The economy of Bangladesh has seen a significant change in recent years. Besides the steady real Gross Domestic Product (GDP) growth, the percentile each sector contributes to GDP has changed drastically. The agri-food sector, which includes the commercial production of food through agriculture, is no exception.
For context, in 2000, 25.6 percent of the total GDP constituted the agricultural sector. However, over time, there has been a significant change. In 2020, this became 12.92 percent of the GDP. This massive declination by 12.68% of the contribution of the agricultural sector towards the annual GDP is a testament to the economic reformation the country is currently undergoing.
Although there is a decline in the contribution made by the agricultural industry compared to the previous decade(s), it is still incredibly important. For instance, in 2017, of the total employed population of Bangladesh, nearly 41% was in agriculture.
As such, agricultural projects, especially agri-food, are uniquely important. Given the decline of the holistic industry and, in hindsight, the agri-food sector’s potential, this must be prioritized. It is vital to create a feasible action plan in collaboration with all relevant stakeholders in the future.
However, there are many imminent challenges, such as the lack of new usable land since the majority of land in this small country has already been taken, or the scope of land expansion for work is so limited that there is little to no scope of accessing it further. Therefore, these issues must be addressed while the plans for the agri-food sector are made.
Especially in the world after the Covid-19 pandemic, more than ever, the agricultural industry needs a well-balanced and forward-thinking diversification and modernization plan. This is uniquely true given the unique nuance that the Covid-19 pandemic has brought upon us. To mitigate the economic harm in the short-term, as well as ensure better contribution in the long run.
Moreover, individuals’ purchasing power is also decreasing. Beyond Covid-19, the Russia-Ukraine war has significantly impacted the price of energy and other goods worldwide. As a result, the world is facing economic difficulty, and Bangladesh is no exception. This indicates a potential change in consumer consumption across many industries, including agri-food.
Given the potential of such consumption pattern change, or opportunities in the emerging market, proper planning can go a long way. However, the need for adequate planning is even higher given a scarcity of resources, and many constraints are coming given the ongoing change of climate being a major global issue.
Given resources are scarce, expanding opportunities to increase resources is necessary. This expansion framework can especially focus on manufacturing and service components of the agri-food supply chain. As the economy of Bangladesh is a transitioning economy on many fronts, it is essential to understand market failures along the process. Moreover, major constraints limiting the local and global agribusinesses from their full potential must also be identified.
Advocacy to carry out solutions is essential. For instance, advocating for a formalization of the existing land rental market with a long-term framework would allow for a better incentive structure for everyone. However, many barriers start from capital centralization, the inertia of those involved, proper regulation, etcetera, making these reforms more challenging. This is why good advocacy is essential.
The private sector still has limited involvement with the seed market. The seed market, in particular, is crucial for efficient agricultural practices. Unless the private sector’s involvement is increased through a new incentive structure, the seed market will not grow. Through collaboration, we can create better quality seeds. And while implementing all this, the focus should be on an innovative approach that will use digital technologies.
In general, good agricultural practices must be developed and adopted. There must be a good collaboration between the public and private sectors in implementing these practices. Framework for local Good Agricultural Practices (GAP) must be developed and adjusted to realities on the ground. For instance, it should focus on issues of misusing fertilizer, pesticides, etcetera that, in effect, brings questions of food safety concerns.
Moreover, the issue of fertilizer misuse is not limited only to intentional overuse or harmful interests but often potentially extends as a bi-product of the government’s fertilizer subsidy policy. This policy is very expensive for the government as well. So there is a scope to redirect this funding to other public-good efforts that might help paddy rice and other crops boost yield sustainably.
Ultimately, cross-sectoral challenges such as investment climate, access to finance, regulation, etcetera must be addressed as a priority. The current situation can be improved significantly through increased private investment, a collaboration of the public and private sectors, and redesigning inefficient policies.
The agri-food sector in Bangladesh has a lot of untapped potentials. Although the contribution of this sector to the holistic GDP is decreasing, there is no doubt that the agri-food sector is still incredibly important. Through proper adjustment and reformation in the agri-food sector, the sector’s future is promising.
Written By Ahmad Tousif Jami
