8^th BAPA Foodpro International Expo 2020

Know-How Of The Exhibition

The agro-food processing industry constitutes an important industry in the manufacturing sector in most countries. This industry is an important part of the manufacturing sector in Bangladesh which now accounts for about 20 per of gross domestic product (GDP) of the country. The agro-food processing industry now contributes about 8.0 per cent to manufacturing output (1.7 per cent of GDP). Despite maintaining sustained growth in output over the last decade or so, its share of GDP remains quite static below 2.0 per cent. This is indicative of the industry’s failure to achieve a higher growth rate relative to other industries, in particular the RMG (ready-made garment) industry which seems to overwhelmingly dominate the manufacturing activity in Bangladesh.

According to the UN Food and Agriculture Organisation (FAO), agro-processing involves the transformation of products originating from agriculture, forestry and fisheries. Agro-food processing involves primary and secondary processing. The former is associated with processing of agricultural products in their basic form and the latter requires into final products like jams, biscuits etc. The primary inputs for the industry include crops, poultry and livestock, fishery and some forestry products.

This industry now employs about 2.2 per cent of total workforce in the country of which close to 70 per cent are unskilled labor. Its share of total exports now stands at around 1.5 per cent. Some researchers indicate that the country has much higher potential to explore enhancement of exports from this industry as reflected in their estimated revealed comparative advantage (RCA). Bangladesh now exports about US$400 million processed Agro-food products and has the potential to rise further in the near future given the RCA.

As the Bangladesh economy continues to grow, the size of the middle-income population will continue to rise. The estimated size of the middle-income population is around 35 million. Also sustained economic growth is causing rapid urbanization. Both sustained economic growth and urbanization have already caused changes in dietary intake where processed food has become an important element in their consumption basket.

Furthermore, with the rise of two-income families the demand for processed packaged food is also on the rise. All these factors are now contributing to a rapidly growing domestic market for a whole range of processed food including ready-to-eat meals. But there is also now a market that exists to cater to the needs of rural population where 40 per cent of the country’s people live.

The industry has been increasingly focusing on export markets. Bangladesh exported US$374 million in 2017-18 which was a 41 per cent increase from the previous year. The captains of the industry believe that the country is poised to hit US$1.0 billion in export earnings from this industry by 2020-21. Bangladesh government provides both tax holidays and cash incentives for exporting processed food. But granting of such incentives for export promotion remains very problematic from the economic efficiency point of view. In fact, such micro-level industry-specific incentives can lead to macroeconomic inefficiency by distorting efficient allocation of resources.