Intro

Agriculture sector comprises crops, fisheries, livestock, and forestry Dairy, Edible Oil, Fruits, Potato, Cold Chain, Poultry, Vegetable Processing, Fisheries, Food Park sub-sectors being the predominant.
Agriculture is the main economic bustle and lifeline integrated with the life and livelihoods of the people of Bangladesh. Agriculture sector makes an vital contribution to GDP of the country, provides employment of about half of the labor force, remains a major supplier of raw materials for agro-based industries, and contributes significantly to export earnings of Bangladesh. Though the share of agriculture in GDP is around 18.5% currently, but the total contribution of agriculture to GDP has increased, and still remains the predominant sector in terms of employment and livelihood.
Agriculture is the principal source of food and nutrition. So, its role is important in improving the wellbeing of the vast population through enhancing productivity, profitability and employment generation in the rural areas. Besides, it is the largest source of market for a variety of consumer goods, particularly in the rural areas. Hence, improvement of agriculture and acceleration of its growth is essential to reduce the rural poverty and enrich the national economy.

Industry Overview

Following Key stats may help to understand the current scenario of agriculture sector of Bangladesh.

Total family 2,86,95,763
Total farm holding 1,51,83,183
Total Cultivable land 85,60,964.75 hectare
Total irrigated land 74,06,822.87 hectare
Cultivable waste 2,10,027.92 hectare
Cropping intensity 192%
Single cropped area 23,54,821.74 hectare
Double cropped area 38,47,274.49 hectare
Triple cropped area 17,15,430.38 hectare
Net cropped area 79,30,071.63 hectare
Total cropped area 1,52,45841.93 hectare
Contribution of agriculture sector to GDP 14.75%
Total food crop production Rice-347.101 lakh MT

wheat-13.48 lakh MT

Maize-27.59 lakh MT

 

Sectoral GDP growth FY13 FY14 FY15 FY16
Agriculture 2.5 4.4 3.3 2.8
   a) Agriculture and Forestry 1.5 3.8 2.5 1.8
i) Crops & Horticulture 0.6 3.8 1.8 0.9
ii) Animal Farming 2.7 2.8 3.1 3.2
iii) Forest and Related Services 5.0 5 5.1 5.1
   b) Fishing 6.2 6.4 6.4 6.1

SWOT Analysis of Agricultural Sector

1.Statistical Act, 2013
2.National Strategy for the Development of Statistics (NSDS)
3.In-depth Capacity Assessment completed
4.Available Experts in BBS
5. Synergies with 7th Five Year Plan and SDGs
1.Weak Organizational Setup
2.Inadequate Manpower
3. Non-availability of Statisticians in different Ministries/Departments
1.Integration of Agriculture Statistics with NSS
2. Initiative of FAO and other International Organizations
3. Country wide Organizational Set up
4. Dominance of Agriculture Sector
1.Lack of Fund
2.Lack of Coordination among Ministries/Departments

Physiography of Bangladesh

Bangladesh forms the largest delta in the world and is situated between 88®10′ and 92®41′ East longitudes and between 20®34′ and 26®38′ North latitudes. The great delta is flat throughout and stretches from near the foot-hills of the Himalayan Mountains in the north to the Bay of Bengal in the south. The vast plain is washed by mighty rivers-the Meghna, the Padma, the Jamuna and the Karnafuli and their numerous tributaries. Tropical monsoon rains drench the land and the rivers. Onrush of rain waters in summer overflows their banks flooding low and outlying areas every year. The monotony of flatness has been relieved inland by two elevated tracts-the Modhupur and the Barind tracts, and on the north-east and south-east by rows of hilly forests. The great plain lies almost at sea level along the southern coast and rises gradually towards north. The maximum elevation above the mean sea level is 4034 feet at Keocradang Hill in Rangamati Hill district. The topography, however, variable and can be divided into the following five classes.

  1. High Land

The area is relatively high and cannot hold waters during monsoon. Some waters are retained by raising “bandhs” around fields. The area spreads over Modhupur Garh in Tangail and Mymensingh district, Bhaoal’s Garh in Gazipur and Dhaka district, Barind tract in Rajshahi Division, Lalmai area in Comilla and “Tilla” areas in Sylhet, Moulvi Bazar and Habiganj district.

  1. Medium Highland

The land which is normally flooded up to about 90 cm. depth during the rainy season for more than two weeks continuously. The area spreads over Barisal division, major parts of Khulna division, northern part of Rajshahi division and parts of Gazipur, Narsindi, Noakhali, Feni, Lakshmipur, Comilla and Habiganj district.

  1. Medium Lowland and Low Land

Medium Lowland is normally flooded between 90cm. and 180 cm. depths and low land is normally flood between 180cm. and 275 cm. depth during the monsoon season. The area spreads over major parts of Comilla, Brahmanbaria, Chandpur, Gopalgonj district and parts of Lahskmipur, Noakhali, Serajganj, Natore and Naogaon district, northern parts of Khulna and Bagherhat district, minor of Jessore, Kishorganj and Habiganj district.

  1. Very Low Land

The land consists of haors, bills, canals and other low lying areas which looks like large lakes during rainy season. Depth of water may rise as high as 30 feet. In winter, waters dry up except in the centre. Most of the haors and bills lie in Sylhet division and in Kisoreganj and Netrokona district.

  1. Hilly Land

The land spreads over Rangamati, Bandarban and Khagrachari Hill Districts, parts of Chittagong, northern parts of Mymensingh, north and southern parts of Sylhet division, eastern border of Comilla and north eastern strip of Feni district.

 

Area under Cultivation of different Crops in Bangladesh, 2015-2016

Epilogue

The agriculture sector is the major supplier to sustained food, nutrition and livelihood security of its big population to achieve self-sufficiency in food production, reduce rural poverty and adopt sustainable economic development. Development of agriculture in Bangladesh is therefore accorded high priority by the Government with special emphasis on agriculture related policies, planning and informed decision making. In this process, the need for scientific measurement of changes in agriculture related indicators is duly recognized. The advancements in technology in recording and analysis of data have opened new borders to interpret, understand and infer about the issues confronting the sector. There is a requisite to improve and strengthen the present system through specific concentration on agriculture industry.

Intro

Milk production is one of the most important economic activities in Bangladesh, providing 3.6 million households with supplementary income. The dairy system in Bangladesh is characterized by small-scale operations, coupled with crops and other off-farm activities. Several government, NGO and private sector initiatives have made progress in transforming dairy into a more value-driven and market-oriented sector. The dairy market in Bangladesh is lucrative for investors given the country’s large population, rising incomes and evolving diet.

Growth Drivers

  • One of the highest cattle density in the world: 145 large ruminants per square kilometers in 2010
  • Rising demand for milk-based food products in daily consumption and as beverages
  • Low cost of input (raw materials, human resources )
  • Introduction of UHT milk, milk powder, yogurt, flavored milk products and other popular product varieties by dairy enterprises
  • Introduction of aseptic milk packaging leading to longer shelf life

Dairy Production

Milk production in Bangladesh annually grew by 6.2% between 2005 and 2012. This growth was largely due to higher milk production by an increasing number of cross-bred dairy cows, more institutional investment in dairy, rising market demand for processed dairy products and the implementation of other similar dairy development program.

Livestock

Livestock is a major component of agricultural economy of Bangladesh performing multifaceted functions such as ensuring food security and source of income, earning foreign revenue through export, supplying manure and fuel among many others.

DAIRY COUNTER

250 ML
DAY/HEAD
Demand for Milk
125.59 ML
DAY/HEAD
Available to meet
124.41 ML
DAY/HEAD
45.8%
Level of Deficiency

15th
Bangladesh ranked
IN TOP 15 DAIRY COW POPULATIONS IN THE WORLD

DAIRY ANIMALS IN SAARC COUNTRIES
COUNTRY CATTLE GOAT BUFFALO
BANGLADESH 23.8 25.8 1.5
INDIA 190.9 135.2 108.7
PAKISTAN 29.6 53.8 27.3
NEPAL 7.2 9.5 5

Dairy Supply Chain in Bangladesh

Formal and Informal Marketing Channels of Processing Milk

Both informal and formal milk-marketing channels coexist in Bangladesh. Smallholder milk producers supply all the milk for the informal traditional market and three quarters of the milk for formal processing market. Cooperatives and institutional dairy enterprises collect milk from smallholders through primary village cooperatives and then process and distribute the milk to all major cities in the country. The cooperative model has especially been successful in creating jobs, reducing collection and distribution costs and improving the quality of milk.

Investment Insights on Dairy Market in Bangladesh

Within the formal dairy sector in Bangladesh, over 90% of the milk is processed as pasteurized packaged milk and only 10% is processed into cheese, butter, ghee and milk powder. Key leverage points for expanding the dairy market are cattle feed production, improved breeds of high yielding cows, milk collection points, dairy cold chain and product varieties.

Demand for Dairy Products in Bangladesh
Milk production in 2011-12 3.46 million tonnes
Demand (million tonnes) (As per WHO recommendation 250 ml a day per person) 12.8 million tonnes
Growth in demand for milk and dairy products 10% per year
Growth of local production 7-9% per year
Estimated market size in 2022 US $ 63.6 billion

Dairy Product’s Market Share

Pasteurized and Flavoured Milk

Milk Pasteurization Process

Milk is heated to 72-75 degrees Celsius for 15-20 seconds for pasteurization. With appropriate cooling and chilled distribution, it has a shelf life of 5 to 15 days. In Ultra High Temperature (UHT) treatment however, milk is heated to 135-137 degrees Celsius for only three seconds. A tetra pack of UHT milk lasts up to six months without refrigeration and preservatives. UHT milk is fast gaining popularity among urban consumers in Bangladesh due to its longer shelf life.

Milk Powder

The formal milk processors source about 50% of their milk supplies from local farmers and the other 50% via imports of dairy products mainly skimmed milk powder.

Number of local producers 3
Average retail price of locally produced milk powder during August 2013-July 2014 US$ 7.36 per kg
Average retail price of imported milk powder during August 2013-July 2014 US$ 9.44-10 per kg
Import in 2013-14 53,539 tonnes
Local production of milk powder in 2013-14 7,000 tonnes

Milk Powder Processing

Manufacturing milk powder involves removal of water from milk while retaining its natural properties such as flavor, solubility, color and nutritional value.

Butter and Cheese

Number of local cheese enterprises 5-7 institutional producers among many unrecognized producers
Local production of cheese in 2013 1,000 tonnes
Imported cheese in 2013 850-900 tonnes
Retail price of locally produced cheese (mozzarella) US $ 2.8-3 per 250 grams
Retail price of imported cheese (mozzarella) US $ 3.5-4.5 per 250 grams
Number of butter producers 6-8 institutional producers among many unrecognized producers
Local production of butter in 2012 1,820 tonnes
Imported butter in 2012 3,890 tonnes
Retail price of locally produced butter US $ 8.5-9.5 per kg
Retail price of imported butter US $ 12-15 per kg

Butter Processing

Butter is produced by churning milk cream. Demand for butter in preparing food is spreading in urban households, hotels and restaurants in Bangladesh. It is usually sold in packages of 100-200 grams.

