Bangladesh Country Investment Plan - Feed the Future

• Access to and tenure of land and water resources. Land tenure is perceived as a
major constraint particularly for the food insecure who, for a large part, do not
own the land that they work. They have insecure, prohibitive and unstable access
to land through crop sharing arrangements, which reduce both the impact of
potential CIP interventions on household food security ( if production has to be
shared) and the incentive for these smallholders to invest as a result of uncertain
access to land. Further, surface water is leased to potential users with insufficient
clarity and regulation, leading to a lack of incentive for sustainable use and
investment in better practices. This is a widespread concern among the farming
community, Government senior officials, NGOs and civil society;
• Lack of access to credit and other financial resources was often mentioned by
the farming community, entrepreneurs and civil society as a major constraint for
them to take advantage of CIP public investment to invest in productive assets. In
their difficulties to access the banking system, they point out governance issues,
complex procedures, insufficient regulatory and policy mechanisms for agroprocessing;
as well as excessive collateral requirements and interest rates. In
addition, smallholders mention the inadequacy of most of the current microfinance
activities to support their investment activities;
• The direct subsidized distribution of fertilizers is having some negative impacts
which should be addressed, such as: (i) diversion of budget resources away from
potential investments towards subsidies; (ii) distortion in the use of fertilizers
(towards more subsidized ones) in contradiction with CIP programme 3 which
aims to optimize the use of fertilizers; (iii) distraction of extension agents who
spend large amounts of time monitoring the distribution process, at the expense of
technical work. The possibility to convert into cash subsidies should be explored.
Private Sector Investment in agriculture
9.6 Private sector representatives took part in the consultation process and confirmed the
immense scope for private investment in the food security sector, provided an enabling policy
environment exists. Private sector is committed to partly fill some resource gap when investing in
food security. Opportunities exist in agro-processing, in the milk and dairy industry, and in
strengthening the quality of the input supply business, the production and maintenance of farm
equipment. Deregulation has led to the expansion of the small irrigation pump industry, which
enables more affordable investment by water users, who now benefit from more accessible
equipment. The CIP should build on existing initiatives by innovative entrepreneurs who have
invested in contract farming, or new marketing relationships with producers (e.g. milk collection
systems). These initiatives are accompanied often by services to the farmers, such as provision of
credit, price information and extension services. The private sector should be further consulted,
e.g. through the MCCI and other representative bodies.
9.7 However, in order to expand the scope for private sector involvement, some policy
elements must be more conducive. These include fiscal incentives or reduced interest rates to
enable the development of infant and risky industries in the agricultural sector; a much stronger
regulatory framework to allow the development of secured contractual arrangements between
Updated Bangladesh Country Investment Plan: A Road Map Towards investing in Agriculture, Food Security and Nutrition
2 June 2011
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