Bangladesh : Agribusiness Development

Agriculture, natural resources and rural development / Agro-industry, marketing, and trade

The Project is aimed at reducing poverty in Bangladesh through agribusiness growth that generates income and employment in rural areas. The outcome of the Project will be expanded activities of rural enterprises engaged in commercial agriculture production, input supply, marketing, processing, and transportation. These will generate employment in rural and peri-urban areas, increase the value added of nontraditional crops and commodities, and increase rural incomes.

Specifically, the Project will target small-scale agribusinesses that do not have the wherewithal to mobilize the financing they require to expand, or the capacity to open up new downstream markets. This will be undertaken with the assistance of NGOs experienced in providing credit and support to rural enterprises at the grassroots level. The rural poor will be the ultimate beneficiaries of all of these actions through enhanced employment opportunities, income generation, and agricultural production.

The Project outputs include (i) establishment, expansion, and successful operation of agribusinesses by small-scale entrepreneurs; (ii) strengthened capacity of participating NGOs and wholesale banks in agribusiness lending; (iii) strengthened capacity of agribusiness associations in policy dialogue and agribusiness information and technology dissemination; and (iv) improved policy environment enabling private sector participation.

Despite several limitations (vulnerability to natural disasters, limited infrastructures, low average income), Bangladesh has lot of potentials and opportunities. Among others, productive agricultural land and a hardworking rural population are among the country' s few resources and assets. Thus, future economic growth will require stimulating commercial activities within, and based on, the agriculture sector. Since almost all cultivable land is in use, increased growth in the agriculture sector must be derived from (i) diversification of agriculture production to higher value crops; (ii) intensification of production around homestead areas; (iii) provision of services to the agriculture sector (upstream links); and (iv) value addition through further processing, storage, and transport of agricultural commodities (downstream links). In other words, future economic growth will require an expansion of agriculture-based enterprises or agribusiness.

The Project is consistent with the poverty reduction strategies of the Government and ADB, which recognize that viable agribusiness are the key for faster growth and poverty reduction in rural areas of Bangladesh. As per National Strategy for Economic Growth, Poverty Reduction and Social Development, the rapid growth of agriculture would require agroprocessing, agribusiness development and value addition to facilitate access of farmers to modern inputs and production technologies to cater increased demand for agriculture products. The ADB 2006-2010 Country Strategy and Program for Bangladesh stressed the need to transform agriculture from a subsistence to a commercial orientation and promote agribusiness development as a means to improve the livelihood of 76% of the country's population (and 85% of the poor). To foster a vibrant and diversified rural economy, ADB assistance through this project will contribute to (i) intensification, diversification, and value addition of the crops to boost agricultural productivity, improve food security, and foster rural enterprise development; (ii) strengthened farm-to-market links; and (iii) sustained growth of agriculture and agribusiness, which generate productive on-farm and off-farm employment to raise rural incomes.

Tk2,729.89 million credit disbursed to 33,432 small scale agribusiness entreprenuers, of which 36% are women.

On an average, employment of about 5.51 persons per entreprise generated.

1. Agribusinesses by small-scale entrepreneurs established, expanded, and successfully operated.

2. Capacity of participating NGOs and banks in agribusiness lending strengthened.

3. Capacity of agribusiness associations in policy dialogue and agribusiness information and technology dissemination strengthened.

4. Improved policy environment enabling private sector participation.

Small scale entreprenuers under the Project established their enterprises (more than targetted) with project support and services, which are in operation during project's physical completion.

Employment of about 5.51 person per enterprose generated.

Complied with.

36% are women

Ongoing

One survey conducted.

Completed.

Total 8 associations supported. 18 Value chain links established, and are in operation.

Not yet due.

Subborrowers are earning good profit, as reported and observed during ADB project review missions

Around $32.0 million disbursed

A revolving credit fund has been established. The wholesale banks and NGOs will continue disbursing credit after physical completion of the Project. The project physically completed on 31 December 2011.

Ongoing

Planned trainings under the project for NGOs and wholesale banks completed and other capacity devlopement initiatives/ training by the partner NGOs themselves are ongoing. The capacities of partner NGOs and wholesale banks are being strengthened on a continuous basis.

Being complied.

Policy environment started to improve towards more private sector participation in agribusiness promotion, value addition and commercial agriculture, and hopefully will continue to further improve in future.

Actions initiated to establish revolving funds with NGOs and PFIs that will be monitored by Bangladesh Bank

MOU signed with 8 associations and under process with another 7 associations

Recently 8 associations formed. First body formed by selection procedure.

Total 20 workshops held

Total 4 fairs held

MOU signed with 3 service provider associations and training provided to 60 paraprofessionals in three batches.

Being complied.

One survey completed.

Not yet due

Not yet due

Women participates in the workshops.

Ministry of Agriculture and Department of Agricultural Marketing are familiar by this time.

The Project involved many small-scale investments ($500-$5,000 equivalent) around

the country. As such, any single activity under the Project is unlikely to have anything other than

a minor localized environmental impact. Environmental and social impacts were considered through incorporating into work

planning and monitoring of the Project. Through training, NGO staff were awared about potential

negative impacts. and the means to avoid or mitigate such impacts.

The Project involved 34,432 small-scale entreprenuers with arround $34 million equivalent credit across the country. No involuntary isplacement of local populations required. Public sector entities was not involed in acquiring any land under the Project.

Nevertheless, the project design has incorporated safeguards to minimize potential negative effects.

The Project support was demand-driven with all the agribusiness investment decisions made by small-scale agribusiness entrepreneurs. The enterprises sponsored by the Project, as private sector ventures, will continue to operate on a self-sustaining and self-financing basis as long as they are profitable and value adding. The Project discouraged special subsidies or preferential treatment. The Project implementation unit closely monitored the performance of the agribusiness enterprises. The measures taken so that at least 90% of agribusiness ventures supported by the Project will be in operation during the project completion review. It is expected that by 2020 the number of new agribusinesses ventures will be double.

The Project used well-established, financially sound and well-governed banks to channel funds through reputable and experienced NGOs to small-scale agribusiness entrepreneurs, who are presently unable to access finance for their ventures. The successful growth of agribusiness lending through experienced NGOs demonstrated to policymakers that the key to expanding rural financial services is engaging capable institutions with the financial and managerial strengths to respond to the growing demands of the market.