ADB's partnership with food company PRAN-RFL helps expand contract farming, make cassava an attractive crop, and build the agribusiness sector.
Habiganj, Bangladesh – Cassava has been raised in the fields of Bangladesh for decades. But its potential as a valuable cash crop for farmers and a domestic source of starch for food processors and other industries has, until recently, gone largely untapped.
Bangladesh imports around 90% of the starch used in its food, textile, and pharmaceutical industries. As demand grows and users look to source more supplies locally, cassava offers an increasingly attractive crop option.
A key factor in convincing previously skeptical farmers to make the shift has been the introduction of contract farming agreements. These arrangements typically provide producers with capital, know-how, and a guaranteed market for their produce, while ensuring buyers obtain high-quality, consistent supplies.
Contract farming means higher output, higher incomes
At the vanguard of this “source-locally” movement is Bangladesh’s largest private food and agribusiness group—PRAN-RFL.
The group, which set up a starch and liquid glucose plant in Habiganj in northeastern Bangladesh in 2013, supported by a $12.5 million loan from the Asian Development Bank (ADB), now has over 2,500 contracted farmers on its books, cultivating cassava on 3,700 acres of land. The plant has the capacity to produce 2,250 tons of cassava starch and 2,400 tons of liquid glucose (derived from starch) every month.
“Cassava’s most important competitive edge is that it needs less care (than other crops) and has almost no risks except water logging.”
Households that joined the contract farming program report significant increases in production and income. A 2017 survey found average area cultivated per cassava farmer had tripled since the program began, with incomes from cassava rising an average of 80%. Farmers also hired about 18,000 day laborers through the recent 11-month harvesting season, equal to about 2,800 full-time jobs.
Capital and knowledge attract farmers
From a farming perspective, the contracts with PRAN-RFL address most of the barriers that make shifting to a new crop a risky proposition.
Mashuk Mia, a 28-year-old farmer from Shayestaganj in Habiganj district, visited cassava fields at least 25 times in 2016 before deciding to cultivate the crop. In the end the terms of the contract arrangement convinced him to take the plunge.
“This is a great opportunity as I don’t have to pay interest for the contract money that PRAN-RFL provides, and I can repay the money after harvesting the crop,” he says.
Monirul Islam Dhali, a 42-year-old farmer who started cultivating the crop in 2015, says he was also drawn by the group’s interest-free capital and guarantee to buy back the raw cassava at a fair market rate, along with its technical support and professionalism.
“The company can offer a competitive price because it buys cassava directly from us, without involving any middlemen,” he says.
As an easily grown and more pest and weather-resistant crop, cassava offers lower production costs and higher profits than rice and vegetables, the farmers note.
“Cassava’s most important competitive edge is that it needs less care (than other crops), and has almost no risks except water logging,” says Dhali.
Expanding market horizons
For PRAN-RFL, a steady domestic source of cassava allows it to produce high-quality liquid glucose locally, after previously having to source supplies exclusively from India. This creates space for the group to explore new product and market opportunities that will directly benefit local farmers, and help Bangladesh reduce imports.
“Using the liquid glucose, we plan to produce more value-added and profitable products, including dextrose, ascetic acid, citric acid, and commercial alcohol to feed emerging industrial demand,” says Md. Abu Naser, head of operations at the plant.
The company is also looking at introducing a new strain of cassava to further scale up output of starch and glucose.
“We are planning to introduce a high yielding variety that will allow us to produce two crops a year and double the current productivity of 7 tons per acre of land,” says Uzma Chowdhury, Finance Director of the PRAN-RFL Group.
With the success of the contract farming model the company plans to expand cassava cultivation areas to 10,000 acres within 2 years, from around 3,700, currently.
Building the agribusiness sector
The growing popularity of the crop provides a host of benefits to Bangladesh—a densely populated country with farmland increasingly under threat from climate change.
Along with providing a vital domestic alternative to imported glucose, cassava cultivation is helping underpin the growth of higher-value added food products for export, benefiting both farmers and the country’s push to diversify crops and strengthen food security.
The ADB-supported PRAN Agribusiness Project is supporting the government objectives of making agriculture and food processing more productive and competitive, and increasing private sector participation and investment in agribusiness.
The project, which is ADB’s first private sector agribusiness project since 1985, will also have other positive spin-offs, including the creation of new jobs. The starch and liquid glucose plant employs 200 workers, 32% of whom are women.
Gobinda Bar is a Senior External Relations Officer at ADB’s Bangladesh Resident Mission. Learn more about ADB’s work in Bangladesh.