The Changing Landscape of Agriculture and Agribusiness in Bangladesh

The Changing Landscape of Agriculture and Agribusiness in Bangladesh

March 15, 2017

By Taposh Ghosh

Bangladesh’s economic success within the past decade and its consistent boom in growth has been a global talking stand point for quite some time now. The country has successfully met numerous economic and social indicators, and is striving at a rate which is far greater in comparison than any other lower middle income nation, similar in size and population to Bangladesh.  Development of infrastructure, particularly since the beginning of the 21st century has enabled the establishment of countless industries which have only successfully amplified the growth rate being enjoyed by manifolds. 

Despite introduction of new industrial sectors and the country looking into diversifying its exports, Bangladesh is still predominantly an agrarian economy. Agriculture contributes 15.33% of the country’s GDP growth of 7.05% in the fiscal year 2015-16 as per the Bangladesh Economic Review 2016. Among the labor force of 78.9 million (Bangladesh Economy Profile 2015), 48.4% of the labor supply is directly or indirectly involved in the agriculture sector (Labor Force Survey 2013).  As the result the performance of this sector has an overwhelming impact on major macroeconomic objectives such as employment generation, poverty alleviation, human resources development and food security.

Current Agricultural Scenario

Bangladesh has made commendable progress over the past 40 years in achieving food security for its population. Despite frequent natural disasters and an exponential population growth, food grain production in the country tripled between 1972 and 2014, from 9.8 to 34.4 million tons. With one of the fastest rates of productivity growth in the world since 1995, averaging at 2.7 percent per year, which is second only to China, Bangladesh’s agricultural sector has benefited from a sound and consistent policy framework backed up by substantial public investments in technology, rural infrastructure and human capital.

Presently, a plurality of Bangladeshis earn their living from agriculture. Although rice and jute are the primary crops, wheat is assuming greater importance. Tea is grown in the northeast. Because of Bangladesh’s fertile soil and normally ample water supply, rice can be grown and harvested three times a year all throughout the country. Due to a number of factors, Bangladesh’s labor-intensive agriculture has achieved steady increases in food grain production despite the often unfavorable weather conditions. This success is owed to better flood control and irrigation, a generally more efficient use of fertilizers, and the establishment of better distribution and rural credit networks.

The magnitude of the agriculture industry in Bangladesh can be difficult to comprehend. The following table summarizes figures relating to current statistics of the sector:

Total family :  2,86,95,763
Total farm holding :  1,51,83,183
Total Cultivable land :  8505278.14 hectare
Total irrigated land :  7124895.41 hectare
Cultivable waste :  204366.24 hectare
Cropping intensity (%) :  190
Single cropped area :  2440659.10 hectare
Double cropped area :  3820637.14 hectare
Triple cropped area :  1637762.79 hectare
Net cropped area :  7908771.50 hectare
Total cropped area :  15034071.60 hectare
Contribution of agriculture sector to GDP :  16.33% (Including Fisheries) 
Total food crop production (2014-15)

(Lakh Metric Ton)

:

389.79 mt

Rice – 350.30 mt

Wheat – 13.95 mt

Maize – 25.72 mt 

(BER 2016)

Table: Data as per Agricultural Information Services (2015) and BBS (2015)

Widening the Agriculture Portfolio

The country’s agricultural sector is no longer limited to the production of food grains and jute only. Private sector investment has given way to countless new sectors to being set up and make noticeable contribution towards the GDP. Also to generate meaningful impact from these investment, sectors need to look into deeply to find out the core issues related with these new sub-sectors and also come up with sustainable solutions for the sectors. The crucial sub-sectors of agriculture presently are:

  • Food Grains Production: Bangladesh has recently attained self-sufficiency recently. The development of agriculture had been most rewarding the food grain sectors. In rice production, Bangladesh has become a country of rice surplus by improving its previous condition of rice shortage. Being encouraged by bumper production and satisfactory stock, the Government of Bangladesh has exported 25 thousand MT coarse rice to Sri Lanka in the FY 2014-15.
  • Poultry: Bangladesh poultry consists of i) native chicken & duck, once that were sole sources of egg and poultry meat in the country till early eighties, and ii) commercial poultry. Bangladesh suffers from protein deficiency resulting in serious malnutrition. According to the livestock economy of Bangladesh, the growth rate of livestock contribution in GDP is 1.66 on 2015-16.
  • Seedlings: Bangladesh Agricultural Development Corporation (BADC) produces foundation seeds from breeder seed of cereal crops, jute seeds, vegetable seeds, potato seeds and pulse and oil seeds. Besides these, certified seeds of rice, wheat, maize, jute, vegetables, spices, potato and pulse and oil seeds are also being produced. Taking into account the demand for quality seeds in Bangladesh, BADC has produced a total of 139,000 MT in FY 2015-16.
  • Irrigation: The Government has given importance on reducing irrigation cost as well as increasing use of surface water and reducing use of underground water. In the FY 2014-15, 11 irrigation projects and 3 irrigation programs were implemented by BADC. By those irrigation projects and programs re-excavation of 700 km canal, construction of 248 irrigation structures, 699.04 km irrigation channel, installation of 118 deep tube wells, 610 power pumps, renovation of 149 Deep Tube Wells, electrification of 351 irrigation equipment and setting of 245 smart card prepaid meters were completed in June 2016.
  • Fertilizer: The expansion of modern agricultural farming practices with intensified cultivation is needed to ensure food for all, which led to an increasing demand for fertilizers. In FY 2013-14, the quantity of urea fertilizer used was 24.62 lakh MT. The total quantity of fertilizers used was 45.02 lakh MT in the same year. In FY 2014-15, the total quantity of fertilizer used was 47.91 lakh MT.
  • Fisheries: Fisheries sector contributes 3.65 percent to the GDP and 22.60 percent to the country’s total agricultural products. Fish alone supplements about 60 percent of animal protein in our daily diet. Over the last 10 years average growth rate of fisheries is 5.4% whereas where aquaculture shows the growth performance of 8.2% (Hossain, 2016).
  • Livestock (Except Poultry) & Dairy: The contribution of the animal farming sub-sector to GDP at constant price is 1.66 percent in FY 2015-16. Though the share of the animal farming sub-sector in GDP is small, it makes immense contribution towards meeting the requirements of daily essential animal protein. According to the estimate of the Department of Livestock Services (DLS), the population of livestock and poultry (projected) rose to 543.57 lakh and 3,206.33 lakh respectively in FY 2015-16. In FY 2015-16, production of milk and meat was consecutively 72.75 lakh metric ton and 61.52 lakh metric ton.
  • Agri-based Industry: There are a few industries like: Silk, Jute, Yarn & Fabric, Handloom, and Food Processing which are highly dependent on agriculture sector. The industries under textile sector are basically managed and operated under the private sector. There are 429 cotton spinning mill (public sector 22 and private sector 407) in the country. In FY 2014-15 up to December 2014 the total production of yarn stood at 600.94 million kg., of which the share of private sector mills was 600 million kg. During the same period, the total production of fabrics was 4,353 million meters, which was produced entirely in the private sector.

