Bangladesh has seen remarkable progress in boosting food production since gaining independence over five decades ago. Despite its land area remaining unchanged, the country's population and food demand have surged. This achievement defied the "bottomless basket" label once applied to Bangladesh. The hard work of farmers combined with supportive agricultural policies from the government have driven this food production success story.
In the aftermath of the 1971 liberation war, Bangabandhu Sheikh Mujibur Rahman initiated policies focused on economic and food security. These involved providing subsidized seeds, fertilizers, and irrigation facilities - measures that continue today. Even amid global crises impacting food grain supplies, Bangladesh's robust food security stems from increased domestic production backed by strategic policies.
To shield farmers from inflation and control food prices, the government raised agricultural subsidies from 17,000 crore taka to 25,000 crore taka in the revised budget of this fiscal year. An additional 600 crore taka was allocated for agricultural rehabilitation. Factors like rising global fertilizer costs, currency devaluation, higher shipping rates and LNG prices necessitated this subsidy increase. The next fiscal year may see an 18,000 crore taka agriculture subsidy, pending the Finance Ministry's decision.
Analysis shows agricultural subsidies have increased yearly, with the most significant jump in FY 2022-23 from 16,000 crore to 26,000 crore taka. Previous years also witnessed hikes over initial allocations. The subsidies primarily reduce fertilizer costs for farmers and subsidize 20% of irrigation electricity bills.
Farm-Friendly Policies Working Wonders
Bangladesh's agricultural sector has witnessed steady growth, with farmers comprising 40% of the workforce and contributing 14% to the national GDP. Although agriculture's share of GDP has declined over the past decade, its absolute value has risen to BDT 393.09 billion, indicating economic diversification. The sector's productivity has also improved, with food grain production increasing from 32.1 million metric tons in 2008-09 to 49.7 million metric tons in 2022, averaging an annual growth rate of 2.4%.
The country is nearing self-sufficiency in rice, fish, meat, and vegetables, ranking among the top 10 globally for 12 agricultural products. Horticulture and non-traditional crops have experienced significant growth, with vegetable production increasing by 83.1% and fruit production rising by 114.4% from 2011 to 2022.
Investments in irrigation and water management infrastructure have boosted crop yields by 20% and reduced failure risks, with over 2 million hectares now under irrigation. Crop diversification is being encouraged through government incentives, leading to a 50% increase in areas dedicated to fruits and vegetables and a 15% rise in the value of agricultural exports.
The adoption of technology, such as mechanized farming and mobile apps for real-time data access, has enhanced productivity. Infrastructure investments, particularly in rural roads, have improved supply chains, although post-harvest losses persist due to inadequate cold storage facilities.
Agriculture remains a key employment sector, with the number of people employed increasing from 37.54 million in 2010 to 41.66 million, aiding poverty reduction efforts. Financial support for agriculture includes Bangladesh Bank's low-deposit accounts for farmers and a Tk 283.91 billion credit target for 2021-22. Bangladesh's agricultural subsidy, the highest in South Asia during the COVID-19 pandemic, increased from 6500 million in 2009 to 13000 million in 2021, with the fertilizer subsidy rising from 16000 crores in FY 2022-23 to 24000 crores in FY 2023-24.
Government Interventions
Bangladesh's agriculture sector transcends mere statistics, playing a crucial role in ensuring food security, sustaining livelihoods, boosting exports, driving rural growth, and fostering sustainability, thereby contributing to the nation's overall stability. The government's recent reforms have significantly enhanced agriculture's production, productivity, and profitability.
The sector's growth over the past decade stands as a testament to the government's dedication and strategic policies. The seventh five-year plan (2016-2020) invested 17% of its budget in agriculture, aiming to raise productivity, upgrade rural infrastructure, and foster crop diversity. Initiatives like the '100 Million Tree Plantation Program' and 'National Agricultural Policy 2016' were introduced during this period.
