Agriculture plays a vital role as the source of livelihood and growth of the economy in Bangladesh. Rice is the main staple in the Bangladeshi diet. Rice production currently accounts for 77% of agricultural land use. USDA forecasts Bangladesh’s 2020/21 marketing year rice production at 35.3 MMT. Second to rice, wheat is one of the most important crops. The demand for wheat is on the rise and Bangladesh’s dependency on wheat imports is increasing. Wheat import requirements are estimated at a near-record level of 6.1 million tonnes in the 2020/21 season.
Bangladesh is situated in the northeastern corner of the Indian subcontinent and bordered by India and Burma, with a population of 165 million. Bangladesh is the eighth-most populous country in the world, and the most densely populated other than city-states.
It has enjoyed consistent annual GDP growth of over six percent since 2005, though growth in 2020 will likely slow because of the COVID-19 outbreak. According to the International Monetary Fund (IMF), Bangladesh’s GDP reached $317 billion in 2019 with an annual growth rate of 7.9 percent.
Much of Bangladesh’s economic growth continues to be driven by exports from the $28.0 billion ready-made garments (RMG) industry. The garment sector accounts for more than 80 percent of Bangladesh’s total exports.
Agriculture plays a vital role as the source of livelihood, growth of the economy and providing employment in the country. Nearly half of the Bangladeshi workforce is employed in the agriculture sector, with rice as the single-most-important product.
Bangladesh produces a variety of agricultural products such as rice, wheat, corn, legumes, fruits, vegetables, chicken meat, fish, and seafood. 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. Strikes, floods, cyclones, and drought can also affect agricultural productivity levels and incomes.
From the last couple of decades, the country has fought to ensure food security to feed 160 million people through very little diversity in crops and with limited land available for cultivation. With significant economic development, the country achieved great success in ensuring food security through the supply of staple foods like rice, vegetables, fruits, and fish to consumers. Within the last ten years, the issue of food safety has been raised as adulterated and low-quality foods spread to markets, raising public health issues to a critical level.
Previously, the Ministry of Food was fully engaged in rice and wheat procurement, storing these commodities in government facilities and supplying them to consumers through various feeding programs. Realizing the importance of a secure and safe food supply to consumers, the Ministry of Food established the Bangladesh Food Safety Authority (BFSA) in October 2013.
Since May, Bangladesh’s grain farmers have had to overcome a cyclone, heavy monsoon rains, and a consistent inflow of floodwaters from India. The floods, which started with heavy rainfall on June 17, did not recede until the end of August and have caused Bangladesh’s 200-plus rivers to overflow, impacting over 40 percent of Bangladesh’s landmass, US Department of Agriculture (USDA) said.
Rice production during the Boro, Aus, and Aman growing seasons was impacted. Corn production was mildly impacted. Wheat production forecasts were not impacted, as wheat is produced during the winter months in Bangladesh.
The COVID-19 pandemic has not had a significant impact on Bangladesh’s MY2020/21 grain production. However, severe weather in Bangladesh, which started in May and ended in August, has impacted Bangladesh’s rice production and moderately impacted Bangladesh’s corn production, according to a Grain and Feed Update report from USDA released on 8th November. Wheat production, which predominately takes place from November to April in Bangladesh, was not impacted.
The COVID-19 pandemic has impacted domestic retail prices for rice, wheat flour, and corn primarily because of farmer and miller speculation but also because of minor supply chain disruptions during the Bangladesh government’s COVID-19 lockdown, which ended in May, and restrictions on importing agricultural inputs (e.g., seeds, fertilizer) put in place by exporting countries, USDA reported.
The government made several announcements over the summer to assuage consumer concerns of any potential food shortages. It has consistently released information about the grain stock levels and has demonstrated a close monitoring of domestic grain prices.
Bangladesh is the world’s 4th largest rice-producer and one of the highest per capita consumers of rice (about 170 kg annually). It is the staple food for the people of Bangladesh. Rice production currently accounts for 77% of agricultural land use maintained by some 13 million farm families.
USDA forecasts Bangladesh’s MY 2020/21 rice production at 35.3 million metric tons (MMT), as a result of severe weather over the May to August time period. If realized, the MY2020/21 rice crop would be down 1.4 percent relative to the MY2019/20 crop.
USDA’s forecast for Bangladesh’s rice consumption in MY 2020/21 is 36.3 MMT. This consumption estimate is 0.5 MMT above MY 2019/20 consumption levels because of two major factors. First, the government has increased its procurement target of rice to support local farmers and keep market prices stable.
Second, household consumers have increased personal stocks, via personal purchase and aid donation, of rice to keep at home during the pandemic, which will likely more than offset the drop in rice consumed in the hotel, restaurant, and institution (HRI) sector.
