Agro-based industires: Regulatory hindrances and government role
Bangladesh enjoys a big comparative advantage compared to many other countries in producing and exporting a wide range of agro based products to the world's markets where there is a huge and growing demand for the same. Fertile soil, favourable weather conditions and cheap labour give the local producers a big edge in producing for export markets. The government in recent years declared export-oriented agro-industries as a thrust area although this has not been backed up by adequate support. The steady progression of exports in this sector is encouraging but a great deal more can be achieved both in areas of increasing export volumes and earnings. For this to happen, all stakeholders need to be persuaded of the potentials of the sector and adopt and apply policies with a vision.
A number of export-oriented agro-industries have been doing ground breaking work in this direction. They have contracted with farmers to produce round the year with guaranteed stable prices for their yields. Thus, the motivation of the farmers has remained strong as their earnings have become regular and ensured. More significantly, the farmers have been trained to produce quality products observing the latest health and safety factors. Secondly, the agro-industries have acquired good technologies in the areas of processing and packaging which means not only substantial value-addition to the produces from the fields but also the creation of appeal for the processed and packaged foods among not only Bangladeshi expatriates but also foreign consumers. Thus, from the growing to the consumption stages, some producing and exporting houses here have been successful in ideally building up a value-chain that meets the interests of all the parties involved at different phases.
Export Promotion Bureau (EPB) data says, Bangladesh earned 570 million dollars by exporting agro based products in FY 2012-13. This had risen to 610 million dollars in FY 2013-14. In 2008-09 export of agro based products was worth only 120 million dollars.
Agro-processing has positive impacts on poverty alleviation by creating rural employment enhancing women empowerment and increased farm income. A vibrant agro-processing industry will encourage farmers to produce better quality farm products that will bring higher income for raising the quality of life and living standards. Agro-processing by reducing post harvest loss could have environmental benefits by reducing garbage disposal and pollution problems particularly in the urban areas. So government need to focus its attention in this sector.
Private sector operators like Pran, Square etc. which intend to join the ranks of successful agro-industries with an export dimension need to essentially emulate the methods of the few firms which are there and which have been successful in exporting agro-products. But the new firms should try to do better than the older ones by trying to acquire even more sophisticated technology, innovation in food products and in their packaging. In that case, their attraction will not be limited to only expatriate Bangladeshis as they can expect to gain a wider market access among foreign consumers. Consumers in India, Japan, Europe and North American countries are usually fond of trying out foods catered to them in novel ways. The appeal can be enhanced through packaging and different marketing methods. Thus, the agro-industries here will have to pay attention to these factors right from the start to become successful and retain success over the longer run.
We can reap tremendous economic benefits by processing some farm products.
We have to work out strategies for setting up the agro-processing industry based on regional competitiveness. The soil and environment of entire North West region is highly favourable for producing various kinds of vegetables like potato, tomato, cabbage, cauliflower, brinjal, carrot etc. So, pragmatic steps need to be taken to increase area based production of agro-based products. Through this, even foreign investors will be encouraged to come forward and set up relevant food processing industries.
Wide-scale investment in agribusiness and agro-industry should require the following steps:
We must develop our agro-processing industries to cope with the challenges by producing international standard processed goods to export abroad. Limitation is here.
Goal should be optimum output. Farmers should be taught to ensure increased production through latest technology.
Inadequate core infrastructure like high-tech controlled production facilities, grading, packaging, logistics, warehousing, integrated processing units, transportation and power supply will have to be ensured. Special concessional pricing is needed for gas and oil.
Insufficient capital for agricultural and agro based industry.
Unreliable supplies of raw materials in terms of quality and quantity need to be checkmated. Government can give support like in other sectors for importing of machinery and others packaging materials.
Establish agricultural export processing zone (if feasible).
Need to develop testing system. Particularly standard of BSTI will have to be of international level. Many times exporters face problem in this regards.
Government policy and regulatory support are urgent for agro based industry. Related law and order need to updated in an industry friendly way.
Technological aspects of agro-processing industries
Quality control is measured in terms of standard specifications, codes of practices and good manufacturing practices. The best quality foods are prepared in strictly controlled safe and hygienic conditions at each and every stage of food processing.
Control of quality of raw materials.
Control of critical points in the processing.
Control of finished products.
The government has to play a major role here. It can set up international standard lab for testing the products quality.
Government ought to reshape the credit policies for agriculture and allied activities and small scale industries etc.
Problems of financing in agro-business
There has been significant development of agro-business activities in LDCs like Bangladesh. Agro-business in LDCs uses outdated and worn-out tools and bring out inferior quality products.
Absence of proven entrepreneurs.
Lack of improved material and technology.
Absence of long-term national plan.
Absence of viable marketing or processing structure.
The lack of marketing infrastructure and the lack of processing and preservation facilities.
Lack of long term plan of banks and financial institutions.
Problems in exporting
Transportation cost is high. Also barrier is there.
Need for building capacity of port, particularly in Benapol, Akhaura, Sutarkandi, Banglaband etc. has been felt for long. India is a big market for Bangladeshi agro based products. So all non-tariff barriers need to be eliminated through government initiatives.
The writer is a journalist and can be reached at [email protected]