The Financial Express
Swasti Lankabangla Swasti Lankabangla

Agro-processing needs proper policy boost    

Agro-processing needs proper policy boost      

Despite the importance often attached to agro-processing as a prospective export sector for Bangladesh, the country is far from making any headway in this regard.

Industry insiders often attribute this less than expected performance to many factors including lack of logistic 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 countries either face or overcome in dealing with agro-processing. However, the actual reason in our case seems to rest more on the overall macro-economic planning. The highly valid point that everyone is aware of is that this sector with its strong and integral link to the livelihood of millions of farmers has more prospect than any other to thrive, that too for both the domestic and export markets. But it is yet to receive the right boost, although it has been declared as a thrust sector in the Industrial Policy 2016.

Declaring it a thrust sector hasn't worked to stimulate it as it should have. This is clearly reflected in the export proceeds. Export of agro-processed 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. Clear enough, this meagre rise in export receipts over the years does not at all justify any noticeable growth in the sector. What, however, is a bit intriguing is that despite the very slow and marginal growth, Bangladesh Agro-processors' Association (BAPA) has set an export target of $1.0 billion by the year 2021. This, no doubt, is not a big target but given the state of current progress, it seems quite an ambitious one.

At present, Bangladeshi companies export processed foods to 140 countries, including the US, Canada, the 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. Primarily, 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 must be noted 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 200 food processing firms, and around a dozen of them are in exporting-according to the BAPA. The food processing industry is estimated to be worth US$ 2.5 billion. Basically, it is the domestic demand that the industry caters to, and so 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 a 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 migrant community only. There is no reason why the large number of sub-continental migrant communities should not be taken as potential consumers, provided the foods are able to match their tastes and preferences.

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, while competing with rivals from other countries and at the same time meeting market-specific compliance needs. While 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. The manufacturers and exporters would be doing the right thing if the focus now is put on this aspect.

In this context, it needs to be mentioned 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 country-specific sanitary and phytosanitary requirements, have attained remarkable success.

Facilitating the sector 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 be gainfully explored 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. 



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