Although the modern economy is largely dependent on industrialization, agriculture remains the lifeblood of the Bangladesh economy. Rice is the main staple in the Bangladeshi diet. In its latest report released on 25th July, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Dhaka forecasts Bangladesh’s 2022/2023 season rice production at 35.65 million tons.
Bangladesh is a country situated in the northeastern corner of the Indian subcontinent and bordered by India and Burma, with a 2021 population estimated to be 165 million. Bangladesh is the eighth most populous country in the world. It has an impressive track record of growth and development. It has been among the fastest growing economies in the world over the past decade, supported by a demographic dividend, strong ready-made garment (RMG) exports, remittances, and stable macroeconomic conditions. The country made a strong economic recovery from the COVID-19 pandemic. According to the International Monetary Fund (IMF), Bangladesh’s GDP reached $354.24 billion in the fiscal year 2020-21 with an annual growth rate of 6.94 percent.
Although the modern economy is largely dependent on industrialization, agriculture remains the lifeblood for the economy of Bangladesh. Nearly half of all Bangladeshis are employed in agriculture and a majority of the rural population is involved in fisheries.
Most agricultural production in Bangladesh is characterized as traditional subsistence farming. Bangladesh produces a variety of agricultural products such as rice, wheat, corn, legumes, fruits, vegetables, meat, fish, seafood, and dairy products. Rice is the main staple in the Bangladeshi diet.
Lack of arable land and limited natural resources increase the importance of developing new agricultural technologies, such as salt tolerant or submergence tolerant seed varieties, to help increase productivity and meet future demand. Floods, cyclones, and biotic-abiotic stress can also affect agricultural productivity levels and incomes.
Although Bangladesh imports bulk commodities such as wheat, soybeans, and pulses, there are niche segment opportunities for high-value agricultural product imports, particularly in more affluent urban centers such as Dhaka and Chittagong. Strong consumer demand exists for imported fresh fruits, tree nuts, and dairy products, as well as processed food products.
In its latest report released on 25th July, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Dhaka forecasts Bangladesh’s 2022/2023 season rice production at 35.65 million tons. Heavy rainfall and flash floods in June 2022 damaged Aus season rice in the northern and northeastern parts of the country.
Heavy rainfall in the northern and northeastern regions of Bangladesh and the adjacent Indian states of Assam and Meghalaya caused severe flooding in Sylhet and Sunamganj districts in mid-June 2022. According to Bangladesh’s Flood Forecasting and Warning Centre, around 90 percent of Sunamganj and 80 percent of Sylhet district were submerged, and the floods directly affected over 4 million people across both districts. The flooding also affected adjacent districts in the Bhramaputra river basin including Kurigram, Gaibandha, Jamalpur, and Tangail. Local media reported that the floods damaged over 56,000 hectares of Aus season.
In July 2022, the average retail price of low-quality (coarse) rice was $0.56 per kilogram, approximately 13 percent higher than the same period last year. The retail price of coarse rice has been trending upward since September 2021 and reached a record high in July 2022. The recent economic turmoil driven by higher fuel costs and record high inflation is contributing to rising rice prices. In May 2022, Bangladesh experienced its highest inflation rate in the past five years.
For the 2022/2023 season, USDA’s Dhaka post forecasts rice imports at 600 thousand tons. Post also revised its 2021/2022 rice imports estimate to 1.3 million tons.
On June 23, 2022, the Bangladesh government reduced the rice import tariff from 62.5 percent to 25 percent to encourage the private sector to import. The reduced tariff rate will remain in effect until October 31, 2022.
From July 1, 2022, the government imposed a ban on the export of aromatic rice to control its price in the local market. Following the export ban order, the Ministry of Commerce canceled the export permissions it gave earlier to 41 private companies. According to the Bangladesh Export Policy, Bangladeshi exporters can export 25 types of aromatic rice, subject to special approval from the Ministry of Commerce. On average, Bangladesh exports 10 thousand tons of aromatic rice annually.
For the 2022/2023 season, USDA forecasts wheat harvested area at 310 thousand hectares and production at 1.10 million tons. Wheat planting in Bangladesh occurs in November and December, with harvesting in March and April. Reduced duration of the winter season and lack of promising varieties affect wheat yields and therefore, area and production are gradually decreasing. USDA estimates MY 2021/2022 wheat harvested area at 320 thousand hectares, with production at 11.3 million tons.
The higher international price of wheat, supply chain disruptions, the Russia-Ukraine war, and India’s wheat export ban jointly contributed to record high wheat and wheat flour prices in Bangladesh. The depreciation of the Bangladesh taka against the U.S. dollar is also increasing the price of wheat flour, as most wheat is imported.
USDA forecasts wheat imports at 7 million tons for the 2022/2023 season. It revised its wheat import forecast down from its previous projection on lower supply and higher prices of wheat in the world market.
For 2022/2023, Post’s total wheat consumption forecast is 8.5 million tons. Post reduced its wheat consumption forecast from its previous forecast due to lower imports and high prices of wheat in the domestic market.
Bangladesh exports substantial volumes of wheat-based products. According to the Export Promotion Bureau of Bangladesh (EPB), the export value of wheat-based products in Bangladesh fiscal year (FY) 2021/22 was around $250 million, an increase of about 130 percent from FY 2016/17.
Corn planted in November/December 2021 and harvested in March/April 2022 is the first crop of the 2022/2023 season. There are some areas in the country where farmers also grow summer corn, which is planted in March/April and harvested in June/July.
USDA’s 2022/2023 corn harvested area forecast is 560 thousand hectares. For MY 2022/2023, USDA forecasts corn production at 5 million tons. Farmers had a very good harvest of winter corn in the last Rabi season. For 2021/2022, USDA estimates corn area harvested at 550 thousand hectares and production at 4.9 million tons.
USDA’s 2022/2023 corn import forecast is 2.2 million tons. According to industry, the average annual demand for corn in Bangladesh is 7 to 8 million tons, while domestic production meets about 65 percent of the total demand. For MY 2021/2022, USDA estimates corn imports at 1.95 million tons.
According to the Trade Data Monitor, LLC (TDM), India is the leading source for imported corn. In the 2021/2022 season, Bangladesh imported 83 percent of corn from India with the remainder from Brazil. Importers look to India for imports due to its geographic proximity, cheaper transportation and logistics, and shorter shipment time.
CORN CONSUMPTION CONTINUES TO GROW
The cattle and poultry feed industries in Bangladesh are the major consumer of corn. According to the Feed Industries Association of Bangladesh (FIAB), corn accounts for 60 percent of feed ingredients while soybean meal and broken rice account for 30 percent and 10 percent, respectively. Due to the higher price of corn, FIAB stated its members may replace some corn with broken rice and bran. “However, Post believes overall corn consumption will rise due to the expansion of the poultry and cattle industries in Bangladesh,” USDA said in its last report. For the 2022/2023 season, USDA forecasts total corn consumption at 7.05 million tons.