Bangladesh holds significant potential in the export of agriculture and agricultural products, yet the sector's contribution to the country's overall export earnings remains limited. Despite the addition of 100% value and the use of domestic raw materials, the desired export revenue has not been achieved.
According to the Bangladesh Bureau of Statistics, agriculture contributed 11.02% to the GDP in the fiscal year 2023-24, down from 11.30% the previous year. While 45.4% of the workforce is employed in agriculture, the sector's export performance does not match its labour share. Industry experts point to inadequate infrastructure, limited use of technology, and a lack of quality seeds, raw materials, and timely policy support as major challenges.
In the last fiscal year, Bangladesh's overall export earnings decreased by 4.3%, but agricultural exports saw significant growth. The country's total export earnings for FY 2023-24 amounted to $44.47 billion, down from $46.49 billion the previous year. However, agricultural exports earned $965.20 million, a 15.9% increase from the $833 million earned in FY 2022-23, according to Bangladesh Bank data.
The highest earnings came from the dry food sector, which brought in $217 million, up 8.3% from the previous year. Vegetable exports saw a remarkable 45.4% increase, generating $113 million, compared to $61 million the year before. Tobacco exports also grew by 10.2%, reaching $182 million, up from $165 million in FY 2022-23.
Notably, flower and fruit exports surged, generating $29 million in FY 2023-24, a significant jump from just $1 million the previous year. Spice exports earned $57 million, up from $42 million, while other agricultural products brought in $367 million, slightly up from $362.9 million the previous year.
Agricultural and processed product exports crossed the billion-dollar mark in FY 2020-21, with earnings of $1 billion, increasing to $1.16 billion the following year.
Bangladesh Investment Development Authority (BIDA) data shows that Bangladesh exports around 700 products under 63 categories to more than 145 countries, with about 250 companies involved in this trade. The country exports a wide range of agricultural and processed products, from vegetables like chillies, gourds, pumpkins, and tomatoes, to processed foods such as juices, snacks, biscuits, frozen foods, and confectionery. Major export markets include India, Nepal, Saudi Arabia, Oman, the UAE, Malaysia, Australia, Canada, the USA, Italy, the UK, and various African countries.
Despite these successes, the sector still faces hurdles in reaching its full export potential, with much work needed to improve infrastructure, technology, and policy support to realise its vast possibilities.
Infinite possibilities in agricultural exports
Agriculture plays a vital role in Bangladesh's economy, employing 45.4% of the nation's workforce. After ensuring the country’s food security, Bangladesh is increasingly focusing on exporting agricultural and processed food products. However, industry insiders argue that only a fraction of the sector's vast potential has been tapped, estimating that less than 1% of the export possibilities have been utilised.
Despite steady growth, the contribution of agriculture and processed products to exports remains far below its potential. According to the Export Promotion Bureau (EPB), the share of agriculture and agricultural products in Bangladesh's total exports rose to 2.17% in the fiscal year 2023-24, up from 1.79% the previous year.
Data from the Bangladesh Investment Development Authority (BIDA) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) highlight the immense global opportunity. In 2022, the global agricultural market was valued at $12,245 billion, with projections to grow at 9.1% annually, reaching $19,700 billion by 2027.
Bangladesh’s export revenue from agricultural products stood at just $965 million in the last fiscal year, a small figure compared to the global market size. In contrast, neighbouring countries like India and Pakistan earned over $52.5 billion and $8 billion respectively, according to data from India’s Ministry of Commerce and Industry and the Pakistan Bureau of Statistics.
With the right strategies to address existing barriers, Bangladesh has the potential to significantly increase its share in global agricultural exports.
Major challenges in agricultural exports
Despite Bangladesh’s strong position in agricultural production, ranking 14th globally according to the FAO, the country faces numerous obstacles in maximising its agricultural export potential. Key challenges include the absence of desirable crop varieties, poor product quality, limited cargo space for agricultural products, a lack of accredited labs for necessary testing, slow certification processes, and inadequate cold chain systems. Importers often lack critical information about Bangladesh’s agricultural offerings, such as market demand and regulations, further impeding export growth. A report by the Ministry of Commerce highlights these barriers.
In addition to these structural issues, several current challenges are also affecting exports. These include reduced cash incentives for exports, rising transportation costs, higher raw material prices compared to competitor countries, and fluctuating exchange rates, which have made Bangladeshi exports less competitive globally.
Solutions for overcoming obstacles
To tap into the potential of agricultural exports, Bangladesh must prioritise increasing its competitiveness. For instance, raw material costs in Bangladesh are significantly higher than in neighbouring countries. As the General Secretary of the Bangladesh Agro-Processors Association (BAPA), Iqtadul Haq, explains, while the price of 1 kg of sugar is around 50 rupees in India and 65 rupees in Pakistan, it is Tk 140 in Bangladesh. Additionally, the rising cost of containers and air freight further drives up production costs, with air freight now costing Tk 650 per kg, compared to Tk 160-170 previously. These higher costs make it difficult for Bangladesh to compete with countries like India, Pakistan, and Thailand, which can offer lower-priced products to international markets.
The government has also reduced cash incentives for agricultural exports, cutting them from 20% to 10%, making it harder for exporters to provide financial support to farmers. This reduction in support is discouraging farmers from continuing production, which could impact the overall contribution of agriculture to the country's GDP.
