Food-processing sector needs to go an extra mile  

Wasi Ahmed     | Published: October 30, 2018 22:36:17

The three-day processed food fair dubbed as the Sixth BAPA FoodPro International Expo 2018, held in the capital, brought fresh insight into the  potential, prospects and problems facing the country's food processing sector. There were hopes about the slow but steady growth of the industry comprising small, medium and large enterprises catering to domestic demands as well as exporting to foreign markets. And indeed there was the feeling that such hopes relied a great deal on things to be done, more importantly, on a congenial environment backed, among other things, by government policies.

A common perception is there that Bangladesh as an agro-based country has immense potential for exporting agro-processed foods, but the reality is that the country is yet to make any headway in exploiting the potential. Industry insiders often attribute this less than expected performance to many factors including lack of logistics support, research and development, high cost of investment and product diversification. There is no point arguing the logic underlying these deficiencies. These are common problems that most countries either face or overcome in dealing with agro-processing. However, the actual reason in our case seems to rest more with the overall macro-economic planning. Though agro-processing has been declared as a thrust sector in the Industrial Policy 2016 in view of its strong and integral link to the livelihood of millions of farmers and its prospect to thrive, it is yet to receive the right boost.

   Declaring it a thrust sector hasn't worked to stimulate it as it should have. This is clearly reflected in the export proceeds. According to Export Promotion data, export of agro-proceed products, mostly food products, earned a paltry $320 million in the fiscal 2017-18. It earned $300 million in FY 2016-17, and $240.4 million in FY 2015-16. The figures were $153.5 million and $101.49 million in FY 2013-14 and 2012-13 respectively. This meagre rise in export receipts over the years does not support strong prospect of growth of the sector in immediate future.

However, despite this very slow and marginal growth, Bangladesh Agro-processors' Association (BAPA) has set an export target of $1.0 billion by the year 2021. This is not a very big target but given the state of current progress, it seems an ambitious one.

At present, Bangladeshi firms export processed food to 144 countries, including the US, Canada, UK, Saudi Arabia, UAE, China, Japan and Australia. The products include among others spices, fruit juice, fruit drinks, biscuits, processed nuts, potato chips, potato flakes and pickles. Bangladeshi migrants are the main consumers of these products, and with more and more quality products made available to them, their preference for home-grown products are very likely to increase. Domestic market for agro-processed products is also growing as people are getting increasingly inclined to ready-to-cook and ready-to-eat food items.

However, it remains to be said that the picture is not rosy enough to inspire great hope for the sector. One key reason being that there are only a handful of companies engaged in quality processing and marketing. The country currently has more than 400 food processing firms, and around a dozen of them are in exporting-according to BAPA. Basically, it is the domestic demand that the industry caters to, and it is growing significantly to meet the domestic demand.

With modern technology facilitating the manufacturing process, the potential for its growth is immense. Obviously, this will add great stimulus for penetrating markets abroad. Even if the migrant Bangladeshis are considered the target consumers, further growth prospect appears to be around the corner. But it must not be taken for granted that these products are meant for the Bangladeshi migrant community only. There is no reason why the large number of sub-continental migrant communities should not be taken as potential consumers.

In order to do so, there is the definite need for market research in target destinations. Whatever has been achieved so far is very much in the pattern of domestic marketing. The foods sent out are the same that the firms produce for domestic market. It is here that exporting firms need to go an extra mile to be able to stay in the overseas markets with competitive edge. While fulfilling market-specific compliance needs and quality assurance is integral to the task, diversification of products is equally important -- the latter can hardly be expected to be accomplished without thorough market research.

In this context, it may be noted that the country's agro-processing industry has not yet capitalised on the prospects of processing seasonal fruits and vegetables. Fruits such as pineapple and banana are potentially suitable for processing, and countries that have gone to do so, complying with country-specific sanitary and phytosanitary requirements, have attained remarkable success.

Facilitating with incentives, especially by way of soft credit, may bring a great change in the sector suffering from capital constraint. More than anything, the important thing that must not be lost sight of is the huge prospect in overseas markets which can only be accessed through long term planning with emphasis on market research, product adaptation and quality assurance.

The government is currently at work on the upcoming Export Policy, and it is indeed pertinent to expect that the authorities would interact meaningfully with the producers/exporters to address the problems facing the sector.


Share if you like