Agro-based industry fails to make breakthrough in global market

Dhaka,  Tue,  22 August 2017
Published : 23 Nov 2016, 21:53:22

Agro-based industry fails to make breakthrough in global market

Tk 1.3 tn annual domestic turnover
Yasir Wardad

The country's agro-based industry, despite having a substantial growth for the two decades in domestic market, is yet to raise its share in the global arena, insiders said.

They attributed inadequate marketing capacity, transportation obstacles and tough quarantine rules and regulation from abroad to the sector's such less-than-expected level of export earnings.

Sustained economic growth, rising incomes and rapid urbanisation have fostered widespread changes in consumers' demand for food that attracted hundreds of investors to enter the agro-based industries raising its turnover to nearly Tk 1.3 trillion annually.

But despite a massive positive growth in domestic agro-based markets, export of the items is much lower---only worth Tk 47 billion.

This is only 1.88 per cent of the country's overall export, insiders said highlighting the need for bringing massive changes in export infrastructure.   

Entrance of a number of big conglomerates in the sector in last one decade has made the sector oversaturated making it tough for new players, said market leaders.

Market analysts said diversification of products, ensuring safe food and exploring export market could make agro-processing business profitable even for new investors.   

Apart from mainstream products' export, Bangladeshi organic products have a great potential in the global market where lack of proper branding and standardisation is the main obstacle, they said.  

According to the Agro-Processors' Association (BAPA), Bangladesh Fruits Vegetables and Allied Products Exporters Association (BFVAPEA), Bangladesh Auto Major Husking Mill Owners Association (BAMHMOA), Bangladesh Agro-based Product Producers & Merchants Association (BAPMA), Bangladesh Poultry Industries Association(BPIA) and other farm trade platforms, the industry's annual turnover reached nearly Tk 1.3 trillion in 2015 of which rice, flour, processed foods, poultry, edible oil and exportable items dominated.

Data of the Economic Review 2016, published by the Ministry of Finance said, the retail and wholesale trade contributes Tk 2.42 trillion (14.02 per cent) to the country's Gross Domestic Product (GDP).

Vice President of BAPA Md Anamul Hasan Khan said processed food sector maintained a 10-15 per cent growth for the last two decades.

Low-income people have also become habituated with industrial food.  

Apart from agro pioneers like Pran, other non-agricultural big industries began entering the food and beverage market from the 1990s, he said.

He said more than 1,250 companies have ventured into food processing, poultry, dairy, hatchery, frozen foods and beverage market in the last two decades attracted by 160 million domestic and 8.0 million expatriate customers.

Turnover of processed foods like snacks, cooking condiments, ready-to-cook food, confectionery items and beverage is nearly Tk 365 billion annually, he said.

"Reports from our 0.25 million distributors across the country say, every family in the country buys processed food items at least worth Tk 20 per day," he said.

Bangladesh Agro-based Product Producers' and Merchants' Association president Md Ruhul Amin said the processed food market has been saturated with conventional products.

He said against a demand of 10.0 million packets of potato chips and crackers a day, supply is more than 40.0 million.

Turnover of processed foods like snacks, cooking condiments, ready-to- cook food, confectionery items and beverage is nearly Tk 365 billion annually, he said.

Reports from our 0.25 million distributors across the country, every family in the country buy processed food items at least worth Tk 20 per day, he said.

Ms Fawzia Yasmeen, General Manager of Ispahani Agro Ltd, a sister concern of 196 year-old business entity 'Ispahani Group', said she sees the matter from a different point of view.

"Safe food and chemical-free food are now a slogan to protect human health. People's awareness has been rising following up-gradation of life standard," she said.

The future trade of agro inputs, processed foods and even wears lie in 'the slogan'. Chemical-free safer products will be sustained in the long run," she said.

However, she informed that her company has been now marketing Ispahani brand of rice and snacks while it opened Ispahani Biotech in 2009.

Ispahani Biotech has already started marketing bio pesticides, bio control agents, sex pheromones and bio fertiliser to ensure chemical-free natural crops, she said.

According to the two rice mill associations, 21,000 rice millers now market 40 per cent of domestic production worth nearly Tk 416 billion annually.

The country's total rice production is 34.7 million tonnes of which rice millers deal with 14.0 million tonnes of the staple cereal.

About 350 big millers in Kushtia, Naogaon, Jaypurhat, Rangpur, Kurigram, Dinajpur, Jessore and Dhaka regions market more than 11.0 million tonnes of branded rice, Md Abdur Rashid, President of BAMHMOA told the FE.

Entrance of big conglomerates like Pran, Square, ACI and Ispahani have made the market more competitive.

However, when local agro-based products achieved an outstanding growth rising by 10 times in last two decades, exports showed little progress, according to sector insiders.

According to the Export Promotion Bureau (EPB), agro-based products like processed foods and raw agricultural produces fetched $ 597 million (Tk 47.0 billion) in FY'16 which was $ 250 million 20 years ago. Exports reached highest $615 million in FY'14 and then decreased to $586 million in FY'15.

Agro-export earning of Bangladesh is only 1.88 per cent of the total export worth Tk 2.496 trillion when it comprises 20 per cent of export earnings of Vietnam and 18 per cent of India, BFVAPEA President SM Jahangir Hossain said.  

He said agricultural product exports, especially of fruits and betel leaf, have been in a morbid condition for the last two years following restriction by key destination European Union (EU).

Local exporters are now following cent per cent government-set tough quarantine rules and regulations.

The government should go ahead diplomatically to open fruit and betel leaf market of the EU for Bangladesh, he said.

On the other hand, air shipment facilities are very limited for 300 export-oriented processors which should be increased massively for bringing ground-breaking change in export earnings.

Chief of the export division at Pran Md Mizanur Rahman said market for Bangladeshi processed foods and spices has been increasing in the EU, the Middle East, Africa, the US and South Asian markets. Apart from food crops, Bangladeshi food processors now export more than 220 items to 140 countries.

He said processed foods like chanachur, potato chips and crackers, biscuits, wafer, bread, frozen snacks, beverages and spices comprise 50 per cent of the export income of agro products.

President of Bangladesh Organic Products Manufacturers' Association (BOPMA) Abdus Salam told the FE organic food items of Bangladesh have a great demand but lack of proper branding and standardisation has been holding back the possibility.

Organic food including honey from the Sundarbans, fruit and jute product exports fetch only $ 8.0 to $ 10.0 million annually while global market has expanded to $ 140 billion.

He said local standardisation entities like Bangladesh Standard and Testing Institute (BSTI) and Bangladesh Accreditation Board (BAB) should tie up with global organisations like USDA,  Demeter International, Bio Suisse, KRAV  etc. Center for Policy Dialogue (CPD) Additional Research Director Dr Khondaker Golam Moazzem said local traditional agro-based industries could not match with the rising demand of consumers whose choice and tastes are changing with increased income after 1990s.

The big industries take the lead as they ensure timely supply, quality of products and modern packaging facilities.

The entrance of large number of traders in the business has both helped consumers and farmers and also helped raise employment opportunities, he said.
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