Scaling up, adding value: A roadmap for Bangladesh's agro-based industries

Investing in modern farming equipment such as tractors, harvesters, and irrigation systems can significantly improve productivity. Photo: TBS

Bangladesh, predominantly an agrarian economy, has substantial potential to develop its agro-based industries. This sector, if effectively harnessed, can significantly contribute to the nation's GDP, create employment opportunities, and ensure food security. Given the fertile land, favourable climate, and abundant labour force, Bangladesh is well-positioned to advance its agro-based industries.

This article explores the strategies and opportunities for developing agro-based industries across the country, focusing on value addition, diversification, technology integration, and sustainable practices.

Agro-based industries encompass a range of activities, from farming to the processing and distribution of agricultural products. These industries can be broadly classified into four categories:

The food processing industry involves processing raw agricultural products into consumable food items, including dairy, meat, fruits, vegetables, and grains. The agrochemicals industry produces fertilisers, pesticides, and herbicides to enhance agricultural productivity. The agromachinery industry manufactures agricultural machinery and equipment to improve farming efficiency. Agrowaste management refers to utilising agricultural waste to produce bioenergy, compost, and other by-products.

Scenario of agro-based industries in Bangladesh

Data indicated that the agro-food processing industry now contributes about 1.7% to GDP and employs about 250,000 people. Its share of total exports now stands at around 3.5%. However, as of now, the agro-based industries in Bangladesh are primarily small-scale and often lack the advanced technology and infrastructure necessary for large-scale operations. However, certain sub-sectors, such as rice milling, fish processing, and poultry, have seen considerable growth.

The area has several challenges that need to be understood thoroughly before making sustainable recommendations:

Land fragmentation is one of the major challenges. Land fragmentation limits the scalability of agricultural operations and reduces efficiency. Promoting cooperative farming and land consolidation can enhance the viability of large-scale farming. Policies supporting land leasing and sharing can also mitigate this issue.

Being one of the most vulnerable countries, climate change has a significant impact on Bangladesh. Climate change poses a significant threat to agriculture, with an increased frequency of floods, droughts, and cyclones. Implementing climate-resilient farming practices, developing drought- and flood-resistant crop varieties, and improving early warning systems can mitigate the impact of climate change.

Additionally, limited access to technology is an important challenge. Many farmers lack access to modern technology and information. Thus, it hampers the full booming of this sector. Expanding the reach of agricultural extension services and promoting digital agriculture platforms can bridge this gap. Providing affordable access to technology through subsidies and financing options can also help.

Moreover, we do have problems accessing the market properly. Farmers often face challenges in accessing markets due to poor infrastructure and a lack of information. Improving rural infrastructure, establishing farmer markets, and leveraging digital platforms for direct marketing can enhance market access. Strengthening supply chain linkages can also reduce intermediaries and improve farmer incomes.

In spite of the existing challenges, there are huge opportunities for agro-based industries in Bangladesh. The opportunities are multi-dimensional and can be as follows:

Export potential

a. Regional and global markets: Bangladesh can tap into regional and global markets for its agricultural products. Establishing trade agreements and improving compliance with international standards can enhance export opportunities.

b. Value-added products: Exporting value-added products, such as processed foods and organic produce, can fetch higher prices than raw agricultural products. Developing branding and marketing strategies can increase the global visibility of Bangladeshi products.

Employment generation

a. Rural employment: Agro-based industries can create substantial employment opportunities in rural areas, reducing migration to urban centres. This includes jobs in farming, processing, logistics, and retail.

b. Women empowerment: Encouraging women's participation in agro-based industries can empower them economically. Providing training and support for women entrepreneurs can promote gender equality in the sector.

Food security

a. Reducing post-harvest losses: Implementing efficient post-harvest handling and storage practices can reduce losses and ensure a steady supply of food. This contributes to national food security and reduces dependence on imports.

b. Diversified diets: Promoting the production and consumption of a diverse range of crops can improve nutritional outcomes. This includes fruits, vegetables, legumes, and animal products.

The Government of Bangladesh has implemented several initiatives and policies to support the development of agro-based industries. These include:

National agriculture policy

The National Agriculture Policy focuses on increasing agricultural productivity, ensuring food security, and promoting sustainable practices. It includes provisions for research and development, extension services, and farmer training.

Agro-processing policy

The Agro-Processing Policy aims to promote value addition and reduce post-harvest losses. It encourages private sector investment in agro-processing units and provides incentives such as tax breaks and subsidies.

Export promotion policies

Export promotion policies include measures to enhance the competitiveness of Bangladesh's agricultural products in the global market. This includes support for quality improvement, certification, and marketing.

Having this backdrop, we can focus on some strategies and approaches to develop the Agro-Based Industry sector.

