Agribusiness
Bangladesh is an agrarian country with a tropical climate perfectly suitable for the production of a variety of crops, fruits & vegetables, livestock and fisheries and a promising Agro and Food-Processing industry.
Overview
70 million metric tons of agricultural output per year
More than 700 basic and processed food products exported to more than 140 countries
Agro & food processing sector employs about 40% of the labor force and contributes 16% to the country’s GDP
Bangladesh
Advantages of Bangladesh
Growing Domestic Demand
Bangladesh’s domestic agro-processed product market stood at USD 2.8 billion in 2019. The market has been estimated to be growing at an average rate of 7.7% between 2005 till 2017, Growing purchasing power of the large and young domestic market with a median age of 27 combined with rapid urbanization, increase in women in the workforce and a resulting increase in nuclear families and busy lifestyles are expected to propel the expansion of entire market for processed food.
Increasing Export Potential
The agricultural exports from Bangladesh have been growing at a CAGR of 18% for the last five years, in particular the exports of processed snacks. The global demand for agricultural product is also expected to grow by 15% between 2019-2028 which provides a great opportunity to the Bangladesh processed food industry to expand its exports.
Access to plentiful agro-resources
Benefiting from a large number of farmers and fertile soil, Bangladesh is capable of producing a variety of crops, ranging from rice, sugarcane, fruits such as jackfruit (the world 2nd producer), mango (9th), guava (8th), and vegetables such as potato (6th), eggplant and tomato, to livestock (the world’s 12th largest cattle inventory) and fisheries.
Processed Food and Vegetable
As one of the top tropical fruits and fresh vegetable producer in the world, Bangladesh offers immense opportunity to invest in the local processing of numerous fruits and vegetable and satisfy the growing and untapped demand of the domestic market with growing per capita income and expanding fast food chains, restaurants and hotels. There are only a few modernized aseptic processing plants in the country resulting in low rates of processing. With high domestic demand and increasing exports, the potential for local processing is enormous.
Dairy Products
In tandem with the growing purchasing power and increasing health awareness, consumption of milk and dairy products grew by 17% annually between 2009 to 2018. Despite an increase in the production capacity over the years, demand has persistently outpaced the supply generating a gap in the domestic market. With a low per-capita consumption of milk and dairy products in the country which is below the optimum level recommended by the WHO, the prospect for investment in the sector is huge.
Edible Oil
Edible Oil is one of the major packaged food products in Bangladesh, with an annual demand of around 3 million MT in 2018. Although, the demand has grown at an annual rate of 8 to 12% in recent years, currently over 90% of the demand is being met by import of palm and soybean oils. Domestic production (mustard and rice bran oils largely) is limited to 0.3 million MT, the government is keen on promoting investment in oil extraction process for rice bran, mustard and offers sector-specific incentive to the oil producers.
Processed Meat
Meat consumption in Bangladesh has been steadily increasing at an annual rate of 15% on average along with the development of poultry farming. Moreover, the growing number of restaurants and hotels has boosted demand for meat processing products across the country. The processed food market stood at USD 24 million in 2018 according to Euromonitor International and is expected to grow at an annual rate of over 13% till 2023. Besides, the global halal meat market provides an additional opportunity for the Bangladeshi industry to explore.
Frozen and Ready to cook food
The frozen and ready-to-cook food segment in Bangladesh has experienced rapid growth with an annual rate of 15% over the past five years. The market size was over USD 95 million in 2019 and is expected to reach around 355 million by 2024 (according to research by Financial Planning). With an increasing middle-income class coupled with changing lifestyles, demand for frozen or ready-to-cook food products is expected to increase in Bangladesh.
Beverage (Soft Drink)
Soft drink has been one of the fastest growing segments across the country. Mordor Intelligence estimated the soft drink market in Bangladesh at USD 610 million in 2018 and is expecting it to grow at an annual rate of 12.5% till 2025, generating a huge opportunity for investment.
Multi-purpose cold storage facility
The country has over 400 cold storage facilities with a capacity of 5.5 million MT majority of which is utilized for storing potatoes. Considering the large post-harvest losses of various fruits and vegetables, Bangladesh needs multi-purpose cold storage facilities to cater to various crops simultaneously in view of stabilizing the supply and price of these crops.
Incentives related to Agro and Food processing
- Reduced Corporate Income Tax (CIT) for 5 to 10 years depending on location, for industrial undertakings engaged in processing of locally produced fruits and vegetables.
- Complete tax exemption on income from rice bran oil production up to 10 years.
- 20% special rebate on electricity consumption to agro processing units.
- Tax exemption on royalties, technical knowhow/ assistance-related fees (and their repatriation).
- Exemption of import duties on capital machineries.
- Full repatriation of profits & initial investment amount.
For Exporters
- 50% tax exemption for income derived from export.
- No VAT imposition on export goods.
- 20% export subsidy/ cash incentive for exporters of locally processed agricultural products and 100% halal meats.
- Duty-free market access (preferential treatment) to 52 nations.
Regulatory Agencies
- Bangladesh Food Safety Authority (BFSA): BFSA regulates and monitors the activities related to manufacture, import, processing, storage, distribution and sales of foods to ensure food safety. BFSA also facilitates and coordinates the activities of all institutions concerned with food safety management
- Bangladesh Standard and Testing Institution (BSTI): BSTI is a national standards body, which formulates the national standards for quality of products and services, conducts laboratory test, and provides certification (both mandatory and voluntary).
Industry Associations
- Bangladesh Agro Processing Association (BAPA)
- Bangladesh Frozen Food Exporters Association (BFFEA)
- Bangladesh Auto Biscuit Bread Manufacturers Association (BABBMA)
- Bangladesh Fruits, Vegetables and allied products exporters association (BFVAPEA)
- Bangladesh Dairy Farmers’ Association (BDFA)
- Bangladesh Organic Products Manufacturers Association (BOPMA)
- Bangladesh Cold Storage Association
- Bangladesh Lozenge Manufacturing Association