While Bangladesh is poised to achieve middle-income status by 2026, its economy continues to heavily rely on agriculture, as per the World Bank. Since gaining independence in 1971, the country has diligently strived to improve its economic prowess, reduce poverty, and transition into a middle-income nation.
In this endeavor, the agricultural sector, especially agribusiness, holds the potential to play several pivotal roles in steering the nation towards its desired transformation. This sector can cater to the food needs of the growing population and burgeoning urban sector, create income and job opportunities for the rural populace, supply labor and materials to the expanding manufacturing and service sectors, offer a market for the nation’s burgeoning industrial sector, and generate investable surpluses and foreign exchange earnings that can be harnessed for the development of rural areas and the overall economy.
You can also read: Bangladesh’s Economic Growth Soars in FY24!
Conversely, the country’s industrial sector can extend crucial support to the agricultural sector by supplying agricultural tools, various other essential inputs (like fertilizers), advanced technology, additional investments related to agribusiness, and by offering ready markets for the increasing agricultural and agribusiness output.
Highest Potential Among Emerging Sectors
The agribusiness sector, which includes food processing and the production of related machinery, is identified as having the greatest potential among the eight emerging sectors. According to the Bangladesh Investment Development Authority (Bida), domestic market sales are expected to reach $8 billion by 2025.
Shah Mohammad Mahboob, the Director General of Bida’s International Investment Promotion wing, stated that the domestic market size was $3.2 billion in 2021 and is projected to grow to $8 billion by 2025. He also noted the promising prospects in the production of agricultural tools and machinery and the improvement of cold chain facilities.
In the past five years, Bangladesh’s agricultural exports have grown by 18 per cent. Agriculture Minister Muhammad Abdur Razzaque said that Bangladesh is now among the top 10 countries worldwide in the production of various crops, indicating significant potential.
A recent report by the Food and Agriculture Organization placed Bangladesh among the top producers of 22 agricultural products, including rice, potatoes, mangoes, and vegetables.
Lokman Hossain Miah, Executive Chairman of Bida, mentioned that Bida’s one-stop service center and other services are geared towards meeting the needs of foreign investors. He assured potential investors of special incentives if they invest in Bangladesh.
However, some challenges include decreased cropland, soil fertility, natural resources and groundwater, climate change, and a lack of capacity in storage, agro-processing, and commercialization.
The government is sincerely working to create new business channels for the agriculture sector. In exporting agro-products we face challenges regarding the quality of our products. In 2016, 117 consignments of our agro-products were canceled by the European Union. Seven critical products have been banned by them. We are also facing problems in exporting fresh fruit and vegetable products. Therefore, to increase exports we must improve the standard of our products. All the stakeholders in the agriculture sector should work together to improve the overall compliance of the sector. The Ministry of Commerce has been running various programs to make our farmers aware of quality issues. In November 2016 a delegation from the EU visited Bangladesh and they gave 14 recommendations to improve the quality of our export products. We are seriously working towards meeting these requirements. Currently, the government is providing incentives to the food-processing sector which will definitely support growth in the agri-business sector. We need more business ventures in the food processing sector. There must be a crop insurance system for farmers to mitigate production-related risk factors. We also need to create easy access to finance for small farmers.
-Mohammad Hafizur Rahman, Joint Secretary and Director, WTO Cell, Ministry of Commerce
Agribusiness for Trade Competitiveness (ATCP)
The Agri-business for Trade Competitiveness Project (ATC-P), also known as Katalyst, concluded on March 31, 2018, after 15 years of groundbreaking work in elevating the income of rural individuals in Bangladesh. Since its inception in 2003, the project has positively impacted 4.75 million farmers and SMEs, including 375,000 women beneficiaries, leading to an income increase of BDT 60.5 billion (USD 729 million). Katalyst has been active in over 30 sectors, including agriculture, services, and industry, and has collaborated with a diverse array of partners from both the public and private sectors.
The project was divided into three phases. The first phase (2003-2008) was dedicated to the innovation, development, and testing of inclusive business models following a market systems development approach. The second phase (2008-2013) aimed to expand these successful business models to benefit a larger number of farmers and SMEs. The third phase (2013-2017) concentrated on reinforcing market system changes in key agricultural sectors and embedding the successful business models and lessons learned within pertinent public and private sector institutions. Katalyst’s mission was to create and enhance economic opportunities for impoverished farmers to help boost their income.
Katalyst’s strategy was centered on establishing a mutually beneficial situation for both agricultural value chain stakeholders and rural farmers. The project guided and assisted various agro-businesses in formulating business strategies that would increase their profit margins while simultaneously creating income-generating opportunities for rural farmers. Businesses acquired millions of new customers by providing small farmers with access to products, inputs, services, and technical expertise. Conversely, rural farmers saw an increase in income due to higher and quality yield, reduced production costs, and post-harvest loss. These inclusive business models, developed with Katalyst’s support, involved co-investment from the private sector, indicating strong ownership on their part and sustainability of the business models within the market system. In addition to the private sector, Katalyst also worked closely with the public sector to advocate for favorable policies and foster an environment conducive to the growth and prosperity of both farmers and businesses.
The project was financed by a consortium of development partners, including UK AID, Swiss Development Cooperation (for all 3 phases), the Danish International Development Agency (phase 3); the Canadian International Development Agency, and the Embassy of the Kingdom of Netherlands (in phase 2); and Swedish International Development Cooperation Agency (in phase 1). The project was implemented by Swisscontact and operated under the auspices of the Ministry of Commerce, Government of Bangladesh.
Some Other Initiatives
Regulatory Streamlining and Investment Facilitation: The Ministry of Commerce has been working with the World Bank Group to address regulatory and policy constraints that hamper the growth of the agribusiness sector. They aim to catalyze investment in the sector by streamlining regulatory frameworks and strengthening investment facilitation opportunities.
Seed Policy Revision: In partnership with the Ministry of Agriculture, they have reviewed and revised the existing seed policy to facilitate private sector participation in the seed sector1.
Fiscal and Export Incentives: The government provides various fiscal and export incentives to encourage investment in agri-business and agro-processing. For example, it provides a 20 per cent incentive for exporting agricultural products.
Although the Green revolution was initiated in the country during the sixties to maximize the benefit of agricultural output, the impact of that revolution has now faded and hence a new revolution in agribusiness needs to be ushered in. However, it’s crucial to remember that such revolutions in agribusiness could have considerable negative effects on the country’s global warming and climate change challenges. Given the country’s well-known susceptibility to the detrimental effects of global warming, ecological imbalance, and various other natural calamities (such as floods, droughts, water-logging, salination, deforestation, etc.), there is a pressing need for eco-friendly agribusiness management. This ensures that the sector’s growth does not exacerbate the country’s existing ecological imbalances and environmental degradation.
