The Horticulture and Agro-Processed foods sectors of Bangladesh have designed a comprehensive export strategy to successfully penetrate selected international markets and to establish sustainable and profitable exportable products.
Stakeholders from each sector, including farmers, sector enterprises, sector associations, government agencies, trade promotion institutions and other international development agencies followed a structured practical process co-facilitated by the International Trade Centre (UNCTAD/WTO) and the Export Promotion Bureau (EPB).
Development activities were then designed & prioritised around market objectives and a shared vision or way forward for each sector was articulated and agreed upon by all stakeholders.
Both strategies reflect short-term and long-term development objectives and describe the work to be undertaken to achieve what will in the end be a “Road Map to Success”. They are now being considered by a number of development agencies and donors. Some of the activities are being executed already by ITC under the BQSP Programme Packaging, Quality and Supply Chain modules.
Horticulture Sector
The Bangladeshi horticulture sector currently exports fruit and vegetables through family or Bangladeshi owned establishments focused on supplying the expatriate ethic communities in overseas markets, principally the United Kingdom and the Gulf States. This market segment is relatively small and finite.
The world market is highly competitive and major conglomerates and multinational corporations and co-operatives dominate the market for mainstream tropical products such as banana and citrus. Moreover, many of the smaller competing suppliers enjoy close proximity to the main markets and thus have a commercial advantage.
However, trends have shown that the market is looking for new and interesting Horticulture products particularly in the growing exotic fruit sector. Bangladesh has a wide variety of Asian type vegetables and tropical fruit that could be developed through the research and extension services thereby exploiting a market sector that is of little interest to the established conglomerates.
The sector’s export strategy is designed to enable the enterprises to penetrate a more sustainable market in order to increase and develop the exports of the Bangladesh Horticulture Sector.
The current growth sectors in the major markets are the organic and health foods, convenience foods such as prepared or sliced fruit and vegetables, mini fruits and vegetables and exotic fruits and vegetables; all of these could be provided by the Bangladeshi sector.
Nevertheless, it is difficult for relatively new entrants to have an impact in markets that are dominated by large conglomerates. Fair-Trade has enabled a number of developing country exporters to effectively compete and constitutes an opportunity for Bangladesh.
The main issues covered by the strategy are summarized bellow:
Market Information and Export Marketing
Sector stakeholders identified suitable niche markets and products in which a competitive advantage could be developed based on reliable and up-to-date market information.
Many successful competing countries / enterprises have marketing offices or agents established in the target markets. These offices organise the marketing within the importing country and are in permanent contact with the buyers enabling the provision of instant feed back to the exporters.
Concerning this matter, the strategy also targets strengthening the sector associations in order to enable them to provide such a service.
Market Entry Requirements
In the retail and catering segments of the market there is a tendency towards concentration and consolidation at both the buyer and supplier level that is increasing the demand by buyers for consistent and significant volumes together with demands for quality well above the minimum entry requirements.
The strategy recommends suppliers to introduce procurement methods that manage the supply chain effectively and efficiently, including adoption and management of a HACCP system.
Supply and Distribution Across the Value Chain
Importers demand consistent volume and uniform quality, which is currently difficult to attain due to a fragmented production base.
Post harvest loss throughout the supply chain in Bangladesh is very high; it increases cost, affects export quality and impacts shelf life of the products. These losses impact on the overall competitiveness of the sector’s value chain, increase consumer prices and reduce farm incomes.
Quality losses are exacerbated by the absence of a cool-chain with modern effective refrigeration, poor port -sea and air- facilities, procedural delays and erratic power supply.
Among other activities and in response to this, stakeholders have proposed to:
Organise Bangladeshi farmers into contract growers producing to the quality standards required by the exporter. This initiative will contribute to unify the production base and provide volume of product at the right quality.
Streamline the procurement chain, reduce handling, improve packaging design and functionality and establish shared cooling facilities.