Cheese Processing

Cheese in made by coagulating milk protein. Farmer cheese commonly known as ‘Paneer’ is the most available variant of cheese in Bangladesh. Only fresh cheese is produced in Bangladesh due to the lack of demand for ripened cheese.

Ghee and Curd

  • Ghee is a type of clarified It is prepared by boiling butter and removing the residue. Ghee is used as a cooking or frying medium, in preparing many kinds of table dishes, in confectionery and in traditional medicines. Eighty percent of ghee is produced by unrecognized small producers. More than 24,000 tonnes of ghee was locally produced in Bangladesh in 2013. It is sold at a retail price of US $ 9-13.
  • Almost all the sweet shops in Bangladesh produce curd, a popular dessert item. Curd is available in two flavors – sweet and sour. Sweet curd comprises of all the milk ingredients in a concentrated form together with sugar and caramel. Sour curd is obtained from milk by mixing edible acidic substances into the milk. Recently, few dairy enterprises have started commercial production of curd in Bangladesh. Retail price of curd ranges between US $ 2 and 4 per kg.

Further Investment Opportunities

Despite one of the highest densities of livestock in the world, the productivity of cattle in Bangladesh is far below the world average. The dairy sector ours many investment opportunities in increasing milk yield and preserving dairy products.

Cattle feed production

  • Quality fodder increases the yield of and fat content in to improve milk productivity of improved breeds of cattle, it is important to feed them a balanced diet with sufficient nutrients.
  • In Bangladesh, rice straws and natural grass constitute traditional feeding of dairy cattle supplemented with a little or no concentrates.
  • Commercial cattle feed produced from agro-industrial wastes and by-products, herbal feed additives, concentrates and other nutrient supplements present potential investment opportunities.

Cold Chain

  • Milk is a highly perishable in a country like Bangladesh with high ambient temperature, pasteurized milk can only be marketed with cold chain support. Lack of cold chain support limits the scope of marketing pasteurized milk only to urban areas. Cold storage’s in Bangladesh are used mostly for storing potato and have inadequate space and facilities for milk preservation.
  • Dairy producers require pre-cooling facilities near dairy farms, and reefer trucks to transport dairy produce from collection centers to the centrally located cold storage, to processing plants, and finally to retailers.
  • The Board of Investment (BOI) of Bangladesh has identified cold storage as a special opportunity for further investment.

Artificial Insemination

  • Artificial insemination is a technique to bring about genetic improvement in farm
  • Majority of the AIsare performed by the Department of Livestock Services of the Government of Bangladesh and also by BRAC, a non-profit
  • About 2.5 to 3 million cows are naturally bred which presents an untapped investment opportunity.
  • AI projects are generally implemented by trained AI workers who provide door-to-door services with supplied semen.

Business Incentives for Dairy Investors

  • Dairy feed is exempted from VAT Added Tax (VAT)
  • Import of dairy equipment is exempted from VAT and customs duty
  • Provision for 100% foreign equity
  • Favourable loan facilities for entrepreneurs
  • In the national budget of FY 2013-2014, duty structures were changed to accommodate more investment in local dairy Customs duty for powder milk import was increased from 5% to 10%. At the same time, concessionary benefit was given by Statutory Regulatory Order (SRO) for insulated road milk tanker (decreased from 5% to 2%), for animal feed (decreased from 5% to 0%), for raw milk preservatives (decreased from 12% to 0%), and also for different spare parts required for AI; supplementary duty (SD) on skimmed milk powder at the manufacturing stage has also been withdrawn.
  • In the national budget of FY 2014-2015, SD rate is reduced from 20% to 15% for butter and other fats and oils derived from milk and dairy spreads, and duties and taxes on many raw materials, such as cow pregnancy test kits, universal syringe for AI, NaCl solution special grade used in AI, are fully exempted.

Relevant Stakeholders

Stakeholders Function
Board of Investment Bangladesh (BOI) BOI encourages investment in the private sector, identifies hindrance of investment and provides necessary facilities and assistance in the establishment of industries.
Bangladesh Cold Storage Association (BCSA) BCSA is a non-profit national association, has about 160 regular members besides contract farmers, suppliers and market players.
Bangladesh Krishi Bank (BKB) The state owned bank provides credit facilities to farmers and agri-business owners.
Bangladesh Standards & Testing Institution (BSTI) BSTI formulates national standards of industrial, food and chemical products, controls the quality of food products and oversees accuracy of weights and measures.
Micro-credit providers for farmers The Microcredit Regulatory Authority (MRA) of the Government of Bangladesh has approved licenses for 742 NGO-Micro Finance Institutes that support rural farmers in running their farms with loan amounts up to BDT 50,000.
NGOs There are NGO projects that aim to address the major challenges to improving smallholders’ participation in the value chain, including farmer mobilization and education, access to markets and access to productivity-enhancing inputs in the remote areas.

Social Impact

Milk is an important source of nutrition and provides numerous health benefits such as stronger bone and teeth, reduction in high blood pressure and decreased risk of cardiovascular diseases among many others. Moreover, thousands of households in rural Bangladesh depend on their small dairy farms in securing a source of income. Dairy enterprises employ and source milk from a large pool of people thereby lifting them out of poverty. Cooperative models of dairy enterprises have proven to be successful in giving rural farmers access to new markets and improving their social well being.

Intro

Bangladesh is a potential market for essential commodities, including edible oils. The insufficient local production with a steadily growing population and an improving economy makes edible oil market in Bangladesh a promising one. Raw material required for oil extraction including rapeseed and rice bran is abundantly available. Rice bran oil has an array of health benefits and is considered as a premium health product globally. The rice bran oil manufacturing in Bangladesh is steadily growing. Bangladesh encourages and supports investments from national and international organizations in edible oil processing,including the highly beneficial rice bran oil.

OVERVIEW OF RICE, MUSTARD AND PALM PRODUCTION

Rice contributes to more than 80% of the total crop production. More than 95% of population consumes rice and it alone provides 76% of calorie and 66% of total protein requirement of daily food intake. In fact, Agriculture sector is largely dominated by rice production.

Rice and Rice Bran

  • 6th in Global Production
  • 75 % of total cultivable land (12 Million Hectares). 64% of Irrigated land
  • 2-3 crops/year
  • Amount of available Rice Bran – 12 million tonnes
  • Most of the varieties consist of
    • Hull – 20%
    • Bran – 8-12%
    • Milled Rice – 68-72%

Palm Oil

Palm oil is the dominating edible oil market since 2003 in Bangladesh. In 2012, palm oil occupied about 64%market share in the edible oil market. Apart from its use as cooking oil, Palm oil is also used as one of the important raw materials for shortening and food industries.
Palm oil is imported both in crude and refined forms. Crude palm oil (CPO) and crude palm olein (CPL) are refined in local refineries for marketing the refined products.

Year Refined Palm Oil Production (tonnes)
2010 945,000
2011 996,000
2012 1,027,200
2013 1,313,700

Mustard

The mustard/rapeseed blends grown in India, Bangladesh and Pakistan are crushed to produce vegetable oil and meal. The blend includes about 30% mustard seed.

Year Seed Production (tonnes) Mustard Oil Production (tonnes) Mustard Oil Import (tonnes)
2008 227,930 78,160 26,840
2009 202,717 64,082 43,918
2010 221,928 85,619 57,381
2011 246,000 58,289 59,711
2012 262,000 72,223 64,777
2013 230,000 74,188 56,812

Growth Drivers

  • High dependency on import of palm and soybean oil can be substituted with local production of Rice Bran Oil
  • Comparatively healthy product attributes of Rice Bran Oil
  • Shifting consumer preference towards healthy products
  • Abundance of raw materials
  • Lower cost than other competing edible oil products
  • Growing number of private sector market actors entering the market leading to market growth, innovation and acceptance

Product Overview-Rice Bran Oil

Rice bran oil is the oil extracted from the hard outer brown layer of rice after chaff (rice husk)is removed. It has a wide range of health benefits.
Health benefits:
Rice bran oil contains anti-oxidants, vitamins and is highly nutritious

  • Reduces Cholesterol,
  • Reduces risk of intestinal cancer and osteoporosis,
  • Provides relief in menopause

Raw Material Analysis

Domestic production of Rice Bran Oil 110,000 tonnes annually
Projected production capacity 2.6 million tonnes annually
Rice Bran Availability 12 million tonnes
Price of rice bran Taka 12000/MT
Requirement of Rice Bran for rice bran oil/tonne 4.5 tonne (22%)

Global Market Overview

Rice bran oil is gaining popularity across the world as it is rich in mono-unsaturated fatty acids and has a higher cholesterol reducing power. In many countries it is being regarded as a healthy food item and both production and export of rice bran oil has increased significantly over the last few years.

Largest producer of Rice Bran Oil India (900,000 tonnes annually)
Export selling Price of Rice Bran Oil US $ 1,400 – 1,500 per tonne

Potential Export Destinations

Japan, Thailand, India, North America, European Union

Competing Countries for Global Market
India, Japan, Thailand, China

Edible Oil Consumption in Bangladesh

 

Edible oil consumption in Bangladesh is way below the world average thus signifying substantial growth potential for the edible oils industry. The growth of branded edible oils is expected to remain favorable on the back of the development of the retail sector and rising income levels.

Bangladesh is the one of the largest consumer and importer of edible oil in the world. Bangladesh imports palm oil mainly from Malaysia and Indonesia and soybean oil from Argentina and Brazil.

 

 

Local production of Edible Oil can substitute the edible oil import. As demand in domestic market grows, there are great opportunities for investment in the production of edible oil, in particularly rice bran oil.

Rice Bran, Palm Oil & Mustard Oil Processing

Profitable By-Products
Due to high protein content (19-20%) and other nutritional value, De-oiled rice bran (DRB) is used as an important raw material for feed manufacturers. DRB accounts for 30-40% of total sales for rice bran oil producers.

Annual Demand of De-oiled rice bran in our country 1, 50,000 MT
Price of De-oiled rice bran Taka 8000 per MT

Moreover the fatty acid is used in the manufacture of soaps and toiletries. The residue materials are used in the manufacture of ‘Agarbati’ and are primarily exported to India.

Investment Insights – Rice Bran Oil

Financial Estimates for the below Production Capacity
Extraction Capacity 100 tonnes per day
Refine Capacity 30 tonnes per day

Business Incentives

  • Research support on post-harvest handling and processing of rice by BRRI (Bangladesh Rice Research Institute)
  • No FDI cap: 100% foreign equity is allowed (Except 4 reserved sectors – Military, Forestry, Nuclear energy, Currency printing)
  • Tax incentives
    • Tax holidays: For 5-7 years (Location and industry dependent)
    • Tax exemption on royalties and technical know-how fees
    • Tax exemption on capital gains from the transfer of shares of public limited companies
  • Cash Incentives
    • Electricity consumption special rebate of 20% to agro-processing sector including poultry
    • Cash Incentives and export subsidies are granted on the FOB value of selected exports products ranging from 5% to 20%
  • Tariff-free access to the European Union (through EU’s General ized System of Preferences, GSP), Canada, Australia and Japan
  • Accelerated Depreciation Allowance: At the rate 50%, 30% and 20% in the 1st, 2nd and 3rd year of commercial production on cost of plant and machinery
  • Concessionary duty on imported capital machinery (5% on capital machinery). No import duty for 100% export oriented companies.

