Agriculture is an important sector in Bangladesh, contributing significantly to the country's Gross Domestic Product (GDP) and providing employment for millions of people. A robust agriculture supply chain management system can help improve the efficiency, quality, and competitiveness of the sector, leading to increased economic growth in several ways.
In the fiscal year 2022, agriculture's value addition (% of GDP) rose from 11.6% to 12.91% compared to the FY 2021. According to FAO, around 48.4% are employed directly or indirectly in the agriculture sector of Bangladesh. Despite various challenges, such as lack of infrastructure, limited access to finance, and lack of technology, the agriculture sector has shown consistent growth over the years.
Recently, the sector saw an increase in the adoption of modern technology and practices, leading to increased productivity and efficiency. However, the COVID-19 pandemic posed new challenges to the agriculture sector, affecting the supply chain and causing disruptions in the market. The sector is characterized by smallholder farms, low levels of technology and limited access to markets, financing, and other resources. Despite these challenges, the sector has great potential for growth, particularly in areas such as horticulture, fisheries, and livestock.
To tap this potential and drive economic growth, the government of Bangladesh is taking several steps to improve the competitiveness of the sector. These include investing in infrastructure, improving access to markets, and providing training and support to farmers and other stakeholders. The private sector can also play an important role by investing in the industry, developing value-added products, and helping improve access to markets.
The current situation in Bangladesh is that the agriculture sector is facing several challenges, including a lack of proper infrastructure, limited market access, and limited information management capabilities. These challenges can reduce the efficiency of the sector and limit its competitiveness, hindering economic growth. Despite these challenges, by improving the efficiency and competitiveness of the supply chain, Bangladesh can tap the sector's potential and drive economic growth. The government of Bangladesh is taking several steps to improve the agriculture supply chain management system, including investing in infrastructure, improving information management systems, and providing training and support to farmers and other stakeholders. The government is also working to increase access to markets by promoting trade and investment in the sector.
Technology presents a significant challenge for the agriculture sector in the country, but with the proper support, it can also create a good opportunity for growth and development. By addressing the challenges and leveraging the potential of technology, the sector can become more efficient, competitive, and resilient, which will drive economic growth and improve the lives of millions of people in the country.
The sector faces numerous challenges, one of which is the lack of an efficient logistics system. The inefficient supply chain, which includes transportation, storage, and distribution, affects the quality and competitiveness of agricultural products in the global market. Some of the key challenges facing the logistics system here include:
Poor infrastructure: The country's roads, bridges, and ports are often inadequate and unable to handle the volume of goods being transported. This results in long lead times and high transportation costs, which impact the competitiveness of agricultural products.
Lack of proper storage facilities: Many farmers in Bangladesh do not have access to proper storage facilities, which results in the spoilage of crops and a decrease in their value.
Limited distribution networks: The limited distribution networks in Bangladesh mean that farmers often have limited access to markets, which affects their ability to sell their products and receive fair prices.
To overcome these challenges, the government and private sector can work together to improve the logistics system in the agriculture sector. This includes investing in infrastructure, such as roads, bridges, and ports, and developing modern storage facilities. Further, the government can provide incentives to companies to help them invest in the logistics sector and improve distribution networks.
Multinational corporations (MNCs) are increasingly participating in the agriculture sector here, which has had a positive impact on the industry. MNCs bring capital, expertise, and technology to the sector, which helps drive innovation and growth. MNCs are bringing cutting-edge technologies to the sector, which helps improve yields and reduce waste. This can increase the competitiveness of the sector and drive economic growth. Also they are directly investing in the agriculture sector in Bangladesh, which helps bring in new capital and expertise. This can help improve the quality of products and increase competitiveness. Their participation helps bring capital, expertise, and technology to the sector. With the right support, the sector can continue to thrive and provide livelihoods for millions of people in the country.
According to the Bangladesh Bureau of Statistics data, the value of farm products' exports from Bangladesh is steadily rising. Bangladesh exported $1.16bn worth of agricultural products in FY22. The country's overall product exports were worth $52.08 billion in the past fiscal year, recording a 34.38% growth. These numbers indicate that the agriculture sector matters to Bangladesh's overall economy.
The implementation of quality control measures in the agriculture sector has helped improve the quality of products and increase their competitiveness in the export market. Bangladesh has been diversifying its export basket, which has helped reduce dependence on a single market and increase the resilience of the export market. Bangladesh exports a wide range of agriculture products to various countries across the world. Some of the main destinations for Bangladeshi agriculture exports include India, European Union, United States, etc.
It is important for the sector to remain competitive in the global market in order to continue driving the country's economic growth and providing livelihoods for millions of people. The main competitors for Bangladeshi agricultural exports include India, Thailand, Vietnam, China, and other Southeast Asian countries. These countries have established themselves as major players in the global agriculture market and pose a challenge to Bangladesh in terms of price, quality and variety of products. To overcome this competition, the sector will need to invest in improving its competitiveness and efficiency. This may involve improving the productivity of farms and the value chain management, marketing, and branding strategies of the industry. Additionally, promoting the products and the sector itself to international buyers and investors can help establish and build long-term relationships with key customers and markets.
Ensuring the production of safe food for export is critical for meeting the requirements of international buyers and boosting the country's exports. Buyers in international markets typically have some requirements when it comes to food safety, as they want to ensure that the products they are purchasing are free from harmful substances and contaminants.
To meet these requirements, the sector will need to implement best practices and technologies that can help reduce the risk of contamination and improve the overall quality of food products. This may involve implementing food safety management systems, such as Hazard Analysis and Critical Control Points (HACCP), which will help identify and control potential food safety hazards in the production process.
The sector is undergoing a period of innovation, with several new technologies and practices being developed and adopted to improve the competitiveness and sustainability. Some of the latest innovations in agriculture in Bangladesh that are attracting attention both locally and globally include: Irrigation Technology, Livestock Management, etc. These innovations are helping modernise and transform the sector, making it more productive, efficient, and sustainable. They are also helping to raise the profile of Bangladesh as an agricultural innovator on the global stage. The private sector has become increasingly involved in the agriculture sector in Bangladesh, which has helped drive innovation and improve the efficiency of the supply chain.
The writer is Head of Supply Chain Advisory Services, Management Consulting, KPMG Bangladesh.
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