The food and nutrition sector in Bangladesh is undergoing a profound transformation, influenced by evolving consumer preferences, increasing incomes, and changing dietary patterns. In this dynamic landscape, the industry faces a spectrum of opportunities and challenges. The market is broadly categorized into fresh produce and packaged products, produced using inputs from the horticulture, aquaculture, and livestock and poultry industries.
Opportunities include the potential for significant growth in the dairy sector to meet local demand, the burgeoning market for processed fruit and vegetable products, rising meat consumption driven by the expansion of poultry farming, a rapidly expanding packaged foods market, promising prospects in the global halal meat industry, and a growing presence in processed food exports.
However, these opportunities are accompanied by challenges, including the imperative for more energy-efficient production facilities & storage infrastructure, concerns related to import dependence that expose the sector to supply chain disruptions and exchange rate risks, and inefficient value chains.
Carbohydrates: Bangladesh contributed to 2% of the World’s total cereal production in 2020. The country is mainly reliant on rice, followed by wheat for its source of carbohydrates. The average citizen consumes 329 grams of Rice per day, supported by a yearly production of 38 million MT.
Protein: Protein sources in Bangladesh primarily encompass Fish, Meat, Milk, and Eggs. The availability of protein products per capita has steadily increased over the years.
Fish stands as the most prevalent protein source in Bangladesh. Meat comprises poultry, beef, and mutton. Poultry dominates year-round food consumption, while the consumption of beef and mutton experiences a substantial surge during Eid-Ul-Adha, a major religious festival when over 10 million cattle are sacrificed. Eggs, being the most cost-effective protein source, are consequently a staple in the daily dietary patterns across all income groups.
Key Factors Driving the Food & Nutrition Sector
Rising Income Levels: As incomes in Bangladesh continue to rise, there is a notable increase in the consumption of higher-value nutritional commodities, reflecting changing dietary preferences and an emphasis on healthier food options.
Food Security Standards: The country’s commitment to improving food security standards not only ensures safer and healthier products for domestic consumption but also unlocks the export potential of the food and nutrition sector, fostering economic growth.
Urbanization and Workforce Dynamics: With a growing urban population and an increasing proportion of women entering the workforce, there is a rising demand for convenient and time-saving food solutions, driving the popularity of packaged and ready-to-cook products.
HORECA Industry Expansion: The expansion of the Hotel, Restaurant, and Catering (HORECA) industry in Bangladesh is contributing significantly to the demand for processed and prepared food products, catering to the evolving tastes of urban consumers.
Global Dietary Influence: Exposure to global food trends through media and travel experiences is leading to changing dietary habits, with consumers seeking a wider variety of foods and flavors, further stimulating the food sector.
Consumer Awareness: As consumers become more health-conscious and concerned about food safety, there is a notable increase in the demand for healthier and safer food products. This trend is encouraging producers to innovate and provide more nutritious and secure options to meet consumer preferences.
Export Potential
Bangladesh exports fresh products and packaged food items primarily to destinations like the US, Europe, India, and the Gulf nations. Bulk of the exports come from aquaculture products. The government is trying to facilitate the introduction of more efficient production technologies in the sector, establish a robust post-harvest storage infrastructure, and improve food security monitoring standards to unlock the export potential of the sector.
Market Dynamics
The food processing industry in Bangladesh exhibits a diverse landscape comprising around 1,000 processors, with the majority falling under the category of small enterprises. Approximately 10% are classified as large and medium-sized enterprises, and among them, about 30% are registered with the Bangladesh Agro-Processing Association (BAPA). Notably, most large units adhere to stringent food safety standards, holding accreditations such as Hazard Analysis and Critical Control Point (HACCP) and ISO-22000. In contrast, less than half of medium-sized units operate with these certifications. However, a notable gap exists regarding modernized aseptic processing plants in the country, limiting the extent of value addition to local produce. For instance, only 6% of the abundant local mango harvest undergoes processing into pulp, paste, juice, and other high-value forms, a meager fraction considering Bangladesh’s significant share in global mango production. This underscores the potential for further development and modernization within the food processing sector to capture a larger share of the global market.
Major players in the sector include PRAN, Olympic, Fuwang, Nestle, Kazi, Paragon, and Gemini. Most of the larger players are backward integrated and have footprints in the export market while catering to the local demand. There are 21 publicly traded companies under the Food & Allied sector in the Dhaka Stock Exchange.
Challenges, Trends, and Opportunities
LightCastle Business Confidence Index (BCI) utilizes the Harmonized Expectation Indicator to take the geometric average between expectation and situation to provide a forward-looking quantitative output of the sentiment on a scale of –100 to +100, where a positive number indicates better expectations than current outcomes.
BCI Score
Poultry & Livestock
+21.17
Agro-Processing
+18.50
Aquaculture
-13.17
Challenges:
Lack of post-harvest storage facilities might result in post-production losses
Inefficient product value chains lead to loss of margins and high-end-market prices
Import dependency on significant inputs like soybeans and fertilizers
Opportunities:
Low production costs due to a competitive labor force and government incentives.
Fertile land and diverse agriculture, including fruits, vegetables, and livestock.
Rising incomes, urbanization, and changing lifestyles boost demand for processed foods, dairy, edible oils, and meat products.
Demand for edible oil exceeds local supply, creating opportunities in oil extraction, especially rice bran and mustard oils.
Rising demand for Halal meat driven by increasing Muslim population around the world leading to significant export opportunities from Bangladesh
Increasing meat consumption, driven by poultry farming and the expansion of the HORECA industry.
Rapidly expanding market of frozen, ready-to-cook food due to a rising middle-class
Need for multi-purpose cold storage facilities to reduce post-harvest losses, stabilizing crop supply and prices, indicating investment opportunities