Relevant Stakeholders

Bangladesh Krishi Bank (BKB)

The state owned bank provides credit facilities of farmers and agri-business owners.

Board of Investment Bangladesh (BOI)

BOI encourages investment in private sector, identifies hindrance of investment and provides necessary facilities and assistance in the establishment of industries

Bangladesh Rice Research Institute (BRRI)

BRRI is an autonomous research organization working in the varietal development of rice and their management technologies

Bangladesh Agricultural Research Institute (BARI)

BARI is the country’s largest multi-crop research institute.

Bangladesh Agricultural Development Corporation (BADC)

BADC works in production, procurement, transport, storage and distribution of essential agricultural inputs.

Also there are 160 private seed suppliers working in the sector.

Bangladesh Edible Oil Merchants Association     

The association of edible  oil  manufacturing companies.            

Bangladesh Standards & Testing Institution (BSTI) 

BSTI  develops  standards  and  maintains  quality  control of products.

 

 

Social Impact

Bangladesh offers a very prospective market for production of edible oil, particularly in the production of rice bran oil. Investment in the rice bran oil sector can potentially create employment, alleviate poverty and enhance social security. Market linkages can lead to other support industries and more employment. Moreover, rice bran oil is a great source of vitamins and minerals and can be instrumental in improving overall health and nutrition in Bangladesh.

Intro

Total fruit production in Bangladesh accounts for more than 34 million metric tonnes and a wide range of fruits are cultivated. The favorable climatic and soil conditions allows for quality production of fruits. Availability of raw materials (fruits) with a consistent growth in production and demand for processed fruit products especially for maintaining nutritional requirement has opened up the market for fruit processing. Bangladesh supports local and foreign direct investment in fruit processing through policy support and tax benefits.

Overview of Fruit Production in Bangladesh

Traditionally fruit cultivation has been a major part of agricultural practices in Bangladesh. Indigenous fruits have potential for preparation of value added products and contribution to food security and income. In recent years, it has been observed that there is a steady rise in cultivation and production of fruits that can be processed.

                                                                                   Annual Fruit Production (BBS 2010)

Litchi, Mango, Jackfruit, Banana and Pineapple are the major fruits grown in Bangladesh

Items Growth Trends
2007-08 2008-09 2009-10
Mango 5% 3% 27%
Banana -13% -5% -2%
Pineapple -12% 9% 2%
Papaya 8% 26% -14%
Jackfruit 5% 0% 3%
Litchi 35% -31% 7%
Guava 0% 6% 12%
Melon 93% -2% -6%
Harvesting Period for fruits
Fruit Harvesting Period
Mango April – September
Banana Year round
Pineapple Year round
Jackfruit April – October
Guava Year round
Litchi May – July

Growth Drivers

  • Increased demand for processed products in domestic and international markets
  • Increasing quality consciousness among consumers
  • Increased demand for processed products in domestic and international markets
  • Prospective markets within geographic proximity, i.e. Middle Eastern countries
  • Expansion opportunity in new markets like Far East and Central Asia
  • Domestic competition level is moderate
  • Opportunities for import substitution in domestic market

Fruit Processing in Bangladesh

Over the past few years, fruit processing industry in Bangladesh has been influenced by factors such as increased demand for convenient prepared meals, increased health and nutrition awareness, increased significance of branding and greater competition from private labels have also contributed to growth.
As much as 30 to 35% of Bangladesh’s fruits and vegetables are wasted due to lack of processing and preservation facilities.

Key points of Fruit Processing in Bangladesh

  • Mango (Gooty & Ashina), guava, tomato, banana and lichi are the main fruits processed for both domestic consumption and exports (often targeting the Bangladeshi ethnic community abroad)
  • 70% fruit pulp in Bangladesh is imported
  • Fruit canning is done on a small scale and primarily sold to Institutional Buyers i.e. food processing companies
Fruit Estimated Annual Pulp Quantity Season when pulping is done Procurement Cost (BDT)
Mango 100,000 tonnes May to August 20-40/kg
Banana 1,500 tonnes Yearlong 3-5/piece
Guava 1,500 tonnes March to July 15-25/kg
Litchi 1,500 tonnes June to July 2-3/piece
Apple 500 tonnes Imported 50-70/kg

Fruit Pulp Production

Annual Export of Processed Fruit Items 90-100 Million US $
Annual Local Market 100-120 Million US $
Overall Processed Fruit Market 290-320 Million US $
Annual Import Volume of Fruits 430,000 MT
Annual Export Volume of Fruits 2,000 MT
Annual Import of Pulp 50-100 Million US $

Key Figures in Fruit Processing of Bangladesh

Mango Processing in Bangladesh

Mango is the most common fruit item that is currently processed in Bangladesh. Bangladesh is ranked 9th in the global production of mangoes.

                                                             Annual Mango Production in Bangladesh (FAO)

  • Mango fruit juice is a very popular item among consumers in both domestic and international markets
  • Canned Mango is a new It is currently produced in small scales and largely caters to institutions, i.e. Food processing companies
  • Mango pulping is profitable as it has an increasing demand from fruit processors offers a longer shelf-life and at more affordable price than imported pulps
Processed Products Annual Production Export Market
Mango Juice 10,000-12,000 tonnes Netherlands, USA,

Germany

Canned Mango 100 – 150 tonnes EU, USA
Mango Pulp 100,000 –120,00 tonnes Middle East, EU

There are largely 2 categories of mango varieties that are processed in Bangladesh, Gooty and Ashina –

Processing Varieties of Mango Characteristics Procurement period & Season Conversion Yield for pulp Price
Gooty •  A mix of many varieties, obtained after screening physically attractive fruits.

•  Small sized

•  Inconsistent quality

May –July 60-65 days 50-55% 12-18

BDT/kg

Ashina Late variety, larger in size, consistent quality July – August 50-55 days 65-80% 22-25 BDT/kg

Fruit Processing: Global Market Scenario

The Global Fruit processing industry produces a variety of products including canned fruits, fruit juices, soups, sauces and dehydrated fruits. Overall, industry revenue is expected to grow at an annualized rate of 0.6% to reach US $179.1 billion in the five years to 2013.

Fruit Juice Processing

Fruit Canning: A Profitable Venture

The market for canned fruit products was valued at US $ 11.16 billion in 2012, and is expected to reach US $ 15.90 billion by 2019, growing at a CAGR of 5.2% from 2013 to 2019.

Fruit Pulping

  • Major Destinations of Fruit Pulp are Saudi Arabia, Yemen Arab Republic
  • UAE, Netherlands, Japan, Singapore, USA, UK, Germany and UAE are for processed mango products like pickle and chutneys
  • Average unit price realized from Mango Pulp exports ranged between US $ 450-530 per ton

Fruit Processing: Discover, Invest and Profit

Mango Fruit Processing

Investment Insights

Estimated project cost for Fruit processing unit (Project Feasibility Reports)

Financial estimates for the below Production Units
Capacity 150 tonnes per annum
Land requirements 2 Acres (8000 square meter)
Building requirements 3600 square feet (334 square meter)
Implementation period 6-12 months
Manpower required 75 Nos.
Estimated Project Cost 3.75 – 4 Million US $
Expected Annual Sales 1.5 – 2.2 Million US $
Additional Opportunities for Fruit Processing in Bangladesh
Fruit Harvesting Period Procurement Cost Opportunities for processing
Lichi May-June 2-3/piece Juice& Jelly
Pineapple Mid May-July 20-30/piece Juice, Jam & Canned
Banana September- November 3-5/piece Juice, Chips, Flour & Buns
Jackfruit May-August 20-25/piece Chips& Canned

Business Incentives

  • Lower tariff imposed by importing countries under GATT (General Agreement on Tariffs and Trade) and by EU countries
  • Cash Incentives
    • Electricity consumption special rebate of 20% to agro-processing sector including poultry
    • Cash Incentives and export subsidies are granted on the FOB value of selected exports products ranging from 5% to 20%
  • No FDI cap-100% foreign equity is allowed (Except 4 reserved sectors – Military, Forestry, Nuclear energy, Currency printing)
  • Tax incentives
    • Tax holidays: For 5-7 years (Location and industry dependent)
    • Tax exemption on royalties and technical know-how fees
    • Tax exemption on capital gains from the transfer of shares of public limited companies
  • Concessionary duty on imported capital machinery(5% on capital machinery). No import duty for 100% export oriented
  • Foreign technicians- Income tax exemption for 3 years

Relevant Stakeholders

Board of Investment Bangladesh (BOI)

BOI encourages investment in private sector, identifies hindrance of investment and provides necessary facilities and assistance in the establishment of industries

Bangladesh Krishi Bank (BKB)

The state owned bank provides credit facilities of farmers and agri-business owners.

Bangladesh Agro-processors’ Association (BAPA)

Association of Agro Processing Companies in Bangladesh Vegetable Fruits and Allied Products Exporters’ Association (VFAPEA) Association of Fruit and processed items Exporters

Bangladesh Agricultural Development Corporation (BADC)

BADC works in production, procurement, transport, storage and distribution of essential agricultural inputs.

Also there are 160 private seed suppliers working in the sector.

Department of Agricultural Extension

The extension services wing providing extension services and technical support on agriculture

Bangladesh Standards & Testing Institution (BSTI)

BSTI develops standards and maintains quality control of products.

Social Impact

Bangladesh offers a potential market for processing of fruits. Investment in the fruit processing sector can generate employment, reduce poverty and improve social security. A major segment of the rural population can be mobilized in the sector and this would strengthen market linkages within the fruit processing industry. Moreover, processed fruits are great sources of vitamins and minerals and can be instrumental in improving overall health and nutrition in Bangladesh.

Intro

Bangladesh is the eighth largest producer of potato in the world. The country usually has surplus potato production and ours substantial investment opportunities in processed foods. Bangladesh advocates for local and foreign direct investment in potato processing through its agro-policies, technical support and tax benefits.

Growth Drivers

  • Consumer preference for ready-to-cook and ready-to-eat food products
  • Low cost and availability of resources (Raw Materials, Human Resources etc.)
  • Increasing demand from the international markets for value added potato products
  • Growing number of private sector investors entering the market leading to market growth, innovation and
    product variations
  • Availability of technical support and research for further growth

Production Overview

Potato in Bangladesh is in transition from a subsidiary to a commercial crop. Domestic production has exceeded 8 million tonnes due to favorable climate and soil.

Value Added Potato Products

Potato is widely used as a table item in most households in Bangladesh.However, value added potato products like potato chips and potato flakes are gaining popularity in the country as food habits change. Internationally, potato flakes is consistently in high demand due to its use in preparing varied products including mashed potato, pasta and potato crackers. Also, potato starch has found its use in food processing, adhesive and textile applications.

