Central region

Household Economy Analysis (HEA) in North West and North Central Region of Bangladesh – Bangladesh

ABSTRACT

INTRODUCTION AND METHODOLOGY

In October 2021, Start Fund Bangladesh commissioned a detailed livelihoods study by applying the Household Economy Analysis (HEA) framework. This report presents the findings of HEA conducted in North West and North Central parts of Bangladesh from October to November 2021 to gain an in-depth understanding of livelihoods and means of survival for different wealth groups, and the seasonality of livelihood strategies. . The study provides more evidence-based information to support the design of a more effective forecast-based financing (FbF) and risk financing mechanism for the Start Fund. The Household Economy Approach (HEA) was used as the guiding methodological framework for the study. The specific method of data collection included focus group discussions (FGD), key informant interviews (KII), a consultative workshop with representatives from the UN, INGOs and the Start Fund, as well as a review of secondary documents and reports available. All data is available in this link.

SUMMARY OF FINDINGS

Livelihood zoning

This study did not conduct a livelihoods zoning exercise; instead, they used livelihood zones determined by the World Food Program in 2016 through a rigorous exercise involving the government’s agricultural extension department. WFP has identified two livelihood zones in the north-west and north-central regions of Bangladesh, such as Char and River Basin. The rationale for carrying out a baseline analysis in these areas for this study is that there is no significant change in people’s livelihood practices and the overall economic context. More than 80 percent of people living in the two areas depend on agriculture for their food and cash income. A brief description of the livelihood zones is as follows:

Livelihood Zone: Arctic Char Zone

Brief description of livelihoods: River islands of the Brahmaputra and Teesta rivers. The only means of communication is by boat. Soil types vary from very sandy to very clayey. The most common type of soil is a mixture of sand and clay. The soil type supports the cultivation of a wide range of crops such as Aman and Boro rice, wheat, millet, maize, lentil, chili, jute, mustard, peanuts, sesame, legumes and vegetables. The majority of people depend on agriculture for their livelihood. More than 50 percent of poor households own either the cow or the shared cow. People have access to the market and can buy food and basic household items from the markets. Floods are the most common hazard in Char, occurring almost every year and affecting people’s crops, homes, livestock and livelihoods.

Livelihood zone: River basin area

Brief description of livelihoods: Mainly continental. It includes the adjacent villages located on the bank of two rivers – Brahmaputra and Teesta. The villages are logistically connected to the normal road network to other districts. Villages on the banks of the river are different from villages further inland as they are lower and subject to annual flooding by two rivers, while further inland are only affected by flooding larger occasional events. People grow a range of food and cash crops including boro, aman, jute, mustard, maize and a variety of vegetables. The majority of people depend on agriculture for their livelihood. Annual floods are common and affect people’s crops, homes and livelihoods. Over the past 10 years, Aman rice has been successfully harvested 3-4 times. As a result, people do not prefer Aman rice cultivation, but rather Boro cultivation.

Basic analysis

Wealth and Asset Profile

Baseline results show that 35 percent of households are extremely poor (EP) in the Char zone while 40 percent are poor. Households belonging to the average category constitute 17% of total households and the rich 8%. Wealth is mainly determined by the amount of land a household is able to cultivate, access to land, ownership of livestock and productive assets.

In the river basin area, 20% of households are classified as Extreme Poor (EP), while 43% are poor. Households belong to the middle and rich wealth group constitute 27% and 10% of total households. Wealth is mainly determined by the amount of land a household is able to cultivate, access to land, ownership of livestock and productive assets.

Sources of food income

In both areas, extremely poor and poor households are highly dependent on the market for their food. In Char, market purchases met 91.5% of the food needs of extremely poor households and 77% of the food needs of poor households. Labor exchange was the second most important food source for extremely poor and poor households, which met 9.2% of the annual food needs of extremely poor households, while 7.7% of poor households. The average household derives most of its food from its own production, which covers 55 percent of its annual food needs.

In the river basin, the market plays a major role in the food supply of extremely poor and poor households. Purchase on the market covered 89.6% of the total annual energy needs of extremely poor households and 64.2% of poor households. Average households met 81% of their total annual energy needs from their own production. The second largest source of food for extremely poor and poor households was the labor market, which covered 8-9% of their total annual energy needs.

Sources of cash income

The results of the study show that sources of income vary across wealth groups. Extremely poor and poor households in both zones were more dependent on labor and loans, while middle and rich households were more dependent on the sale of their crops and livestock.

Char area

  • Extremely poor households earned an average of BDT 109,900 during the reference year. Cash income from the local labor market accounted for 53.5% of total income, while migration covered 25.4% of their total annual cash needs during the reference years.

  • Poor households earned on average BDT 132,450 during the reference year. Labor exchange met 42.3% and migration met 22.5% of their annual cash needs in the reference year.

  • Middle households earned an average of BDT 198,900 during the reference year. They depend on their own production, livestock and remittances which have helped cover 44.7%, 20.1% and 20.1% of their total annual cash needs respectively.

  • Income from loans represents 11-18% of the total income of extremely poor and poor households.

River basin area

  • Extremely poor households earned an average of BDT 113,750, while poor households earned an average of BDT 133,500 during the reference year. Income from labor exchange accounted for 54.8 percent of the total annual cash needs of extremely poor households, while it was 42.5 percent for poor households.

  • Migration was the second largest source of cash income for extremely poor and poor households. Cash income from migration accounted for 26.2% of the annual cash needs of extremely poor households, while it contributed to meeting 24.9% of the annual cash needs of poor households.

  • Cash income from loans represented 15-17% of the total income of extremely poor and poor households.

  • Middle households mainly depend on their own production, livestock and remittances. Cash income from the sale of their own production (rice and other crops) accounted for 44% of their cash income, while livestock 29.2% and remittances 12.2%.

Household expenditure model

Households in both zones spent on a variety of items, including food, social services (school, health), inputs, clothing, livestock, transport, house maintenance and reimbursement of expenses. loans. The highest expenditures of extremely poor and poor households were on food, followed by loan repayments.

Char households

  • Extremely poor and poor households spent 39–48 percent of their base year income on food.

  • The second largest expenditure was for loan repayments, which accounted for 13-20% of the total income of extremely poor and poor households.

  • Spending on agricultural inputs accounted for 11 percent of spending by the poor.

  • Spending on education, transportation, and clothing accounted for 4–6 percent of total spending for extremely poor and poor households.

River basin households

The study found households with similar spending patterns across all wealth groups in the river basin area.

  • Extremely poor households spent the most on food, which accounted for about 47.3% of their income, while poor households spent 37.1% of their income on food.

  • Loan repayment accounted for 16-20% of total expenditure for extremely poor and poor households.

  • Expenditure on agricultural inputs represented 11.8% of total annual expenditure in poor countries.

  • Expenditure by extremely poor and poor households on education, transport and clothing represented between 4 and 5 percent of total annual expenditure during the reference year.

Effect of the problem

Change in economic and livelihood context

Extremely poor and poor households in the Char zone found employment for a total of 168 and 160 days in agriculture at the local level, extremely poor and poor households in the river basin found employment for 178 and 172 days. They mainly worked in land preparation, planting, weeding and harvesting for Aman, Boro and Jute. They also engage in casual work at the local level. The 2020 flood had a devastating effect on Aman, jute and casual labor which helped to change the livelihoods and economic context in the study areas, such as

  • Aman’s harvest was 5% in char and 10% in the base year river basin.

  • Jute harvest was 5 percent in Char and 40 percent in the base year river basin.

  • Casual work opportunities were 30% in Char and 60% in River Basin in the base years.