Published:  12:15 AM, 20 October 2021 Last Update: 02:59 AM, 20 October 2021

Made in Bangladesh and Beyond

Made in Bangladesh and Beyond
 
According to latest revised economic outlook of International Monetary Fund with USD 355 Billion GDP (Gross Domestic Product), Bangladesh is the second largest economy in the South Asia. We will remain ahead of India in per capita gross domestic product for the next five years to 2026, geared by booming remittance, exports and agricultural activities. But the flow of remittance is fluctuating. Recent report of Bangladesh Bank indicates remittance flow fell down to 16th month low of USD 1.72 Billion in September 2021. RMG sector is doing well but the remittance shows inconsistence. So we need to focus on strengthening other sector immediately. To ensure sustainable development of our economy, country should give more emphasizes on other sources of external income. Export based agro farming can be best alternative to boast up the peace of our economy, specifically export oriented fruits and vegetables production.

Global vegetables export market size is USD 6.87 Billion in 2020. Which has increased by 13.1% for all frozen vegetables over the five years period. As per website information of worldtopexports.com, the five biggest exporters of frozen vegetables are Belgium, China, Spain, Mexico and Poland. Combining these countries are sharing 58.4% of total market share during the year 2020. Europe sold the highest 51.6%, Asian exporters were second with 23.7%, while 13.9% of worldwide frozen vegetables shipment originated from North America, smaller portion 5.3% of market share comes from Latin America, 4.1% from Africa and 1.4% from Oceania.

With suitable land and climate, Bangladesh has comparative advantage to produce all kinds of exportable vegetables with competitive pricing for year the round.  Based on growing season vegetables are categorized as summer and winter seasons. These include gourds, beans, chilli, papaya, leafy vegetables, potato, edible root, cauliflower, carrot, coriander leaves, lemon, radish, tomato etc. vegetables production in winter is much higher than in summer.

Bangladesh exported more than 70 varieties of vegetables to 53 countries in current fiscal year. Out of them Saudia Arabia, UAE, Singapore, Malaysia and Hong Kong were the leading importers as per report of Bangladesh Fruit Vegetables and Allied Products Exporter Association (BFVAPEA). Export Promotion Bureau (EPB) data shows, overall vegetable export was $100 million in the FY 2019. In first six month of FY 2020 export rose in $128 million, contributed mostly by cabbage, bean, brinjal, pointed gourd and potato. In July - August period of 2021-2022 FY, countries vegetables export declined to $118 million.

To sustain the pace of agricultural products export, Ministry of Agriculture recently disclose two road map. One for vegetables and fruit and another Road map for potato export. Under first road map government is planning to have income of $1.63 billion in the FY 2021-2022 and $2 billion in FY 2022-2023 by exporting fruit and vegetables. In second road map country is planning to increase potato export by 80,000 tonnes by 2022, 1, 20,000 tonnes by 2023, 1, 80,000 tonnes by 2024 and 2, 50,000 tonnes by 2025 respectively. It is not easy to achieve this target in traditional way. Sector insiders cited, country makes only 45,000 tonnes - 50,000 tonnes of vegetables export annually against its local production of 12.1 million tonnes.

There are many structural problems in this sector to achieve the target. To be exportable, agro products must be complied with World Trade Organization's (WTO) agreement on Sanitary and Phytosanitary Measures (SPS agreement) and the International Plant Protection Convention (IPPC). But due to not having any international standards laboratory in our country, Bangladeshi exporters have to test their products from foreign labs. This will increase the pricing as well as it is time consuming. Fresh example is, despite potential, Bangladesh cannot export enough potatoes and betel leaves for failing to comply with the SPS agreement and the IPPC.  For the same reason mycology, bacteriology, virology, nematology and microbiology tests cannot be done properly and for doing these we have to depend on foreign labs.

Vegetables and fruits contain many types of germs. Hence importing countries have many requirements to be fulfill for exporting goods to Europe or Middle East. For example, it is necessary to check whether betel leaves contain salmonella.

Being agro products are perishable in nature so timely shipment is a big factor in efficient export management but scarcity of cargo space makes it difficult to ensure timely shipment to destinations.

Bangladesh's three rival exporting countries - India, Thailand and Vietnam's airfreight is much lower than that of ours which facilitated them to have a competitive advantage over Bangladesh.

Any cross border air shipment must go through Explosive Detective System (EDS) scanner of the Hazrat Shah Jalal International airport. But the authority have only two EDS machine those are not working after 8 months of their installment. Hence shipment process becomes complex, longer and time consuming.

Less of contract farming arrangement and the farmers are yet to skilled enough regarding use of pesticide and chemical fertilizer in producing organic vegetables and fruits.

Transportation and cold storage problem in the cultivation area. Scarcity of good quality seeds.

Access to new market with diversifying product basket.   

Bangladesh is a labor intensive country with less wages than competitors, endowed with fertile land, suitable climate for cultivation of different kinds of vegetables year the round, but still we are lagging behind to reap the benefits of natural advantage.  To encourage the export business of the country, Bangladesh Bank gives cash intensive facility to the exporter through Foreign Exchange Circular no. 29, and 31 dated on September 20, 2021 and August 17, 2017 respectively.  The rate is 20% on FOB (Free On Board) value of potato and vegetables export. It is noted that this is the highest cash incentive rate among all export items. It means exporters have double earning facility one from their normal trade margin and another one from Government as cash incentive form.  Country has extended favorable banking facility for the exporters too. But the due to not having commercial investment in this sector, country can't achieve export target. In Bangladesh investing in RMG gets more priority than investing in export based agriculture though it gives 100% value addition comparing to 20%-40% value addition in RMG export. Besides it is environment friendly compared to RMG.

Only declaring the road map is not sufficient enough to attain the target. Rather government should solve the structural problem first. Establishing the necessary international standards laboratory for certifying products quality as per WTO's SPS and IPPC, arranging sufficient cargo facility with 20-25% space in every cargo for agro products, reducing air freight, emphasis on contract farming, following GSP guidelines of EPB, separate gate should have in airport for agro products handling, sufficient workable scanner machines (EDS) along with cold storage in airport premises need to be ensured, farmers have to give sufficient training on Good Agricultural Practice (GAP), Hazard Analysis and Critical Control Points (HACCP), traceability and Maximum Residue Limit (MRL) regarding pesticide use. Organic farming should be encourage which will reduce the use of chemicals and pesticides as well as protect the ecological balance of the country. Agricultural Ministry wants to transform the plant quarantine laboratory at the central packing house in the capital's Shyampur into a world class laboratory by 2023. The process should be expedite rather to hidden into the Red-tapism. Let's branding our country as product of Bangladesh besides Made in Bangladesh.


Salim Ahmed is a Banker & Analyst



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