Global Market Scenario: Processed Potato

The rise in global potato production is largely due to unprecedented demand for ready-to-eat food. Processed potato products are now preferred more to fresh potatoes as global consumption pattern evolves.Global potato chips, flakes and starch markets are expected to grow at 4.8%, 10% and 10% between 2012 and 2016.

Investment Insights on Bangladesh Market

Supported by a strong source of supply of raw material, potato processing industry in Bangladesh serves an important opportunity for investors.There area plethora of opportunities for exporting processed potato products. Moreover, Bangladesh’s selling price is highly competitive in the global export market.

Potato Wholesale Price

Wholesale prices of potato fluctuate throughout the year resulting in higher operational costs in some seasons.
(Source: Department of Agricultural Marketing (DAM))

Potato Chips

Product Verities Chips, Crackers
Number of Producers 15-20
Market Size in 2009 US $ 38 Million
Retail Price of Potato Chips US $ 0.28-0.35 per 38 grams Package
Distributor Price of Potato Chips US $ 0.23-0.25 Per 38 grams Package
Quality requirements Appearance: Crisp
Spices Used for flavors: Non-toxic

Processing Steps

Local companies mostly use potato flakes, potato powder, starch, and wheat flower to produce potato crackers, most popular product among the product varieties. Recently, few local companies have started producing potato chips from potato slices. Although, potato slices taste better but are difficult to preserve over the season.

Potato Chips

Number of producers 2-3
Export volume in 2007 1,182 tonnes
FOB export price in 2014 US $ 1.2-1.5 per kg
Export destinations in 2010-14 Belgium, Australia, Germany, Lebanon, Malaysia, USA, Turkey, UAE, Saudi Arab, Pakistan, Chile, Ukraine, Romania
Import volume in 2007 389 tonnes
Cost of packaging US $ 0.55-0.60 per 25 kg Package
Retail price in local market US $ 1.15-1.25/375 grams
Quality requirements Appearance: No clots
Color: Cream to pale yellow
Taste: Natural potato flavor
Smell: Natural potato

Processing Steps

Potato flakes is a popular dehydrated potato product used globally.It is a conserved form of potato and used as a substitute for boiled potato. The process of dehydrating potatoes for flakes production is different from other vegetables as the product is required to have good aroma, taste and re-hydration properties so as to function like freshly boiled potatoes. Potato flakes produced in Bangladesh are comparatively better because of whole potatoes being used for production and the product having less black and hard spots.

Potato Starch

Number of producers 1-2
Annual export volume 1,000-1,500 tonnes
FOB export price in 2014 US $  950-1,050 per tonne
Export destinations in 2010-14 Pakistan, India, Middle-East, Thailand, Egypt, Belgium, Germany
Quality requirements Appearance: Fine powder
Color: White
Taste: No taste
Smell: Odorless
Cost of packaging US $ 0.55-0.60 per 25 kg package
Uses in food industry Potato starch is used to impart functional properties such as binding, filling, thickening to processed foods and as a stabilizer in noodles, dairy products, bakery etc.
Use in non-food industry Used in Pharmaceuticals, textile, plywood, adhesive and construction material industries

Processing Steps

Starch is present in an almost infinite number of plants. However, industry recovers starch from only a few of them, mainly the
potato, tapioca, maize and wheat.

Further Investment Opportunities

Post-harvest losses in potato amount to 20-26% in Bangladesh. Potato pre-storage and cold chain present investment opportunities.

Producer (5- 8%)
Cold Storage (3%)
Trader (4-5%)
Retailer (up to 8-10%)
Total loss (up to 20-26%)

By-products

Rejected potatoes and peelings can be sent to farms to be used as animal feed. Also, the starch that is removed in the rinsing process of potato flakes can be used in starch processing.

Business Incentives

The potato industry enjoys

  • Tax holidays for 5-7 years
  • 20% cash incentive on export
  • Provision for 100% foreign equity
  • Import duty at the rate of 3% ad valorem is payable on capital machinery and spares imported for initial installation or balancing, modernization, rehabilitation and expansion of the existing industries. The value of spare parts should not, however, exceed 10% of the total cost and freight value of the machinery
  • Value Added Tax (VAT) is not payable for imported capital machinery and spares
  • Support from NGOs in improving access to and use of quality inputs and capacity building and mobilization of farmers
  • 45% supplementary duty on imported chips to encourage local investment in chips production

Agricultural and Rural Credit Policy and Programme of Bangladesh Bank states that

  • All private banks will have to disburse at least 2.5% of their total loan disbursement to the agriculture and rural sector
  • Loan disbursement target in agriculture for all the state owned and private banks is US $ 2,000 million
  • Maximum interest rate for agricultural term-loan is 13%

Relevant Stakeholders

Board of Investment Bangladesh (BOI)
BOI encourages investment in private sector, identifies hindrance of investment and provides necessary facilities and assistance in the establishment of industries

Bangladesh Krishi Bank (BKB)
The state owned bank provides credit facilities of farmers  and agri-business owners.

Bangladesh Cold Storage Association (BCSA)
A non-profit national association, has about 160 regular members besides contract farmers, suppliers and other
market players

Bangladesh Agricultural Development Corporation
(BADC)
Works in production, procurement, transport, storage and distribution of essential agricultural inputs. In the private sector, there are more than 100 companies involved, with over 8,000 registered seed dealers operating across the country.

Bangladesh Agricultural Research Institute (BARI)
Is the country’s largest multi-crop research institute. It has  completed research on 56 different varieties of potatoes.
Producers can readily find information on these varieties from BARI website.

Bangladesh Standards & Testing Institution (BSTI)
Formulates national standards of industrial, food and chemical products, controls quality of food products and
oversees accuracy of weights and measures.

Social Impact

Bangladesh offers a very prospective market for potato processing. Investment in the potato sector can potentially drive employment, poverty alleviation and social security. Market linkages can lead to other support industries and more employment. Moreover, potato is a great source of vitamins and minerals, and potato industry has been instrumental in improving food security in Bangladesh.

Intro

The agri-input industry in Bangladesh has seen significant growth majorly due to crop diversification, realization of better yields and incomes, efficient distribution network and farmer awareness. Within the agri-input industry Seed industry has shown comparatively better growth, followed by fertilizers and insecticides. The Ministry of Agriculture, Bangladesh, with its initiatives and policies, has shown keen interest to promote quality seeds, bio-organic inputs, micro nutrients, Integrated Pest and Nutrient Management and farm mechanization.

Seed Industry

Estimated Value of the Industry US $ 500 Million Estimated Market Size 1.25 Million Tons

Quality seeds play a vital role in maximizing the yield potential of any crop variety. Experimental results have clearly indicated a yield enhancement of about 12%-15% by use of quality seeds. The seed industry in Bangladesh is comprised of both public and private sectors. The recent expansion of the private sector seed companies have resulted in the engagement of many contract farmers into the formal seed production chain.

41% 59%
Combined supply of seed by the public and private sectors Farmer retained seeds & informal market

Demand and Supply

Growth Drivers

  • Gradual shift of farmers from subsistence farming to commercial agriculture that requires quality and efficient inputs
  • Approval to private sector to import and sell hybrid seeds since 1998
  • Growing realization of better yield through good quality seeds among farmers
  • Complimentary industry like poultry have grown, in turn boosting the maize seed market

Key Excerpts of National Seed Policy

  • Controlled crops: The new varieties of wheat, Rice, Jute, Potato and Sugarcane developed by private or public agencies or imported will be subject to notification by the National Seed Board (NSB) and evaluation and testing by the Technical Committee on seeds
  • Varieties of crops, other than mentioned above, that are imported or locally developed by a private agency must be registered with the NSB, but will not be subject to any evaluation/testing

Variety Evaluation and Approval

► Prior to variety approval and release, new varieties of controlled crops must have undergone two types of variety tests:
– Test for Distinctness, Uniformity and Stability (DUS) and
– Test for Value, Cultivation and Use (VCU).
► The Seed Certification Agency (SCA) is responsible for the DUS and VCU test
► The DUS test is carried out in one location in a one year test and is a prerequisite for certification, variety identity, and the
introduction of plant breeders’ rights and plant variety protection
► Due to difficulties in testing sugarcane, this crop in not included in the DUS test
► Tests for VCU are also carried out at SCA. The VCU test is performed as multi -location trials over two years and in six
locations
► New varieties are evaluated to ensure that the new varieties represent a genuine improvement compared to old varieties

Pesticide Industry

Estimated Value of the Industry US $ 250 Million Estimated Market Size 40000+ Metric Tons/KL

The current low consumption of crop protection products in Bangladesh being less than a kg/ha compared to world average of 3 kg/ha, offer immense opportunities for future growth.

Growth Drivers

  • Gradual shift of farmers from subsistence farming to commercial agriculture that requires quality and efficient inputs
  • Increasing awareness of crop loss due to pests and use of pesticides among the farmers
  • Growth in cultivation of Horticulture crops including vegetables
  • Government initiatives and policies towards Integrated Pest Management (IPM)

Bio-Pesticides

Bio-pesticides are naturally occurring substances controlling harmful pests, especially biologically.

Types of Bio-Pesticides:

  1. Microbial: Bacteria, Fungi or other protozoa based. Target specific
  2. Biochemical: herbal-based substances helping plants in counter attacking
  3. Plant incorporated protectant: Genetically modified materials produced by modifying proteins and introduced in plants to produce its own pesticides

The use of Bio-Pesticides has been limited to Trichoderma, Bracon Herbetor, sex pheromone etc. and there lies an immense scope for Bio-Pesticides to be promoted in Bangladesh.

Insecticides

  • The insecticide use has grown by more than 45% over the last decade and has been steady over the last 3 years
  • In 2013, Granular insecticides have decreased by 18% y-o-y, while use of liquid and powder insecticides have increased by 1% and 7% respectively
  • The range of farmers using insecticide can be increased significantly.
  • Popular insecticide include:
       * Carbofuran         * Cypermethrin
       * Diazinon         * DDVP
       * Fipronil         * Chlorpyriphos

Fungicides

  • The use of Fungicides has grown 5 times over the decade and is growing by CAGR of 35% over the last 3 years
  • In 2013, fungicides in general have grown by 10% year on year due to its increasing use in Rice, Vegetables and Potato
  • While Sulphur based Fungicides have been more popular among the farmers, the following are the top selling Fungicidal active ingredients
       * Propiconazol         * Mancozeb
       * EBDC         * Chorothalonil
       * Dimethemorph

Herbicides

  • Herbicides have grown twice in a decade while the demand for herbicides have remained steady with 2% growth in last 3 years
  • In 2013, Herbicide use has decreased by 18% due to introduction of effective herbicides having low dosages
  • Use of Herbicides like Glyphosate, 2-4-D, Triclopyr and MCPA

Fertiliser Industry

Estimated Value of the Industry US $ 300 Million Estimated Market Size 2.6 Million Tons

Growth Drivers

  • Gradual shift of farmers from subsistence farming to commercial agriculture that requires quality and efficient inputs
  • Government initiatives and policies to promote organic/ bio fertilizers and Integrated Nutrient Management
  • Variable availability in Urea (N) results in use of other traditional, mixed and organic fertilizers

Types of Fertilizers Used

Other than the traditional fertilizers, most of the rest fertilizers are sup plied by private organizations, especially the micronutrients and organic fertilizers.

