning Commission, GoB chaired the session. Dr. Iffath Sharif, Senior Economist, The World Bank and Dr. Quazi Shahabuddin, Professorial Fellow and former Director General, Bangladesh Institute of Development Studies (BIDS) were present as Panelists.

Professor M. A. Baqui Khalily, the keynote speaker of the session, informed that the major objectives of the study were to examine keenly the impact of PRIME (Programmed Initiative for Monga Eradication) on food security in the greater Rangpur region, as well as to evaluate the role of access to credit to mitigate the monga like situation Improving food security of the vulnerable extreme poor households with sustainability requires long term interventions and assessment – Professor Khalily said. The study showed that credit alone was not sufficient to mitigate such multidimensional structural poverty like monga. Considering the need for other monetary and non-monetary support other than the microcredit, PKSF initiated the project entitled PRIME in the greater Rangpur region in 2006. The program targeted those households who fulfilled any or all of the three criteria: (i) household had wage income; (ii) maximum income was BDT 1,500 per month; (iii) maximum amount of household land holding was 50 decimals. Along with credit facilities like, Flexible Microcredit, Emergency loan and Seasonal credit, the program also incorporated Training, Technical Assistance and Health care. Professor Khalily also presented a synopsis of the PRIME program and its association with the poor households which finally settled on nutrient intake and human productivity if the credit amount could be utilized effectively.

The major findings of the study revealed that both microcredit and microcredit plus programs like PRIME implemented by PKSF had positive impact on household food security mainly by raising their incomes through investments in income generating activities (IGAs). Credit plus programs where along with microcredit, various other services like training, savings, and health services had higher impact compared with credit only service. During the project period, the participating poor households achieved rise in food consumption in both monga and normal times.

Professor Md. Abdul Wadud, in his presentation, addressed that agriculture sector in Bangladesh was characterized by large number of small and marginal farms with limited financial resources. They had little or no access to formal sources of credit and cannot apply optimal inputs and new production technologies timely. This resulted in lower efficiency, productivity and production hampering food security. Thus increasing food production and attaining food security was required for timely and adequate supply of agricultural inputs. The sector also required financial support from institutional and non-institutional sources. Microcredit could provide them access to purchase of inputs like seed, fertilizer and irrigation at right time, which, in turn, helped utilization of new production technologies properly and timely. This would lead to increased efficiency, food production and ensuring food security and thus achieving more inclusive growth.

The average efficiency performance of the microcredit receivers is one per cent higher than the microcredit non-receivers. – said Professor Wadud.  The analysis and findings of the study revealed that use of microcredit reduced inefficiency in farm production by facilitating small/marginal farmers who were a great majority and lack sufficient finance to use optimum input-mix by on time procurement. It also reduced inefficiency or increased efficiency in farm production, results in increased production and availability of food. The findings also suggested that productive efficiency could be increased more if larger amount of microcredit would have been available to farmers. Finally he suggested providing fair, timely and low-cost delivery of microcredit to marginal and small farmers.

In the discussion session, the panelists Dr. Iffath Sharif and Dr. Quazi Shahabuddin expressed their annotations on the momentous issues of the study. Dr. Iffath Sharif commented that though this paper defined food security in terms of food amount and access to food, however, concept of food use could also be addressed appropriately. She stressed on identifying a minimum threshold level to measure food security. She suggested considering other proxy variable, such as, calorie content of the food ingredients along with number of meals per day and food expenditures, which may help as supplements of results of this paper over years.

Dr. Quazi Shahabuddin commented that minor change (1%) in consumption level among participants and non-participant over five years reflected that both groups were equally improved. He queried whether the two programmes PRIME and FSVGD incurred cost efficiency and which one was more effective and sustainable.

The Chair of the session, Dr. M. A. Sattar Mandal thanked the research team for evaluating such important research question. He said PRIME had remarkable positive impact on food security. Though there was no focus on the technical assistance provided by the PRIME programme in the paper. He also suggested to shed light on the nutrition issue and intra-household food security in the future research.

Panelist Dr. Iffath Sharif had made few comments on the second paper. She said that motivation of the paper was not fully cleared, i.e., evaluating the impact of microcredit in reducing efficiency. She also queried, was there anything different then microcredit which could have more impact on efficiency. Moreover, sample size of the paper did not support the ideal measurement of the propensity score matching technique. She suggested clarifying the comparison between farm and non-farm households among microcredit sample group.

he other panelist, Kazi Shahabuddin asked about the appropriate delivery system to achieve full efficiency level.

While making the concluding remarks the Chair, Dr. M. A. Sattar Mandal asked whether the paper found that microcredit reduced the yield gap or not. He also suggested clarifying the background of the qualitative research component of the study.

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