Increased volumes and regular supply combined with land-side efficient handling will be used as bargaining tools for air-freight cost negotiation.
By doing so, the overall objective is to fulfil the following three conditions: Correct product handling, Delivery on time with no unexpected delays and that the product arrives in good condition through an unbroken cool-chain.
Access to Finance
Many of the competing countries enjoy the facilities of a specialised agriculture bank that understands the entire industry and provides low cost finance. Many commercial bankers do not fully understand the peculiarities of the industry and many bank clients do not understand the banks assessment processes. The linkage with financial institutions is a key commercial factor in developing a strong export sector.
Agro-processed Foods Sector
It is not enough to assume that products primarily developed for the Bangladesh domestic market will be suitable or successful in a selected export market. When selecting or developing products for export it has become clear to the Agro-Process Industry that they need to clearly understand the individual market requirements for the selected export countries.
To put the need for the strategy into perspective it is necessary to reflect on the history of the Bangladesh export market as it was originally developed.
A good example of this is the United Kingdom where there are major Bangladeshi communities who have settled generally in the more concentrated urban areas of the United Kingdom. This gave importers a well-defined already available local market with good initial volume
However although this has served exporters well in establishing a lead into countries like the United Kingdom it has now been recognised that potential for growth in these markets may be limited to these communities only, as the products exported are not necessarily designed for a wider indigenous audience.
Additionally first and second generation descendants are becoming more exposed to cultural influences from their adopted country in addition to, or instead of their traditional culinary links with their mother country, therefore this could increase the competition for food styles other than traditional Bangladeshi.
Main Outcomes of the Strategy
An understanding has been reached that for the exports to grow the Agro-Process Industry may need to tailor the products to the selected markets, to service the requirements of the ethic tastes of the Bangladeshi communities and also to appeal to the wider audience and potentially greater volume opportunity of the indigenous population who are embracing ethnic tastes and products at an increased rate of acceptance.
Past experience and available knowledge has shown that the ethnic market in the United Kingdom remains one of the greatest potential markets for Bangladeshi exporters because of the historical and traditional links. For example the total value of the total United Kingdom that in 2003 ethnic restaurant and take-away market was $3.6billion (1), a growth of 10% over 1999. The “Bangladeshi (2)” style food market was worth $900million of this and is expected to grow by 25% by 2010(3).
It has been recognised that the United Kingdom/European Union is one major target market but part of the Agro-Process Industry strategy outcomes incorporate potential market options in near neighbour and other regional countries
The decision by the Agro-Process Industry to implement this strategy is a belief that the export potential success will be better realised in the international market and lead to greater export volumes and revenue streams over the next 10 years.
Below one will find the main objectives covered by the strategy:
Market Information
In-depth research of the market dynamics and requirements of the target countries will enable products to be developed or modified to suit the market and the chance of success will be substantially improved.
Therefore it is an understanding that gathering specific market information is a critical area to investigate and has been established as a priority objective
Depending on this the strategy may follow a number of export paths:Industrial products such as rice flour, concentrated bulk juices or spices, the establishment of individual links with added value processors in the export country of choice for further processing.
Finished ready to eat or ready to use products, create links on a number of supply chain routes with direct links with major supermarkets preferably as a supermarket own label product or under an own brand with selected wholesalers in the export country to supply ethnic outlets or local independent retailers/shops
Although the market intelligence to achieve the penetration part of the strategy is a prime strategic objective it is recognised that just achieving market penetration would not be enough to deliver success.
Other Objectives Identified by the Sector Stakeholders
A number of other very important objectives have also been identified by the sector such that the overall vision and strategy will stand a chance of success.
These objectives fully explored along with action points in the strategy are summarized below:
- To achieve affordable quality testing facilities to allow product to be accepted by the export country of choice
- Prevent damage, contaminants and impurities entering the food chain
- Reduce power outages and improve the supply chain infrastructure related to post harvest losses to 25% or less within five years
- Make finance accessible
- To improve primary and secondary packaging support facilities