Traditional Fertilizers Mixed Fertilizers Micronutrients Organic Fertilizers
Urea| Super Phosphates | Murat of Potash Traditional fertilizers mixed with other nutrients like Sulphur, Zinc Cl| Copper| Cu| Fe| Mn | B | Mo Rhizobium, Azotobacter, Azospirillum, Cyanobacteria

Opportunity for Micronutrients in Bangladesh

The nutrient elements which are required comparatively in small quantities are called as micro or minor nutrients or trace elements. There are various types and mixtures of micronutrients in form of foliar spray, soil application or fertigation. The consumption of micronutrients is growing due to awareness among farmers regarding their roles.

Micronutrients Role in plant process
Chlorine, Copper, Iron, Manganese, Zinc, Copper, Iron, Processes related to photosynthesis
Manganese Enzymes systems
Molybdenum Assimilation of Nitrogen
Boron Reproductive systems

Plant Growth Regulators

Any organic compound, that is active at low concentrations (1-10 ng/nl) in promoting, inhibiting or modifying growth and development of a plant. The naturally occurring (endogenous) growth substances are commonly known as plant hormones, while the synthetic ones are called growth regulators.

Major PGRs include Auxin, Gibberellin, Ethylene, Cytokinin

Ingredient Application crops
Indol Butyric Acid Pineapple, Apple, Ornamentals
Gibbrellins Grapes, Potato, Mango
Ethephon Apple, Cherry, Pineapple,

Sugarcane

Packlobutrazol Litchi, Mango
Brassinolide Horticulture crops

Opportunity for Bio Fertilizers

Bio-fertilizer are preparations containing efficient strains of microorganisms that help crop plants’ uptake of nutrients. Use of bio-fertilizers is important component of Integrated Nutrient Management (INM), since they are cost effective and provide renewable source of plant nutrients to supplement the chemical fertilizers for sustainable agriculture. Use of bio-fertilizers in Bangladesh is growing due to government initiatives to promote them.

Farm Machinery Industry

The agriculture machinery and equipment manufacturing industry provides vital support for the development of the agribusiness sector in Bangladesh. The sector comprises a wide range of products including diesel engine, pumps, electric motors, power tillers, threshers, rice haulers, implements and hand sprayers. Land preparation, irrigation, chemical spraying, husking and milling have been mechanized to a greater extent in the country.

Growth Drivers

  • Gradual shift from subsistence farming to commercial agriculture Availability of labors for agricultural operations is decreasing
  • Availability of labors for agricultural operations is decreasing
  • Use of machinery in agriculture is Cost and Time effective

Relevant Stakeholders

Stakeholders Function
Bangladesh Agricultural Research Institute (BARI) BARI is the largest multi-crop search institute conducting research on a wide variety of crops. Besides variety development, this institute carries out research on such areas

as soil and crop management, disease and insect management, water management and irrigation, development of farm machinery and other areas

Bangladesh Crop Protection association (BCPA) BCPA is the representative body of pesticide companies. Safe guarding the common

interest of its member companies BCPA works to ensure that farmers are aware of safe and economic use of pesticides.

Bangladesh Fertilizer Association (BFA) BFA works to protect, develop, support and promote all measures and steps towards open/free competitive marketing, trade and manufacture of all fertilizers and plant nutrients in Bangladesh and to co-ordinate the efforts of the members of the

Association towards this end

Bangladesh Seed Association (BSA) BSA is a trade-body of 180-private sector seed marketers and work towards the promotion and marketing of seed products in Bangladesh
Bangladesh Agricultural Machinery Merchant Association

(BAMMA)

This is a private sector association that works for profitable growth for this sub-sector and to identify problems, constraints and opportunities of the farm machinery industry in Bangladesh

Intro

The cold chain sector serves as an important link in the agri-business industrial value chain of Bangladesh. Compared to developed countries and industrialized Asia, post-harvest losses in Bangladesh are significantly higher in the various stages of supply chain from field to consumer (FAO). The cold chain sector is expected to grow at more than 6% (per annum) over the next 5 years and the investment in up gradation of cold chain technology and establishment of flexi-cold storage’s are among the potential investment opportunities in this sector.

Growth Drivers

Rise in Organized Retail: With growing demand of fruits and vegetables and rising consumer income levels, organized retailing is emerging as the strongest driver for growth of the cold chain sector.

Growth in Food processing sector: The growing Bangladesh food processing sector needs, and thereby drives, the Cold Chain sector.

Shift towards Horticulture crops: Farmers are moving towards cultivation of horticultural crops which requires refrigerated storage.

High Post-Harvest Loss: Studies estimate annual post harvest loss of 26% for fruits and Vegetables. Post-harvest loss for various fish categories range from 12-30%

Increase in Export of Horticultural Products: Export of Fruits, vegetables, fish and meat products have steadily increased over the last few years

Cold Storage Supply Chain

Trends and Future Demands

  • Additional cold storage capacity required till 2020: 3.86 million MT*
  • of cold storage required till 2020: 581*
  • Total investment required till 2020: US $ 2.36 billion*

*Estimated figures

(Assumption- Cold Storage infrastructure will cater to 12% of agriculture produce in 2020 from the 8% currently)

Investment Opportunity in Cold Chain

Bulk cold stores Status in Bangladesh Investment Opportunity
Used for storage of a single commodity and operate on seasonal basis. Most cold stores are bulk cold stores Conversion to multipurpose odd storage’s for year round storage of multiple commodities
Multipurpose cold stores (MPCs)
Cold stores designed for storage of a variety or commodities which Operate, radically round the year. The products stored in these types of cold stores are fruits. Vegetables, dry fruits. spices, pulses, milk products etc. Only a few MPCs Establishing modern cold stores. These may include pre-cooling facility and located near consumption centres.

 

Small cold stores with pre-cooling facilities (SCS)
Small cold stores with pre-cooling facilities for fresh fruits and vegetables Mainly for immediate export oriented terns. Absent Development of SCS near export channels like ports, airports, Since fruits and vegetables amount to 65% of the total production of commodities to be stored In Bangladesh (fruits, vegetables, meat, fish, milk) and export of fruits and vegetables was more than US $ 182 Million In 2012-13
Freezing Units
Cold chambers with or without processing facilities, Mainly for freezing of fish, meat, poultry, dairy products and processed fruits and vegetables. Only for fish industry With increasing development of processing facilities in Bangladesh there will be higher demand for freezing units Establishment of controlled atmosphere stores for selected fruits and vegetables especially litchi may be considered Increase in the number of supermarkets would imply requirement of more walk in cold VMS
Controlled atmosphere stores
Applicable for certain fruits and vegetables like apples, pears, cherries, litchi etc. Absent Establishment of controlled atmosphere stars for selected fruits and vegetables especially litchi may be considered
Mini units/walk In cold
Stores located in hotels, restaurants, malls and supermarkets Absent Increase in the number of supermarkets would imply requirement of more walk in cold stores

Advanced Business Models

Integrated Cold Chain Structure

  • Integrating backward and forward linkages along with Cold chains will help ensure supply, quality, price, reduction in losses along with assured buyer for the produce.
  • This model is critical for perishable goods which are highly perishable like milk/ meat, etc. and also fruits which damage quickly.
  • Instead of direct contract farming with farmers, contract can also be executed with cooperatives which can ive an assured supply of raw materials with minimal hassle
  • This can also be termed as the Hub and Spoke Model.

Standalone Cold Storage – Only Pack House

A pack house comprises of a Pre Engineered Building, Grading and Sorting area with suitable process lines, Pre Coolers, Multiple Transit Cold rooms, Ripening Chambers, Crates, Material handling, Refrigeration and laboratory.

Pack houses are generally the first point of aggregation of farm produce where minimal processing is undertaken to extend shelf life for feeding the markets. They are typically of two kinds-

  1. Transit pack house- for pre cooling, cleaning, sorting grading and packing of perishables for immediate supply to market.
  2. Holding pack house- having cold rooms where the produce can be stored for few days before sending to the market depending on the demand supply scenario.

Multicommodity Cold Stores or Multi-Product Cold Storage

This is for multi commodity cold store facility which includes a Pre-engineered Insulated Building, Processing area, Grading and Sorting lines, multiple cold rooms, Pallet racks, Material Handling equipment, Docks, laboratory and sanitation.
This is usually used to store the various kinds of fruits and vegetables as well as dairy and meat products. Compatibility of fruits and vegetables need to be followed for storing the commodities and accordingly cold chambers need to be designed.
Another model that can be explored is the Warehouse Receipt (WR) Financing. It is the use of securely stored goods in a warehouse (cold storage) as loan collateral that farmers use to request a loan from a bank or Micro Finance Institution (MFI). The farmer pays storage fees to the cold storage warehouse, which he can use either as a temporary storage facility, or as a channel for selling his produce to buyers.
This global practice helps the farmer to get a suitable price for the produce, avoids distress sale, Improves profitability, promotes transparency and sustains food security.

Required Licences and Costs

The Average inspection time and cost required for license and permit is shown in the table below-

Business Incentives

  • Cold Storage industry has been classified with agro-processing industry status in the recent government Industrial policy
  • Electricity consumption special rebate of 20% to agro-processing sector
  • Accelerated Depreciation Allowance: At the rate 50%, 30% and 20% in the 1st, 2nd and 3rd year of commercial production on cost of plant and machinery
  • Concessionary duty on imported capital machinery (5% on capital machinery). No import duty for 100% export oriented companies.

Relevant Stake Holders

Name Mandate
Ministry of Agriculture (MOA) The Ministry develops agricultural policies, plans, regulations, acts, etc. for sustainable agricultural development and for food sufficiency
Board of Investment Bangladesh (BOI) BoI encourages investment in private sector and provides necessary facilities and assistance in the establishment of industries
Bangladesh Cold Storage Association (BCSA) BCSA is the apex body of cold storage in Bangladesh. It works in the development and promotes favorable policy changes for the industry
Bangladesh Agricultural Development Corporation (BADC) BADC works in production, procurement, transport, storage and distribution of essential agricultural inputs.
Bangladesh Krishi Bank (BKB) The state owned bank provides credit facilities to farmers and agri-business owners.
Horticulture Export Development Foundation(HORTEX) The foundation under the Ministry of Agriculture works in the development and promotion of agribusiness with high value agro-products for export through technological and advisory support in order to boost national economy and farmers’ income.

Social Impact

Apart from helping farmers to gain fair market prices, the cold chain infrastructure also creates employment opportunities. Each cold storage setup creates employment for 30 people on average and it is estimated that 86,000 additional jobs will be created due to investment in cold storage setup. Indirect job creation will be about 3 times more as many ancillary facilities will also come up after integration of cold chain.