According to Handloom Census 2003, the handloom industry can produce 830 million meters of fabrics per year, which can meet more than percent of total domestic demand for clothes. This industry create direct employment for about 0.9 million people and 0.6 million indirect employment. There are about 0.51 million handlooms in the country out of which 0.31 million looms are in operation and the remaining 0.20 million are closed due to non- availability of working capital.

However, due to introduction of artificial and synthetic fiber and their easy availability, the demand and price of jute products has declined but because of the environmentally friendly nature of jute and jute products the demand and interest for jute and jute products in the international market are increasing again. The share of foreign exchange earnings from jute and jute products is 3 percent of the total export earnings. In 2015-16, the production of raw jute were 84.45 lakh metric ton; among which Bangladesh earned USD 80.80 million by exporting 6.37 lakh metric ton raw jute.

Technology & Agriculture

The agricultural sector of Bangladesh has come a long way from being a “bottomless basket” to self-sufficient. Innovation of new methods, development and distribution of new varieties of seed and samples, mentorship and subsidies from the government and involvement of private sector in the sector has bring the sector to the position it is now. Yet, the progress is not enough.

The agricultural sustainability is yet to be achieved. The key of achieving agricultural sustainability is technological integration. Technology increases productivity in agriculture, at the same time consumes less resources. The use of modern machineries in agriculture saves time, reduces cost, requires lower amount of seed and fertilizer and also increases the productivity. For example: one of the simplest of machineries like a Drum Seeder which is very easy to use, can lower seed requirement by 10-40% than the traditional system and rice production can be increased to 10-15% (AIL).

ICT is also playing a significant role in facilitating growth in the sector. As per the statistic of BTRC, the total number of mobile phone subscriptions has reached 133.16 million by November 2015. Therefore, Informative voice SMS, alerts to the farmer before natural disasters, weather forecast, seasonal activity information etc. can be sent through SMS in local language. Social Media can also take integral part for ICT development in agriculture. Knowledge, problems and solutions can be shared between farmers and extension workers through social media.

In the modern world, communication can be done through cellular phones, computer, network system, satellite systems etc. with the farmers. Agri Call Centers is one of the best reliable and timely actionable communication method in the world and that can consist of technology center, helpline and experts in the field. Production and cultivation suggestion, diseases and insect Information, latest market price information can be given to the farmer by using Agri Call centers.

Realigning Priorities to Sustain Growth into the Future

Today, the largest share of public expenditure for agriculture goes to subsidies. At the same time, nearly half of the farmers are overusing chemical fertilizers, which create environmental and health hazards. While rural non-farm employment is large, almost double of total urban employment and growing, non-farm businesses are not expanding or diversifying fast enough.

Even though the market is functioning well, more investments are necessary to upgrade market facilities, improve food safety systems, and help traders of high value products access working capital.

Bangladesh has great potential to raise agriculture-generated incomes, increase agriculture productivity and make it more resilient to climate change, and improve the nutritional value of crops. As a World Bank suggests, the country should focus on the following action areas:

  • A balanced development strategy should be developed for both farm and non-farm growth.
  • More rapid diversification in agriculture—with balanced attention to rice. Diversification into high value agriculture is a priority.
  • Further improving the policy framework and rebalancing public expenditure priorities. More investment is required in research and extension services, markets and infrastructure.
  • An enabling environment for robust rural non-farm growth and more efficient value chains.
  • Continued investment in connectivity is needed to increase business jobs in smaller cities and rural areas which remain isolated.

A Shift in Priorities

Faster and more inclusive rural growth with job creation will require greater agricultural diversification together with more robust rural non-farm enterprise development. A shift in production from rice to higher-value crops will significantly reduce malnutrition, trigger more rapid growth in incomes, and create more and better on-farm and non-farm jobs, especially for women and youth. Livestock and fisheries also offer tremendous potential for reducing malnutrition and increasing incomes and jobs in a severely land constrained economy, but struggle because of inadequate government support.

Investment in and expansion of the rural non-farm enterprises (or RNFEs) is a parallel priority for Bangladesh. RFNE’s can help households become more resilient to climate shocks through income and livelihood diversification. And they can be a potentially powerful source of job generation, especially for youth and women, through more efficient and competitive value chains.

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