Bangladesh’s domestic agro-processed product market stood at USD 2.8 billion in 2019.
The market has been estimated to be growing at an average rate of 7.7% between 2005
till 2017, Growing purchasing power of the large and young domestic market with a
median age of 27 combined with rapid urbanization, increase in women in the
workforce and a resulting increase in nuclear families and busy lifestyles are
expected to propel the expansion of entire market for processed food.
The agricultural exports from Bangladesh have been growing at a CAGR of 18% for the
last five years, in particular the exports of processed snacks. The global demand
for agricultural product is also expected to grow by 15% between 2019-2028 which
provides a great opportunity to the Bangladesh processed food industry to expand its
exports.
Benefiting from a large number of farmers and fertile soil, Bangladesh is capable of
producing a variety of crops, ranging from rice, sugarcane, fruits such as jackfruit
(the world 2nd producer), mango (9th), guava (8th), and vegetables such as potato
(6th), eggplant and tomato, to livestock (the world’s 12th largest cattle inventory)
and fisheries.
Incentives related to Agro and Food processing
- Reduced Corporate Income Tax (CIT) for 5 to 10 years depending
on location, for industrial undertakings engaged in processing of locally
produced fruits and vegetables.
- Complete tax exemption on income from rice bran oil production
up to 10 years.
- 20% special rebate on electricity consumption to agro
processing units.
- Tax exemption on royalties, technical knowhow/
assistance-related fees (and their repatriation).
- Exemption of import duties on capital machineries.
- Full repatriation of profits & initial investment amount.
For Exporters
- 50% tax exemption for income derived from export.
- No VAT imposition on export goods.
- 20% export subsidy/ cash incentive for exporters of locally
processed agricultural products and 100% halal meats.
- Duty-free market access (preferential treatment) to 52
nations.
Regulatory Agencies
Industry Associations
As one of the top tropical fruits and fresh vegetable producer in the world,
Bangladesh offers immense opportunity to invest in the local processing of numerous
fruits and vegetable and satisfy the growing and untapped demand of the domestic
market with growing per capita income and expanding fast food chains, restaurants
and hotels. There are only a few modernized aseptic processing plants in the country
resulting in low rates of processing. With high domestic demand and increasing
exports, the potential for local processing is enormous.
In tandem with the growing purchasing power and increasing health awareness,
consumption of milk and dairy products grew by 17% annually between 2009 to 2018.
Despite an increase in the production capacity over the years, demand has
persistently outpaced the supply generating a gap in the domestic market. With a low
per-capita consumption of milk and dairy products in the country which is below the
optimum level recommended by the WHO, the prospect for investment in the sector is
huge.
Edible Oil is one of the major packaged food products in Bangladesh, with an annual
demand of around 3 million MT in 2018. Although, the demand has grown at an annual
rate of 8 to 12% in recent years, currently over 90% of the demand is being met by
import of palm and soybean oils. Domestic production (mustard and rice bran oils
largely) is limited to 0.3 million MT, the government is keen on promoting
investment in oil extraction process for rice bran, mustard and offers
sector-specific incentive to the oil producers.
Meat consumption in Bangladesh has been steadily increasing at an annual rate of 15%
on average along with the development of poultry farming. Moreover, the growing
number of restaurants and hotels has boosted demand for meat processing products
across the country. The processed food market stood at USD 24 million in 2018
according to Euromonitor International and is expected to grow at an annual rate of
over 13% till 2023. Besides, the global halal meat market provides an additional
opportunity for the Bangladeshi industry to explore.
The frozen and ready-to-cook food segment in Bangladesh has experienced rapid growth
with an annual rate of 15% over the past five years. The market size was over USD 95
million in 2019 and is expected to reach around 355 million by 2024 (according to
research by Financial Planning). With an increasing middle-income class coupled with
changing lifestyles, demand for frozen or ready-to-cook food products is expected to
increase in Bangladesh.
Soft drink has been one of the fastest growing segments across the country. Mordor
Intelligence estimated the soft drink market in Bangladesh at USD 610 million in
2018 and is expecting it to grow at an annual rate of 12.5% till 2025, generating a
huge opportunity for investment.
The country has over 400 cold storage facilities with a capacity of 5.5 million MT
majority of which is utilized for storing potatoes. Considering the large
post-harvest losses of various fruits and vegetables, Bangladesh needs multi-purpose
cold storage facilities to cater to various crops simultaneously in view of
stabilizing the supply and price of these crops.
