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Bangladesh food industry

Pandemics, war retard pace of growth

Zahid Huq | September 29, 2022 00:00:00

Food and clothing are two important elements of any economy since they are at the top of the list of basic needs of its population. Thus, these two do play a pivotal role in the economic activities of any country, rich or poor.

Then again, of the two elements, food comes first. One needs to consume food to survive. Bangladesh, a country with a large population to feed, is no exception. Food production, processing, and preservation get due importance at the state and individual levels. Agriculture, an important source of food items and employment, occupies a notable place in the economic planning of Bangladesh. Though the contribution of agriculture to the country's gross domestic product (GDP)) has been declining in recent years it continues to play an important role in the economy. Food production has more than tripled in three decades mainly due to the greater introduction of improved farm practices. The sector has been receiving much-needed attention. A few lapses, however, are there.

Thus, the growth of the food industry remains a natural phenomenon in a country where the population is large and agriculture is the mainstay of its economy. Bangladesh too has been witnessing notable growth in its food production and processing industries in recent years in the wake of a rise in demand for processed foods locally and outside.

According to Statista, an international database company, revenues from the food market in Bangladesh amount to US$127 billion in 2022. The market is expected to grow at an annual rate of nearly 10 per cent until 2027. Of all the food items, bread and cereal products have emerged as the largest segment of the food industry with an annual market share worth US$20.58 billion in 2022.

By any measure, it is huge growth. With a population growing at a modest rate and per capita income going up unabatedly, the demand for processed foods, including bread and cereal items, would naturally go up. In Bangladesh, the demand for handmade bakery items has gone down when a reverse development has taken place for mechanically produced bakery items. During the last two decades, many units having modern bread and biscuit-producing machines have come up. Those not only are meeting the local demand but also exporting a sizeable volume of their produce.

The food industry is a behemoth, as it has many segments, each having special characteristics. A few segments are traditional and some others deal with modern food processing and marketing. The food processing segment now occupies a major part of the industry. Locals and multinationals involved in it produce food products worth billions of taka every year. In processed foods, quality is a key factor and Bangladeshi producers have made a notable improvement in this area. Hopefully, they would make further progress and beef up their export volume gradually.

Thousands of small roadside tea stalls in cities, towns and villages show how important a role the food industry plays in the country's economy. Besides serving tea, these stalls sell biscuits, cake and buns to a wide range of customers, who include rickshaw-pullers, day labourers, and youths. There is no way of knowing their total daily turnover since none has ever tried to know it. But it must be in billions of taka. These tea stalls are helping innumerable small bakeries to survive.

There is no denying that the onslaught of the Covid-19 pandemic has affected the food industry like others during the past couple of years. The industry was hopeful about making recovery with the pandemic waning. But things have happened otherwise because of the Russia-Ukraine war. The prices of most food items, including wheat and cooking oils, recorded a huge increase as both the warring countries are major producers of cereals and oilseeds. The situation has eased slightly but is yet to return to the previous state. The combined effect of war and Covid-19 has hugely eroded the purchasing power of consumers. So, the demand for processed foods has declined. In the meanwhile, the threat of global recession is looming on the horizon. Several multilateral institutions, including the World Bank and the World Trade Organization, have already warned of such a possibility. Like all other industries, food processing industries will also face a tough time if recession gets hold of the global economy.

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