Intro

The growing demand for livestock products in Bangladesh has been driven by economic growth, rising per capita incomes and urbanization. The total value of poultry production in the country is US $ 1.9 billion (2011) and is expected to double within the next decade. The industry employs about six million people, directly or indirectly, and contributes about l% to GDP. Further investment in backward (parent farms, day old chick supply, feed supply, vaccine supply etc.) and forward (live bird, eggs, processed meat etc.) integration will ensure sustainable growth for the poultry industry.

Industry Overview

Growth Drivers of Poultry in Bangladesh

  • Supply of improved breed and feed for poultry farming
  • The rising population of the country require continuous supply of animal protein. Commercial poultry farms have flourished under such demand for meat products.
  • Low cost of resources (human resource, water availability etc.)
  • Rising demand for ready to cook and ready to eat food products
  • Growth in the food industry including fast food chains that require large amount of fresh and processed vegetables for salads and vegetable dishes
  • Growing number of private sector investors entering the market leading to market growth, innovation and product variations

Poultry Inputs in Bangladesh

Day Old Chicks (DOCs) Feed Vaccines
· Hatcheries supply broiler and layer DOCs to commercial and SME poultry farms. About 85% of the hatcheries are producing broiler DOCs whereas 15% of the hatcheries are producing both broiler and layer DOCs.
· Proper housing and disease prevention procedure, and proper housing and management system are needed to make the chicks reach their true genetic potential.
· About 65% of a poultry farm’s expenditure is for feed.
·  About 50% of the feed is corn. The protein portion of the feed comprises soybean meal.
· 50% of the required corn and 100/0 of the required soybean is produced locally, the rest being imported.
· There are more than 30 automatic mechanized feed mills, and 45 small and medium feed mills in operation in Bangladesh.
· All kinds of poultry vaccines are available in Bangladesh. Multinational and local animal health companies access the market through distributors who either sell directly to the end users or sell through another sub-distributor or local agent.
· There are more than 100 pharmaceutical companies in operation in Bangladesh.

Global Scenario of the Poultry Industry

The combined region of Africa and the Middle East is projected to account for most of the increase in world poultry import. Poultry consumption is also expected to rise faster than beef or pork consumption.

Investment Opportunities in Poultry

Grand Parent Stock Farms

The broiler chicken production process in Bangladesh begins with the grandparent breeder flocks. The breeder flocks are raised to maturity in grandparent growing and laying farms where fertile eggs are produced.

Parent Stock Farms

Parent breeders are hatched from the fertile eggs from grandparent flocks, After arrival from the hatchery at one day old, these are reared, housed and managed similarly to grandparent flocks. Parent stock provides eggs to hatch final broiler or layer breed.

Boiler Farms

Broilers are reared for meat production. They typically weigh about 1.2-1.5 kg in Bangladesh at the time of slaughter. After rearing, broilers move as live birds either to processing plants or to consumers through intermediaries.

Poultry Processing

There is a high demand for commercially processed whole or cut chickens in high-end restaurants, fast-food chains, and hotels.

Processing Steps

Muslims constitute about 90% of the population in Bangladesh. Therefore, processing industries need to follow ‘Halal’ or allowed way of slaughtering according to Islamic regulations. Once slaughtered, the chickens then move along the processing line to allow blood to drain from their bodies and further processing.

Further Processed Food Items

Further processed food items, ready to cook and ready to eat items are popular among urban consumers, especially among children and young adults. These items are mostly available in superstores and company retail outlets. Ready to cook chicken food products are kept frozen in superstores.

Further Processing Equipment
  • Cutter
  • Tumbler
  • Brine Injector
  • Piston Stuffers
  • Vacuum Stuffers
  • String Linker
  • Mechanical Filling
  • Meat Grinder and Mixer
  • Meat Mincer
  • Meat Slicer, Chopper and Dicer
  • Battering Equipment
  • Crumbing Equipment
  • Fryer
  • Flattening
  • Auto Cooker
  • Electric Boiler
Barriers to Entry in Further Processing
Barriers to Entry Level/Impact
Industry Competition Low
Industry Concentration High
Life Cycle Stage Growth
Capital Intensity Medium
Technology Change Low
Industry Assistance Medium

Poultry Waste Management

  • About 70% of a chicken is edible. Waste from a poultry farm includes litters from broiler and layers, hatchery debris, dead birds and feathers.
  • Poultry litter is widely used as fertilizers, livestock feed and in some cases as fuel to electrical generating plants.
  • Feathers are used in many products such as pillows, dust cleaners, costume accessories etc.
  • A poultry waste rendering plant converts all the non-edible poultry waste parts into a sterilized meat meal which is used in the formulation of animal feed, especially in the United States as a low-cost meat in dog and cat food.
  • Estimated cost of equipment, and building and land development for a poultry waste and rendering plant in Bangladesh is US $ 130,000 fora plant capacity of 1,000 birds per day.

Business Incentives

  • The poultry processing industry enjoys
  • Tax holidays for 5-7 years
  • 20% cash Incentive on export
  • Provision for 100% foreign equity
  • Import duty at the rate of 5% ad valorem is payable on capital machinery and spares Imported for initial installation or balancing, modernization, rehabilitation and expansion of the existing industries. The value of spare parts should not, however, exceed 10% of the total cost and freight value of the machinery
  • Value Added Tax (VAT) is not payable for imported capital machinery and spares
  • Support from NGOs in improving access to and use of quality inputs and capacity building and mobilization of farmers
  • Any income from poultry, irrespective of individual or company, assessee shall have to pay tax only at 3%
  • Agricultural and Rural Credit Policy and Program of Bangladesh Bank states that
  • All private banks will have to disburse at least 2.5 per cent of their total loan disbursement to the agriculture and rural sector
  • Loan disbursement target in agriculture for all the state owned and private banks is US $ 2 billion
  • Maximum interest rate for agricultural term-loan is 13%

Relevant Stake Holders

Stakeholders Function
Department of Livestock Services (DLS), Ministry of Fisheries and Livestock DLS is responsible for providing veterinary coverage, development and extension services to meet protein requirements as well as to create employment opportunities by rearing livestock and poultry, and marketing and processing further processed products.
Board of Investment Bangladesh (BOI) BO! encourages investment in the private sector and provides necessary facilities and assistance in the establishment of industries.
Bangladesh Krishi Bank (BKB) The state owned bank provides credit facilities to farmers and agri-business owners
Business Associations Breeders Association of Bangladesh (BAB) Feed Industries Associations Bangladesh (FIAB)

Social Impact

The poultry sector plays a key role in Bangladesh in alleviating poverty, improving food security and generating employment. Thanks to the poultry sector, the ancillary industries such as maize, poultry feed and poultry vaccines have also grown making major contributions to the country’s growing GDP. A striking feature of the poultry sector is its contribution to the economic and social empowerment of rural women with limited marketable skills since nearly 50% of those employed in the sector are women.

Intro

Matching the global market, Bangladesh is gradually showing increase in demand for processed vegetable products largely due to preference for ready to cook food products and healthy organic choices. Moreover, Bangladesh provides an exquisite variety of vegetables for the processing industry. Although, the vegetables are generally minimally processed and frozen before being exported from Bangladesh, further processing, such as canning and pulping, can help vegetable processors and exporters to establish foot prints in new markets.

Vegetable Production in Bangladesh

Bangladesh produced about 4 million tonnes of vegetables against a demand of about 10 million tonnes in 2011. Total demand can be met by encouraging farmers to produce more vegetables, minimizing the post-harvest losses and processing the vegetables.

Growth Drivers of Vegetable Processing in Bangladesh

  • Gradual shift of farmers from subsistence farming to commercial production of vegetables due to better quality of inputs and better price
  • Consumer preference for convenience and healthy living leading growth in demand for cut vegetables, nationally and internationally
  • Growth in the food industry including fast food chains that require large amount of fresh and processed vegetables for salads and vegetable dishes
  • Low cost and abundant resources for vegetable production and processing (raw materials, human resources etc.)
  • Growing number of private sector investors entering the market leading to market growth, innovation and product variations
  • Consumers’ dietary habits have become more diverse all across the world leading to increasing demand for more exotic kind of vegetables
  • Introduction of improved processing techniques for canning, freezing and drying of vegetables have made the final product palatable, nutritious, and of long and reliable shelf life

Supply Chain of Vegetables in Bangladesh

Global Market Scenario of Processed Vegetable

Export-Import Scenario of Vegetables in Bangladesh

Vegetable Processing

Minimally Processed Frozen Vegetables

Minimally processed vegetables are trimmed, peeled and/or cut into a digestible product, which is subsequently packaged in a way to ensure long shelf life and convenience to consumers. Vegetables are mostly exported in frozen form from Bangladesh. Importantly, most of the vegetables grown in Bangladesh can be frozen.

Freezing Process of Vegetable

After initial processing, vegetables need to be maintained at low temperatures during storage, transport, and distribution to ensure its natural taste and texture. Standard temperature necessary for cold storage, distribution, and retail display are -18 °C, -15 °C and -12 °C respectively.

Major Quality Checkpoints of Minimally Processed Frozen Vegetables
  • Vegetables Sourced from Suppliers Who Practice Good agriculture Practice
  • Adequate Ventilation, drainage and waste disposal, lighting and water supply must be maintained in processing plant
  • Temperature maintained within a closely define range while transporting vegetable
  • Packaging Materials should be moisture-vapour-resistant and durable

Flash Freezing Vegetable

Flash freezing with liquid Nitrogen is a relatively new technique for freezing vegetable. With this technique vegetable are submerged in liquid, nitrogen (at minus 1600 C) to apply rapid freezing. It is one of the fastest ways to freezing preserving vital nutrients, moister and Flavor of vegetables. It is a popular choice for individually quick freezing (IQF).

Canning Process of Vegetables

Canning is a safe method of food preservation which involves placing vegetables in jars and heating the jars to a temperature that destroys microorganisms harmful for health. The heating also destroys enzymes that may cause adverse change in color, flavor and texture of vegetables. The amount of time and pressure, and number of steps needed for processing different varieties of vegetable is different for each vegetable, depending on the vegetable’s acidity, density and ability to transfer heat. Jars are now made from recyclable steel for commercial canning.

Pulping and Pickling of Vegetables

Number of major processors 4-5
Number of major imported brands 4-5
Import countries Malaysia, Thailand, USA, Bhutan
Import volume of tomato paste/ketchup in 2011 419 tonnes
Product varieties Tomato and chilli ketchup
Estimated global market size of tomato ketchup in 2015 US $ 3.3 billion
Retail price of imported tomato ketchups (1 kg) US $ 5.5-7
Retail price of locally produced ketchups (1 kg) US $ 4.5-5

Tomato Sauce/Ketchup Production

Tomato ketchup is a sweet and tangy sauce which typically contains tomatoes, a sweetener, vinegar, and assorted seasonings and spices. The desired product viscosity would normally be achieved using a starch based thickener.

Promising New Vegetables for the Processing Industry

Cassava: With a high demand for glucose in the market and local production of sugar being less than one-tenth of annual demand, cassava can reduce the need to import liquid glucose. Cassava is not a staple food in Bangladesh and can be grown on lands unsuitable for other crops.