Strategies for developing agro-based industries

A number of strategies can be deployed for developing this sector, which includes:

1. Value addition and diversification 

a. Promoting high-value crops: Shifting focus from traditional crops like rice and jute to high-value crops such as fruits, vegetables, spices, and flowers can increase profitability. Crops like mangoes, pineapples, and lychees have significant export potential.

b. Developing agro-processing Units: Establishing agro-processing units close to farming areas can reduce post-harvest losses and add value to raw products. For instance, setting up fruit processing plants can enable the production of juices, jams, and dried fruits.

c. Encouraging organic farming: Organic products fetch higher prices in both domestic and international markets. Promoting organic farming through training and certification can enhance the marketability of Bangladesh agricultural products.

2. Technological integration 

a. Precision farming: Adopting precision farming techniques can optimise resource use and increase yields. This includes the use of GPS, IoT devices, and data analytics to monitor crop health, soil conditions, and weather patterns.

b. Mechanisation: Investing in modern farming equipment such as tractors, harvesters, and irrigation systems can significantly improve productivity. Providing subsidies and low-interest loans for purchasing machinery can encourage farmers to adopt mechanisation.

c. Research and development: Establishing agricultural research centres focused on developing high-yield, pest-resistant crop varieties and sustainable farming practices can drive innovation in the sector. Collaborations with international research institutions can bring in advanced knowledge and techniques. 

3. Infrastructure Development

a. Cold chain logistics: Developing a robust cold chain infrastructure is crucial for preserving perishable products. This includes refrigerated storage facilities, transportation, and distribution networks to ensure that products remain fresh from farm to market.

b. Rural roads and connectivity: Improving rural roads and connectivity can facilitate the smooth movement of agricultural products to processing units and markets. This reduces transportation costs and time, enhancing the overall efficiency of the supply chain.

c. Irrigation systems: Expanding and modernising irrigation systems can mitigate the effects of droughts and ensure a consistent water supply. Drip and sprinkler irrigation systems are particularly effective in conserving water and improving crop yields.

4. Financial support and incentives 

a. Subsidies and grants: Providing subsidies for seeds, fertilisers, and machinery can reduce the financial burden on farmers and encourage investment in modern farming practices.

b. Access to credit: Ensuring easy access to credit through microfinance institutions and banks can enable farmers and entrepreneurs to invest in agro-based industries. Interest rate subsidies and flexible repayment terms can make borrowing more attractive.

c. Insurance schemes: Implementing crop insurance schemes can protect farmers against losses due to natural disasters, pests, and diseases. This reduces the financial risk and encourages investment in agriculture.

5. Skill development and training

a. Farmer training programs: Conducting regular training programs on modern farming techniques, pest management, and post-harvest handling can improve farmers' skills and knowledge. Extension services can provide on-field guidance and support.

b. Entrepreneurship development: Encouraging entrepreneurship in the agro-based sector through business development programs can foster innovation and create new business opportunities. This includes training in business planning, marketing, and financial management.

c. Technical education: Incorporating agricultural and agro-processing courses in vocational and technical education can create a skilled workforce ready to work in agro-based industries. Partnerships with industry players can provide practical training and internships.

6. Sustainable practices 

a. Integrated pest management: Promoting integrated pest management (IPM) practices can reduce the reliance on chemical pesticides, preserving the environment and human health. IPM includes biological control, crop rotation, and the use of pest-resistant varieties.

b. Soil health management: Encouraging practices that maintain and improve soil health, such as crop rotation, cover cropping, and organic fertilisation, can enhance long-term agricultural productivity.

c. Water conservation: Promoting water-saving technologies and practices, such as rainwater harvesting and efficient irrigation systems, can ensure sustainable water use in agriculture.

Additionally, success stories can teach lessons. Examples exist that can be good reference points for this sector.

The dairy sector in Bangladesh has seen significant growth due to organised cooperatives and modern farming practices. The establishment of milk processing plants and value-added dairy products has created a vibrant market, improving the livelihoods of dairy farmers.

Besides, the poultry industry has emerged as a major player in the agro-based sector. Investments in feed production, breeding, and processing have transformed it into a highly organised and profitable industry, contributing significantly to the national economy.

Additionally, Bangladesh's frozen fish and shrimp exports are booming. Adopting advanced aquaculture techniques and adhering to international standards have boosted the competitiveness of Bangladeshi seafood in the global market. These success stories can be an inspiration for this sector.

It is important to explore the huge opportunity of the agro-based industry in Bangladesh. Bangladesh needs to act now before it is too late. However, while adopting policies, the policy leaders also keep the issues of food security in mind so that diversification cannot hamper the main crop production. A comprehensive and coordinated effort can be key. 

Mohammad Kamrul Hasan. Sketch: TBS

Dr Mohammad Kamrul Hasan is a Public Administration researcher and Practitioner. email:[email protected]  

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.