Development of Agribusiness Enterprises - Asian Productivity ...

The agriculture sector is the single largest contributor to income and employment
generation and it is a vital element in the country’s drive to achieve self-sufficiency in food
production, reduce rural poverty and foster sustainable economic development. The
government has, therefore, accorded the highest priority to this sector to enable the country
to meet these challenges and make the sector commercially profitable.
Current Situation of Agribusiness Development in Bangladesh
The Ministry of Agriculture has successfully undertaken a number of policy reforms
in the past for which it has received considerable recognition, both within the government
and among its development partners. The agriculture sector has already achieved the desired
long-term goal of self-sufficiency in the production of rice. The major success of the
Ministry is its unquestioned success in spurring the growth of crop agriculture while saving
considerable amounts of local currency through the elimination of fertilizer subsidies and
allowing private trade in fertilizers, minor irrigation equipment and seeds. Structural
adjustments were started with the liberalization of different agricultural input delivery
systems in the public sector, including:
C the liberalization of trade in the minor irrigation sector and encouragement of the
private sector in supplying minor irrigation equipment. This occurred gradually in
phases following the removal of restrictions on imports of small diesel engines in
1986/ 87 and the withdrawal of duty on such imports in 1988/89. The subsidy on deep
tube-well (DTW) was removed in 1992 and the involvement of the government
organization, the Bangladesh Agricultural Development Corporation (BADC), in the
procurement and distribution of minor irrigation equipment was ended. These reform
measures had a tangible positive effect on increasing the demand for irrigation
equipment and, consequently, the rate of increase in the area under minor irrigation.
C privatization of trade in fertilizers with the objective of transferring the fertilizer
management and distribution services exclusively to the private sector. Imports of all
fertilizers except urea are now undertaken by the private sector. However, the private
sector is not restricted from importing urea. All fertilizers are distributed through the
network of private sector dealers. The government issued a revised fertilizer control
ordinance in 1995 in consultation with the private sector and International Fertilizer
Development Center (IFDC) on quality control and regulation of fertilizer prices. That
has led to increased availability and wider adoption of chemical fertilizer use at the
farm level, and economic activities in rural areas have tremendously increased due to
the withdrawal of the government from fertilizer distribution.
C liberalization of trade and foreign exchange in order to enhance the participation of the
private sector in the agricultural machinery business. The government has been
continually reviewing information on conditions adversely affecting competitive trade
and taking action to remove barriers.
C liberalization of seed production, progressing, distribution and import to ensure the
participation of private sector seed dealers in the development of the seed industry.
The private sector is now allowed to import all types of improved germ plasm for
research and development and to develop its own facilities for producing foundation
seeds. The private sector is also allowed to import and sell seeds with the exception
of those for five notified crops (rice, wheat, sugar cane, potatoes and jute). With
regard to notified crops, certain procedural formalities must be observed by the private
- 70 -