Baby Corn: The climate of Bangladesh is highly suitable for round the year production of baby corns of global standard. Its young and tender roots are eaten both as raw and in cooked form, and can also be frozen or canned for export.

Vegetable Processing Industry Analysis

Minimally processed frozen vegetables for local market Level/Impact Minimally processed frozen vegetables for local market Level/Impact Tomato ketchup for local market Level/Impact
Industry Competition Low Industry Competition High Industry Competition High
Industry Concentration High Industry Concentration Low Industry Concentration High
Life Cycle Stage Introduction Life Cycle Stage Growth Life Cycle Stage Growth
Capital Intensity Medium Capital Intensity Medium Capital Intensity Medium
Technology Change Low Technology Change Low Technology Change Low
Industry Assistance Medium Industry Assistance Medium Industry Assistance Medium

Business Incentives

The vegetable processing Industry enjoys:

  • Tax holidays for 5-7 years
  • 20% cash incentive on export
  • Provision for 100% foreign equity
  • Import duty at the rate of 5% ad valor em is payable on capital machinery and spares Imported for Initial Installation or balancing, modernization, rehabilitation and expansion of the existing Industries. The value of spare parts should not, however, exceed 10% of the total cost and freight value of the machinery
  • value Added Tax (VAT) is not payable for imported capital machinery and spares
  • Support from NGOs In Improving access to and use of quality inputs and capacity building and mobilization of farmers
  • 15% Supplementary Duty (SD) on imported vegetables and tomatoes, and 20% SD on vegetable juices to encourage local investment in vegetable processing
  • Agricultural and Rural Credit Policy and Program of Bangladesh Bank states that
  • All private banks will have to disburse at least 2.5% of their total loan disbursement to the agriculture and rural sector
  • Loan disbursement target in agriculture for all the state owned and private banks is US $ 2 billion
  • Maximum interest rate for agricultural term-loan is 13%

Relevant Stake Holders

Stakeholders Function
Ministry of Agriculture The ministry develops agricultural policies, provides support to developing new agricultural technologies and monitors marketing of different agricultural products among many other activities.
Board of Investment Bangladesh (BOI) BOI encourages investment in the private sector, and provides necessary facilities and assistance in the establishment of industries.
Bangladesh Cold Storage Association (BCSA) BCSA is a non-profit national association which has about 160 regular members besides contract farmers, suppliers and market players.
Bangladesh Krishi Bank (BKB) The state owned bank provides credit facilities to farmers and agri-business owners.
Bangladesh Standards & Testing Institution (BSTI) BSTI formulates national standards of industrial, food and chemical products, controls the quality of food products and oversees accuracy of weights and measures.
Hortex Foundation The Foundation is a Not for Profit organization which supports investors by providing market intelligence support, ensuring training and advisory support, developing efficient supply, packaging, cold chain and value chain management, and disseminating information related to agribusiness

Social Impact

Bangladesh offers a very prospective market for vegetable processing. Investment in the vegetable sector can potentially drive employment, poverty alleviation and social security. Market linkages can lead to other support industries and more employment. Moreover, vegetable industry has been instrumental in improving food security in Bangladesh.

Intro

Bangladesh is the 4th largest fish producing country with a total annual production of around 3.26 Million Tonnes. In 2012, the sector contributed 4.4% of GDP and 23% of total agricultural production. Shrimp export alone is worth more than US $ 450 million annually which makes it a top performer among export products in Bangladesh. Furthermore the sector is even more important as it is an easily available source of protein for the workforce in Bangladesh.

Industry Overview

Growth Drivers of Fishery in Bangladesh

  • Better farming technology leading to enhanced production
  • The demand for supply of animal protein is increasing to cater to the burgeoning population  of
  • Scope for improvement in terms of more intensive production of
  • Low cost and abundant resources for fish production and processing (human resource, water availability )
  • Consumer preference for more convenience in the form of ready to cook food products
  • Growth in the food industry like restaurants  and  food  chains  that  require  large  amount  of  fish and fish products

Commercial Supply Chain

Integrated Supply Chain

Opportunities in Fish Export from Bangladesh

  • Fish export in 2012-13 was US $ 58 Million US $ and for Shrimps and Prawns was US $ 455
  • World market demand for frozen shrimps has, in value  terms,  grown  at  an  average  annual  rate  of  around 4% over the period 2002-2010.
  • Shrimps from Bangladesh fetch lower price in the Global market in comparison to  other  Asian countries like, Thailand and Therefore there is good scope for improvement of quality of Bangladesh’s shrimps.

Bangladesh is well positioned in terms of serving the largest segments of the world market – EU and US – but has not yet established significant exports to the third largest importing country, Japan.

Hence, by increasing the supply of high quality products, total value of shrimp exports could be increased. Exports of agri-food products other than Fish and fish products (including shrimps) are very small in comparison.

Diversified Fisheries Resources

The diversified fisheries resources of the country are divided into three groups, i.e., inland culture, inland capture and marine capture.

Culture production of fish is where rural households and entrepreneurs culture fish for their own diet as well as to sell. These can be broadly separated into three categories, being homestead, entrepreneurial and intensive pellet fed systems. Homestead consists of 399,000 tons while entrepreneurial and intensive culture accounts for a significant portion of aquaculture. Combined, culture accounts for 53% of total fish production.

Inland Capture

Capture fish relates to the fish caught in inland water bodies like rivers and lakes. Bangladesh is blessed with huge open water resources with a wide range of variations in nature. The country has more than 200 rivers with a total length of 22,155 km. This category accounts for around 30% of total fish production and Bangladesh with an annual production of around 1.1 million tons is 3rd ranked globally in the inland capture category.

Marine Capture

Bangladesh has 720 km long coastal line along the southern part of the country facing Bay of Bengal. The marine waters are rich in nutrient creating suitable habitat for fish, shrimps and other marine production. This category produces around 578,620 tons annually, making up 17% of total production volume.

Fish Export in 201213 (Tons)
Shrimp 1,667
Pomfret 57
Mackerel 182
Cuttlefish 270
Ribbon Fish 73
Eel 9
Others 31
Total Export Volume 2,288
Export Value 132.8 Million US $

Investment Opportunities in Fish Processing

The species of fishes like sole, sardines, cuttlefish mackerels, etc. may be further developed into value added products.

Tongue Sole

Tongue sole may be value added to be made into fillet and exported as value packs.

Sardines

Sardines constitute more than 30% of the trawl catch. Sardines are being processed and canned around the world. Given the processing potential of the species, post-harvest handling in the trawler can be improved to suit the latter processing requirements.

Cuttlefish

Cuttlefish are being exported from Bangladesh in raw form. About 300 Mt of cuttlefish was exported from Bangladesh during the year 2012-13. Cuttlefish may be value added into various products like whole clean, pineapple cut, baby cuttlefish skewer and cleaned cuttlefish head.

Mackerels

Recent harvesting of mackerel has increased to about nine percent of the total trawl catch. Proper handling of these fish on board and processing on board or on shore could open an avenue for value added mackerels as individual consumer packs and also as canned product. Apart from canning mackerel may be processed and packed as individual consumer pack and exported as value added product.

Other Species

Many other marine fishes that could be exported with good value are tuna and tuna like species. Tuna command high price in international markets. Some species like skip jacks albacore are used in canning and the yellow fin, big eye and other parts of high value species may be used in sushi and sashimi recopies.

Processing Steps

Freezing as process has been used for many years to preserve food including seafood. It slows down the changes that occur where the product inhaled and hence increase the shelf-life of the products.

Types of Freezing Methods

Type Brief Description Advantage Disadvantage
Blast Freezing Airflow is arranged so that the coldest air is flowing over the coldest product Ability to cope with different shaped products at one time They may take up a lot of space in the factory
Plate Freezing Freezing is carried out between hollow metal plates that have a liquid or gas refrigerant circulating through them Packed products can be frozen very quickly Only one shape and size products can be frozen at one time
Immersion Freezing Liquid refrigerants are used to freeze food products Product freezes quickly as it is completely immersed in liquid refrigerant Flavor of the product may be changed
Cryogenic Freezing It  uses  liquid  nitrogen  or  carbon dioxide to freeze food products They freeze products very rapidly Both liquid nitrogen and liquid Carbon dioxide can be very expensive

Business Incentives

  • 15% cash incentive offered against shrimp export
  • 5% cash incentive to the exporters of frozen fish other than shrimp
  • The government is promoting semi-intensive shrimp
  • Shrimp processing and export industry is largely dominated by the small business
  • Government has developed initiatives of quality assurance for  frozen  foods  in  co-operation with exporters
  • Agricultural and Rural Credit Policy and Program of Bangladesh Bank states that
    • All private banks will have to disburse at least 5% of their total loan disbursement to the agriculture and rural sector
    • Loan disbursement target in agriculture for all the state owned and private banks is US $ 2 billion
    • Maximum interest rate for agricultural term-loan is 13%

Relevant Stake Holders

Name Mandate
AHCAB (Animal Health Companies Association Of Bangladesh) It is the only Apex Trade Body registered with Ministry of Commerce of People’s Republic of Bangladesh. It aims to conduct welfare of animal industry consist of poultry, cattle, fish, shrimp and companion animal by promoting, educating and creating awareness to develop the animal industry.
BFFEA ( Bangladesh Frozen Foods Exporters Association) Since its inception the Association has been working to establish and promote contracts with foreign buyers, business association and the chamber of commerce and industries to develop export marketing of Frozen Foods.
BSFF (Bangladesh Shrimp and Fish Foundation) As a supportive and advocacy organization BSFF’s mission is to work for growth of the shrimp and fish industry through closely working with associations, Government and conducting market studies.
GHAB (Golda Hatchery Association of Bangladesh) Supportive and Advocacy organization for the Fresh Water Prawn hatcheries.
B0I (Board of Investment Bangladesh) BOI encourages investment in private sector and provides necessary facilities and assistance in the establishment of industries.
DOF ( Department o f Fisheries) The DOF has the mandate of maximizing fish production, Poverty alleviation through employment generation.

Social Impact

The fish sector’s contribution to the national economy is much higher than its 4.4% share of GDP, as it provides about 60% of the animal protein intake and more than 11% of the total population of the country is directly or indirectly involved in this sector for their livelihoods.

Intro

Agriculture sector in Bangladesh has grown by 4% in the past decade and has nearly achieved self-sufficiency in rice and potato production. Moreover, the current production trend indicates a gradual shift of farmers from subsistence farming to commercial production. Despite the considerable growth in agricultural production, the processing sector is still in its Infancy. Modest infrastructure, lack of processable raw material and unorganized sourcing and retailing practices are major challenges faced by the food processing industries. Considering this scenario, establishing industrial food parks would prove to be instrumental in ensuring necessary infrastructure required for food processing, minimizing post-harvest losses, encouraging cluster development and supporting Industries to Invest In food processing thereby creating employment opportunities.

Drivers

Minimizing Post-harvest Losses

Post-harvest operations are critical to the production-consumption system of perishable food crops such as fruits and vegetables. Generally, post-harvest losses count for 20-40% of total production of various fruits and vegetables in Bangladesh. Organized sourcing through collection centers and pre-processing storage houses can vastly improve the scenario of post-harvest losses.

