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Bangladesh Agribusiness Report Q2 2009
Business Monitor International, April 2009, Pages: 40
This Bangladesh Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Bangladesh's agribusiness service.
In the Bangladesh Agribusiness Report for Q2 2009 we introduce the new Business Environment section. This gives an overview of agriculture in Bangladesh and its significance to the overall economy and labour market. We discuss the industry's key sectors including the valuable aquaculture industry. We also cover government support given to agriculture in the country.
One of the many challenges facing Sheikh Hasina's Awami League-led government that came to power in January 2009 will be ensuring food security for Bangladesh's fast-growing population of 142mn, almost half of whom live on less than US$1 per day and spend around 70% of their income on food. Reducing the agricultural import bill and food-deficit will also be a key concern.
Positive news on this front is that rice production has been growing rapidly bringing self-sufficiency in the country's staple food within sight. Production fell slightly in 2008 following the devastation of Cyclone Sidr which struck in late 2007, but we expect the 2009 output to show strong growth. The government has said that it believes it will not have to import any rice this year to meet domestic demand, though we are less sure. Still, we forecast Bangladesh to achieve self-sufficiency in rice within the next two years.
While this will be an important milestone for the country, we warn that to maintain self-sufficiency production will have to keep increasing to match growth in the population, which is running at more than 2% a year. As the population grows and the economy develops, pressure on Bangladesh's limited land resources is sure to increase. The area of cultivated land actually increased 4.8% in the decade up to 2005, but this cannot continue indefinitely as farm land is converted for industrial or residential use. This means growth in yields will have to be strong to maintain output. However, a threat to this, again caused by rising population, is the shrinking of average farm area as holdings are divided among siblings. As farms get smaller, improving efficiency will be harder.
In other sectors, poultry farmers have again taken a battering from avian flu outbreaks in recent months. Following the end of the rainy season in October 2008, incidences of the disease returned to the country and by the end of February 2009 were still being reported. While the coming of the hot season in March and April should bring some respite from the disease, the financial damage to farmers has been substantial. Many farmers were already in a poor financial position owing to the high cost of feed through 2008. For many, the loss of flocks to avian flu was enough to drive them out of business.
The development of more commercial poultry farms is a potentially profitable avenue for growth in Bangladesh's agricultural sector as demand for meat is sure to increase assuming per capita incomes continue to rise. However, the government will need to do more to combat avian flu if farmers are not to be set back every time cool season comes around. With backyard poultry rearing still accounting for a large share of production, this will not be an easy task.
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