Addressing infrastructure and certification gaps
A lack of infrastructure, especially at airports, is also a significant hurdle. There is insufficient space for storing agricultural products, and exporters are not given priority in processing shipments. Manjurul Islam, adviser to the Bangladesh Fruits Vegetables and Allied Products Exporters Association (BFVAPEA), suggests that dedicated gates, scanner machines, and cold storage facilities should be set up for agricultural exports at airports. In addition, Bangladesh lacks the necessary labs to issue quality certificates required by markets like Europe and the United States, forcing exporters to seek expensive and time-consuming certification abroad.
According to Zahid Hossain, former chief economist of the World Bank in Bangladesh, establishing testing labs for certification is critical to entering high-potential markets like Japan and the United States. If necessary, joint investment should be considered to develop these facilities.
Currently, 49% of Bangladesh’s agricultural exports go to the Middle East, 32% to Europe, 15% to Asia, and 4% to other countries, including Canada.
Processed food: An emerging export sector
The demand for processed food is rising both in Bangladesh and abroad, driven by the increasing participation of men and women in the workforce and the pace of urban life. This trend has led to the emergence of processed food exports as a vital growth area. Products such as bread, biscuits, snacks, noodles, and beverages are being exported to countries like India, Nepal, the Maldives, and Bhutan.
However, high production costs remain a challenge. For example, raw materials like flour, sugar, and oil, which are imported for the production of processed foods, are more expensive in Bangladesh than in neighbouring countries.
Kamruzzaman Kamal, marketing director of Pran-RFL Group, believes that addressing the cost of raw materials, adjusting tax rates, and ensuring certification and testing facilities would significantly boost export earnings from this sub-sector.
Tackling non-tariff barriers
Non-tariff barriers, particularly in India, are another significant challenge. Exporters have reported that India does not accept Bangladesh’s BSTI certification, even though an agreement was made for mutual recognition of testing. Exporters are urging the Indian government to accept product certifications in line with the agreement, which would increase trade between the two countries.
Addressing post-harvest losses
Post-harvest losses are another area of concern. According to traders and researchers, 20-25% of onions, 30-35% of mangoes, 25-30% of bananas, papayas, guavas, and litchis, 8-9% of rice, and 6-7% of pulses are wasted every year due to a lack of proper storage systems. Exporters have called on the government to support the adoption of technology, cold chain systems, and better storage to preserve product quality and reduce losses.
With the right infrastructure, policy support, and investments in technology, Bangladesh can significantly increase its agricultural export earnings and capture a larger share of the global market.
Attracting foreign investment in agriculture
Foreign investment is crucial to enhancing technology adoption and diversifying agricultural products in Bangladesh. While investment in the sector is rising, it remains insufficient. According to Bangladesh Bank, the agriculture and fisheries sectors attracted $58 million in foreign investment in 2023, up from $39 million in 2022. The largest contributions came from Singapore ($24.41 million), followed by Thailand ($15 million) and the Netherlands ($9 million).
Dr Zahid Hossain, former Chief Economist of the World Bank's Bangladesh office, emphasised the need for greater investment to boost production and exports. "To increase exports, we must scale up production by leveraging technology and foreign investment. The agricultural sector in Bangladesh is ripe for technology-based investments, but we're not seeing the expected inflows. Improving infrastructure and removing tariff barriers, along with rationalizing tax rates, are key to attracting foreign investors," he said.
Thailand serves as a strong example of agricultural success, where the sector contributes over 23% to GDP and generates more than $35 billion in exports. Bangladesh can learn from Thailand by adopting technology for both production and food processing.
Branding and new market research
Bangladesh is already recognised globally for its ready-made garments, and similar efforts are needed for agricultural products. Branding and market research can help expand the export potential of this sector. According to Khondaker Golam Moazzem, Senior Research Director at the Center for Policy Dialogue (CPD), "It’s encouraging to see Bangladeshi agricultural and processed products in major supermarkets across Europe, the Middle East, and Africa. We need to further brand our products by participating in international exhibitions and promoting our best practices, quality, and competitive prices."
In addition to branding, exporters must explore new markets and buyers. Moazzem highlighted the need for innovation and restructuring within the sector. He advised both local and foreign investors to adopt technology to boost production and minimise post-harvest losses.
Leading companies like PRAN-RFL Group are already making strides in this direction. The company showcases its wide range of processed foods and juices at global events such as the Gulfood Fair in Dubai, the Anuga Fair in Germany, and the SIAL Food Fair in Paris. PRAN-RFL currently exports to 145 countries, generating $377 million in revenue last fiscal year.
Preparing for LDC graduation
As Bangladesh prepares to transition from Least Developed Country (LDC) status to a developing country in 2026, the agricultural sector must brace for the loss of government cash incentives and tariff benefits on exports.
Dr Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID), explains in his research, ‘Implications of LDC Graduation for Agricultural Exports from Bangladesh: Issues and Policy Options’, that the country’s exports will face two significant challenges post-graduation. Firstly, Bangladesh will lose tariff-free benefits in key markets, which could result in taxes ranging from 7% to 11% in many countries and up to 11% to 22% in the Indian market. Secondly, the country will have to pay customs duties when entering many of these previously favoured markets.
To mitigate these effects, Dr Razzaque suggests that Bangladesh should immediately begin negotiations for post-graduation duty-free access to developing countries. Additionally, the government must offer other forms of financial support to maintain export competitiveness after LDC graduation.