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Bangladesh Agribusiness Report Q1 2009
Business Monitor International, Jan 2009, Pages: 38
The 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.
The world food crisis of late 2007 and the first half of 2008 was sorely felt in Bangladesh. With almost half the population of more than 140mn living on less than US$1 per day and spending around 70% of their income on food, the rising price of key staples, particularly rice, pushed tens of millions further into poverty. In BMI's new Bangladesh Agribusiness Report Q1 2009 we examine what measures are being
pursued to develop agriculture and improve food security in the country.
After suffering a series of floods in 2007, the year ended with the devastation of Cyclone Sidr which struck in November. The natural disasters caused the loss of about 2mn tonnes of rice in the field. This meant the government had to secure a far larger amount of rice on the tight world market than it had originally forecast, straining the balance of payments. For consumers, the effects of the dual crises were more immediate. From May 2007 to May 2008, the retail price of rice climbed by more than 100% to BDT40 (US$0.59), putting an enormous strain on incomes. Many of the poor, especially in urban areas, struggled to find enough food to feed their families and the middle classes found they had to queue for subsidised rice or take on extra work to make ends meet.
Prices have since dropped off, falling to BDT28 in December 2008. The government is hoping that a bumper rice crop in 2009 will bring prices down further and reduce reliance on imports. We warn, however, that the government's target of 35.6mn, a 19.5% increase from the 2008 level of 29.1mn tonnes, seems overly optimistic, especially as farmers are still suffering from high fertilizer costs. Over our forecast period to 2012, we expect rice production to increase by 21.1% to 35.25mn tonnes which should be just about enough to meet domestic demand.
We also expect strong growth in Bangladesh's dairy sector, forecasting growth in milk production of 27.3% to 2012 to reach 3.68mn tonnes. This will be achieved by increasing yields in the country's 24.5mn head of cattle from the current dismal average milk yield of 250kg per year. The government has outlined plans for a breeding programme to improve the genetic stock of dairy cows as well as a programme to train farmers in modern dairy management.
Despite these positive forecasts, there are a number of challenges facing all agribusiness sectors that must be overcome if Bangladesh is to be able to feed itself. With a population density of around 1,050 people per square kilometre, the highest of any large country, land will be increasingly at a premium with pressure to convert agricultural land for habitation or industry.
Coupled with this, Bangladesh is likely to be one of the countries worst affected by climate change. The country faces a whole list of potential threats from changing weather patterns and rising sea levels. A paper by the Bangladesh Agricultural Research Institute lists increased droughts and floods, soil erosion, more frequent cyclones, decreasing availability of fresh water and increased soil salinity as likely effects of climate change. The government will have to factor these potential changes in the environment into its plans for development of the agricultural sector
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