The International Rice Research Institute (IRRI) conducted a survey comprised of different rice value-chain actors in which respondents indicated an increase in per-capita consumption of rice as a result of COVID-19 because “rice is easily available and cheaper than other foods”.
USDA’s forecast for rice imports is 500,000 MT in MY 2020/21, as a result of the government’s difficulty in procuring rice from the domestic market at low prices. Smallholders farmers reported various difficulties in selling rice as a part of the increased procurement program this year because of regulations and high transaction costs associated with the procurement program. The government has publicly stated the possibility of increasing rice imports to meet the necessary food security stock levels. The current effective import rate for rice is 55 percent.
STRONG DEMAND FOR WHEAT
Bangladesh being driven by rapid urbanization, rising incomes and more people joining the workforce outside their homes, the demand for wheat-made food and food products is on the rise. Second to rice, wheat is one of the most important winter crops and is temperature-sensitive grain crop of Bangladesh.
USDA’s forecasts Bangladesh’s MY 2020/21 wheat production at 1.25 MMT. If realized, this crop would be a 4.2 percent increase over the 2019/20 crop. The Ministry of Agriculture has set the annual food grain production target for wheat at 1.3 MMT during Bangladesh’s FY2020/21.
Bangladesh’s wheat consumption forecast in MY 2020/21 is 7.55 MMT. If realized, the consumption of wheat would increase 2 percent in MY2020/21 relative to 2019/2020. The increase is driven by a growing preference for wheat in aquaculture feed and consumer preference for wheat-based products in Bangladesh, despite a slight downturn in consumption of baked goods from the hotel, restaurant, and Institution (HRI) sector as a result of COVID-19, USDA said.
With the continuous fall of wheat production in Bangladesh, the country’s dependency on wheat imports is increasing over time. Wheat import requirements, which account for the largest share of the grain imports, are estimated at a near-record level of 6.1 million tonnes in the 2020/21 marketing year, 10 percent above the previous five-year average, following a steady increasing trend since 2012/13. The strong demand for wheat largely reflects a shift in local diet preferences.
Bangladesh’s wheat import will be driven by the private industry. From July to September 2020, the private industry’s import of wheat was 1.3 MMT. Wheat is imported at a zero tariff rate and importers prefer to import durum, soft, red hard winter or milling wheat.
Bangladesh has become one of the major export destinations for Canada. Along with Canada, Bangladesh imports wheat from Russia, Ukraine, Argentina, Australia and some other countries to meet its local demand for wheat.
USDA forecasts Bangladesh’s MY 2020/21 corn production at 4.5 MMT, as a result of the growing demand for corn in the feed industry and improved yields. If realized, this crop would be a 9.7 percent increase over USDA’s official 2019/20 crop estimate. The Ministry of Agriculture has set the annual food grain production target for corn at 5.69 MMT during Bangladesh’s FY2020/21.
USDA’s forecast for Bangladesh’s corn consumption in MY 2020/21 is 5.5 MMT. If realized, the consumption of corn would increase 5.8 percent in MY2020/21 relative to 2019/2020. The increase is driven by a growing preference for corn in feed production and the increasing size of Bangladesh’s feed industry.
According to a recent FAO report, corn has two distinct uses in Bangladesh. It is a major ingredient in feed for livestock and fish, and for humans, it is used for popcorn and corn flour. Surveys indicate that a few companies have started producing corn starch for industrial purposes in response to the crisis, though the extent of these actions and their durability following the end of the lockdown needs to be verified.
However, it was reported by the Maize Association of Bangladesh that popcorn processing had been halted as its sales as a street food declined to insignificant levels during the pandemic.
FOOD PROCESSING INDUSTRY IN BANGLADESH
Bangladesh has a strong growing food processing sector, which heavily relies on domestic agricultural production and mainly focuses on serving domestic demands. Despite having good potential for high volume export, these potentials have not been exploited to the fullest. The food processing includes rice and wheat milling, sugar refining, production of edible oils, processing and preserving of fruits and fruit juices as well as fish processing, both white fish and shrimps.
Processed food represents one of the major potential sectors in terms of its contribution to value addition and employment. The sector accounts for over 22% of all manufacturing production and employs about 20% of the labor force. All food processing enterprises account for 5% of GDP (around 4.48 bill USD).
As rice is the staple cereal in Bangladesh and with the increase of both the population size and life expectancy at birth, it has given the rice processing industry a stable outlook. Most of the rice mills in Bangladesh are located in Dinajpur district and other northern districts.
Over the last decade, several hundred automatic and semi-automatic rice mills commenced, in various rice producing zones. Naogaon, Chapainawabganj, Dinajpur, Kushtia, Khulna, Barisal and Noapara of Jashore are some districts that have attracted investment to set up big automatic rice mills. Presently, there are approximately 17,000 chatals, 500 semi-automatic rice mills and 400 fully automatic rice mills operating in Bangladesh.