The 8th Five-Year Plan (2021-2025) has set an ambitious target of increasing food grain production by 50% by 2030. To achieve this, the plan envisions expanding cultivation by 10%, boosting irrigation by 15%, and encouraging the use of high-yield seeds and fertilizers. These goals, outlined in the National Agriculture Policy 2016, chart a course for sustainable agricultural advancement, food security, and rural prosperity.
Bangladesh's resilience in maintaining a stable food supply during the COVID-19 pandemic can be largely attributed to the substantial government support extended to farmers and the easing of lockdown restrictions for the agricultural supply chain. Following the pandemic, the government has continued to provide market support and production facilities to the agricultural sector.
Market Intervention: In November 2022, the government announced a refinancing plan worth BDT 5,000 crore for the agriculture sector to conclude by June 2024. This scheme offers loans with up to an 18-month repayment period and a three-month grace period. Additionally, the government committed to buying 300,000 tonnes of paddy and 500,000 tonnes of parboiled rice from the 2022/23 Aman harvest. In April 2023, it was further announced that purchases would include 400,000 tonnes of paddy and 1.25 million tonnes of parboiled rice from the 2023/24 Boro harvest, scheduled from 7 May to 31 August 2023, at Tk 44 per kg for parboiled rice and Tk30 per kg for paddy.
Production Support: In December 2022, the government allocated BDT 1.7 billion to aid 2.7 million producers for the 2023/24 Boro season. This support includes distributing two kgs of hybrid seeds to 1.5 million farmers and providing five kgs of seeds, along with ten kgs each of di-ammonium phosphate and muriate of potash, to promote high-yield crops and mechanization. In February 2023, an additional BDT 572.5 million was designated to assist 1 million smallholders growing Aus paddy, supplying them with seeds and fertilizers.
Import Tariff, Finance and Credit Facilities: In December 2022, the government decided to reduce import duties and charges on non-fragrant parboiled and white rice to a rate of 15.25 percent and requested the commercial banks to issue letters of credit to importers of rice and wheat at a minimum margin.
Initiatives For Agricultural Resilience
National budget: The government has significantly increased its financial support for agriculture, allocating Tk. 35,374 crore in the 2022-23 budget, marking a 4.97% rise from the previous year. This includes 205 rebates on electricity for irrigation pumps, with 70% of costs in haor and coastal regions and 50% elsewhere subsidized as development aid. The funds will bolster various initiatives such as crop diversification, irrigation, water management, agricultural research, extension services, and private sector investment.
Agro subsidies: The government provides several subsidies to farmers to support their agricultural activities. These include subsidies on fertilizers, pesticides, and irrigation equipment. Such subsidies help reduce the overall cost of production for farmers, making it more affordable for them to cultivate crops.
In the budget for the fiscal year 2023-24, the government has allocated Tk. 24,000 crore as a fertilizer subsidy, marking a significant increase from the Tk. 16,000 crore allocated in the previous year. Additionally, the food subsidy is set to be increased by Tk. 800 crore, reaching a total of Tk. 6,766 crore.
Furthermore, proposals have been made to waive the advance tax on the import of agricultural machinery such as rice transplanters, dryers, potato planters, and prayer machines. This move aims to facilitate easier access to modern farming equipment, thereby enhancing efficiency and productivity in the agricultural sector.
Cash assistance: Farmers affected by calamities or natural disasters may be eligible for government financial assistance. This aid helps cover the costs of food, seeds, and other farming necessities. Following the Covid-19 pandemic, the government provided farmers with a cash relief package of Tk. 2,000 crore in 2021.
Incentive program: The government has launched initiatives like the "Farmers' Income Enhancement Program" and the "Providing Agricultural Land to the Landless Farmers" program to support agricultural growth. These programs aim to boost farmers' productivity and income by providing financial assistance, educational opportunities, and various resources.
Future Challenges
Despite recent advancements, Bangladesh's agriculture faces challenges like climate change, land scarcity, and limited financial access for smallholder farmers. Addressing these issues through climate-resilient practices, innovative farming techniques, and improved financial services is crucial. Upgrading infrastructure and enhancing market access are also key to reducing losses, increasing profitability, and ensuring fair pricing for farmers. Tackling these challenges will help sustain growth and enhance food security in the long run.