Improving Food Security

Bangladesh is one of the world’s most densely populated countries. Food security of such a large Population cannot be ensured through traditional farming and marketing approach. Attaining food Security depends upon a number of parallel development Initiatives including establishment Of adequate physical infrastructure like food parks, and improved supply chain management and agricultural capacity building.

Adding Value and Creating Wealth

Food parks can ensure efficient management of agricultural supply, processing and distribution leading to economies of scale, and better control over production quality and cost. Industries set up within food parks normally enjoy various fiscal and non-fiscal incentives such as rebates, tax exemption, credit facilities among many others. Improved physical security also build trust among foreign a food park. Moreover, food parks create job opportunities for factory management staff and workers, and provide security to cost sensitive agricultural farmers.

Food Park Overview

Food Park is a cluster-based approach for developing a holistic food processing infrastructure supported by an efficient supply chain. A food park is a hub of value addition which combines production, collection, research and development, processing, distribution and social functions. A food park generally has three separate units to support its functions – Central Processing Center (CPC), Primary Processing Centers (PPC) and Collection Centers (CC).

The hub and spoke model explains the infrastructure and value-addition stages in a food park. It describes the provisions of strong backward and forward linkages that create a sustainable agro value chain. The Field Collection Centers (CC) enables the companies for systematic and large-scale collection of agricultural produce from varying groups of producers. From the collection center the products are taken to Primary Processing Centers (PPC) where post-harvest activities including grading, sorting, packing and storage are carried out. The products are then channeled towards the Central Processing Center (CPC), which houses a number of processing units and common facilities. From there the products are sent either for domestic retail or to the export market through the export-import channel.

Commercial Facilities in Food Park

The common infrastructure required of an agro-industrial park depends upon the types of industries that will be established. But common infrastructure support can be broadly divided into the following categories –

Producer Support

The success of agro-industries in the park will depend largely upon a reliable supply of high quality raw materials. This will depend upon the ability of farmers to produce to order, and there is much that the park industrialists can do collectively to support farmer-producers.

Industrial Support and Common Facilities

Access to on-site facilities is a key prerequisite for encouraging food processors to establish Industries In the park. The extent of industrial facilities developed will have direct and indirect Impact upon the Industrial processes Involved. These facilities provide advantages to on-site industries that help improve manufacturing and sales of materials and goods, and help with disposal of unwanted wastes or byproducts in an environment-friendly and cost-effective manner. These facilities would include:

  • Quality inspection and quarantine facilities
  • Environmental protection measures
  • Road network
  • Drainage,
  • Power supply
  • Telecommunication services
  • Waste treatment and handling systems

Commercial Premises

These are auxiliary services for the main industrial units based at the park and also for the people employed. The commercial area should provide buildings and office space for a wide variety of activities that will be essential for the success of the park.

Category of facility Facilities to be provided
Industry related: commercial Business center Banks Fuel depot Spare part agencies and shops Farm inputs suppliers
Industry related: social Residential areas for key staff (optional) Supermarkets and food shops Bus terminals and car parks Hospital and emergency services
Government and others office Agro-industrial park office Inspection and certification agencies Industrial associations Training center District industries center Environmental control office Local authority offices (Police, utilities, etc.)

Advantages of a Food Park

Economic

Advantages of scale  through industrial production & processing

Substantial cost reduction and increased profit margin

lower dependence on Seasonality

Land availability

Quality Control

Tracking and tracing of Inputs

Enhanced workplace safety

Environment

Optimization of water use

Utilization of by-products Better waste management

Social

Employment opportunities for factory workers and management staff

Forward market assurance and better price to farmers for their produce

Project Cost

  • Site development costs such as removal of existing structures, earthworks for leveling and terracing etc.
  • Paved roads, main drainage system, storm water drains, landscaping and planting trees
  • Water supply systems including piped networks for supplies to individual plots and sites of ready-build sheds
  • Firefighting systems such as storage tanks, hydrants and pipe networks
  • Telecom infrastructural networks, structures, cables, and manholes for access below ground
  • Power supply infrastructure including sub stations, transformers and distribution lines
  • Sewage systems for domestic effluent management
  • Contingencies and overheads
  • Consultancy fees for consultants, architects, technicians, engineers and other service experts

Economics of a Food Park

Implementation Period
  • Minimum 3 years for parks with less than 100 acres of land needed
  • More than 5 years for parks with more than 100 acres of land needed
Implementation Period
  • A food park project is likely to generate its own funds at the beginning of second year. This comes from receipts from advanced bookings for plots and sheds, and confirmed allotment / sales of completed plots / sheds from the beginning of third year.
  • Nearly 25% of project costs can be recovered within the implementation period of the project.

General Facilities Offered by Food Park

Food Parks are typically managed by a private developer. The various facilities provided by the Food Park to Food processors and Investors are listed below:

Facilities Quality Control
Specialized zones with basic infrastructures The parks have developed plots with basic infrastructure enabled that entrepreneurs can lease for the setting up of food processing and ancillary units. It will include basic facilities like roads, drainage, water supply, electricity supply including captive power plant, at the PPC and CPC level.
Common Facilities Availability of common facilities including effluent treatment plant, sold waste handling, parking bay and facilitation centers.
Specialized facilities Availability of common / pay-per-use facilities such as dry ware house, cold storage, pre-cooling and ripening chambers to reduce the input cost L for the investors
Convenient location  Proximity to agricultural clusters reduce costs and risk of product supply.
Farm Proximate Collection Centers and Primary Processing Centers They have cleaning, grading, sorting and packing facilities, dry warehouses, specialized cold stores Including pre-cooling chambers, ripening chambers, reefer vans, mobile pre-coolers and mobile collection vans.
Central Processing Centers Buildings for common facilities like testing laboratory dry warehouses, specialized storage facilities including controlled atmosphere chambers, pressure ventilators, variable humidity stores, pre-cooling chambers, ripening chambers, cold chain infrastructure, food incubation and development centers.
Factory buildings It consists of standard factory sheds for Micro and Small Enterprises (MSEs) which are built on a maximum of 10 per cent of the area of CPC as part of plug and play facilities for MSEs
Non-Core Infrastructure It consists of support Infrastructure such as administrative buildings, training center (including equipment), trade center/display center, Canteen, workers’ hostel, offices of service providers, labor rest and recreation facilities, marketing support system, etc.

Criteria for Locating a Food Park

The following criteria must be considered before selecting a location for developing a food park:

  • Raw materials availability, production trends, processing capacities and markets
  • Existing status of infrastructure including connectivity and utility
  • Price movements and price trends
  • Existing industrial base, distribution, numbers and capacities
  • Population of the area and availability of skilled and unskilled work force
  • Household Incomes; the purchasing power of the population and average spending on foods by individual families from different socio-economic groups.
  • Export potential and infrastructure required

Prospective Locations for Food Parks Based on Raw Materials Availability in Bangladesh

Vegetables

The climatic conditions are highly Conducive for producing most types of vegetables in Bangladesh. Potato, tomato, brinjal, okra, radish, Cabbage, pumpkin and cauliflower are some of the major vegetables produced in the country. Jessore and Kushtia districts are well suited for vegetable production beside Dhaka, JamalPur• Rangpur and Rajshahi.

Dairy

The water and grazing fields of the Northern regions of Bangladesh, specially Pabna and Sirajganj districts, are favorable for dairy production. Rest of the country is well connected to this region leading to more efficient transports of dairy products.

Fruits

Traditionally fruit cultivation has been a major part of agricultural practices in Bangladesh. Different varieties of fruits are cultivated all throughout the country. However major fruits like mango, litchi, Jack-fruit, banana and pineapple have significant production clustered around the Rajshahi Division.

Fish

Bangladesh has a lot of rivers, coastal areas and water bodies which are suitable for fish habitat and production. This is more pronounced for the coastal divisions of Khulna and Chittagong.

Relevant Stake Holders

Stakeholders Function
Bangladesh Economic Zones Authority (BEZA) BEZA aims to establish economic zones in all potential areas in Bangladesh including backward and underdeveloped regions with a view to encouraging rapid economic development through increase and diversification of industry, employment, production and export.
Ministry of Agriculture The ministry develops agricultural policies, provides Support to develop new agricultural technologies and monitors marketing of different agricultural products among many other activities.
Board of Investment Bangladesh (B01) BOI encourages Investment in the private sector and provides necessary facilities and assistance in the establishment of industries.
Ministry of Land The ministry is in charge of all types of land administration, management and development. Land administration system in Bangladesh separates records of ownership and records of revenue as such. Land records office operate under the directorate of land records and survey, Ministry of Land, for land records, surveys, publication and maintenance of records.
Ministry Of Power, Energy And Mineral Resources The Power Division is responsible for formulating policy relating to power and supervise, control and monitor the developmental activities in the power sector of the country.

General Business Incentives Offered By Bangladesh

Bangladesh offers competitive fiscal and non-fiscal incentives-

  • No FDI cap-100% foreign equity is allowed (Except for defense, nuclear energy, currency and forest plantations)

Tax Incentives

  • Tax holidays: For 5-7 years (Location and Industry dependent)
  • Tax exemption on royalties and technical know-how fees
  • Tax exemption on capital gains from the transfer of shares of public limited companies

Cash Incentives

  • Electricity consumption special rebate of 20% to agro-processing sector including poultry
  • Cash Incentives and export subsidies are granted on the FOB value of selected exports products ranging from 5% to 20%
  • Tariff-free access to the European Union (through EU’s Generalized System of Preferences, GSP), Canada, Australia and Japan
  • Accelerated Depreciation Allowance at the rate 50%, 30% and 20% in the 1st, 2nd and 3rd year of commercial production on cost of plant and machinery (Applicable for industrial undertakings not enjoying tax holidays)
  • Agricultural and Rural Credit Policy and Program of Bangladesh Bank states that
  • All private banks will have to disburse at least 2.5 per cent of their total loan disbursement to the agriculture and rural sector
  • Loan disbursement target in agriculture for all the state owned and private banks is US $ 2,000 million
  • Maximum interest rate for agricultural term-loan is 13%
  • Concessionary duty on Imported capital machinery @ 5% ad valorem on capital machinery. No import duty for 100% export oriented companies. VAT not charged for
  • Foreign technicians- Income tax exemption for 3 years

Other Incentives offered

  • Local Bank’s full working loans available to foreign investors
  • Foreigners employed in Bangladesh entitled to remit up to 50% of their salary
  • Foreigners employed in Bangladesh enjoy full repatriation of their saving and retirement benefits
  • Portfolio investments In Bangladesh stock exchanges allowed by Non-resident institution/ investor
  • Facilities for repatriation of invested capital, profits and dividends
  • Special facilities and venture capital support will be provided to export-oriented industries under “Thrust sectors”. According to industrial policy order 2010 issued by Ministry of Industries, ‘Agriculture’ has been identified as the Thrust sector
  • International Agreements: Bangladesh has concluded bilateral agreements for avoidance of double taxation and investment treaties for promotion and protection of investment