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Opportunities within fishery, vegetables and fruits

FOOD PROCESSING IN BANGLADESH

UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK

(COVER THIS AREA WITH PHOTO)

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AGENDA

• The food sector overall

• The fishing industry

• The fruit and vegetable industry



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SUMMARY I: THE FOOD PROSECCING SECTOR IS IMPORTANT IN BANGLADESH

Bangladesh has a well-established food processing sector, which heavily relies

on agricultural production

The sector accounts for 22% of total manufactured products, 20% of total

labor force and 5% of total GDP – equal to around 4.48 bill USD

Focus is on domestic demand. Excluding scrimps export of processed

food products is limited and mainly targeted ethnic products, not the mainstream international markets

Besides scrimps main products are agriculturally based as oils and

bakeries, but also fishery plays an important role


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SUMMARY II: A NUMBER OF OPPORTUNITIES EXISTS WITHIN PROCESSED FOODS

Main challenge in the fishing industry is lack of raw materials, due to high national and international demand. This gives opportunities:

• Investments in hatcheries and ponds etc. (grow supply base, develop contract farming etc.)

• Technology introduction to increase effectiveness in trawl fishing and inland fishing

• Technology introduction to increase utilization of fish waste

Main business opportunities in the fruit and vegetable industries are:

• TBD (study not done until end of 2009)

• xxxx

• xxxx


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EDIBLE OILS FOLLOWED BY FISHERIES ARE THE MAJOR SUBSECTORS WITHIN PROCESSED FOODS


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THE PRODUCTION OF PROCESSED FOOD HAS SHOWN SIGNIFICANT GROWTH

There are nearly 700 processed food manufacturing enterprises in Bangladesh including brands like Teer, Olympia, Milk Vita, Fresh, 7Up, Bombay, Ahmed, Bengal, Pran, Isphahani and

Igloo

The processed food sector has grown 22% during the last 3

years and the growth is expected to continue as the

industry is considered the most potential growth industry in

Bangladesh

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MAIN EKSPORTS ARE SCRIMPS FOLLOWED BY FISH AND AGROBASED PRODUCTS

Bangladesh only has around 0.1% of the world share in export of processed foods

In FY07-08 exports amounted to 515.48 mill USD

81% were shrimp products, 15% fish products and only 4% agro

based products

The export products of agro goods are mainly aromatic rice, powdered spices, frozen snacks,

puffed rice, mustard oil


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EKSPORT LEVELS ARE NOT HIGH, BUT GROWTH HAS BEEN SUBSTANTIAL…

Eksports grew 23% from 2005-2006 to 2007-2008 in terms of MT and about 12% in terms of USD-value

As processed shrimp production has stagnated the growth is fully contributed to growth in processed fish products (36% measured in MT) and processed

agro-products (87% also measured in MT)


…AND THE POTENTIAL TO GROW EVEN FURTHER IS VERY SIZEABLE


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The potentials for high volume export in the processed food sector have not

been exploited to the fullest

Focus has mainly been on ethnical products and export to a limited numbers of countries. There is

limited export to the EU, Italy and the UK are major importers

With only smaller changes in product range and standards it is believed

that there is high potential for entering the US and EU mainstream

markets with processed food products

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THE EXPECTATION OF CONTINOUS GROWTH FINDS STRONG SUPORT

Investment climate in Bangladesh is very attractive. One main goal of government is to attract foreign investors and boost export

12.5% cash incentives to export of frozen shrimp and fish and 20% cash incentives to export of agro processed products is given

The sector has further been declared as a “Thrust Sector” and therefore receives

preferential treatments including income tax exemption, tax return, cheaper air

transport, low interest rates and export assistance

Bangladesh is also part of EU’s GSP and EBA programmes, which opens for duty and

quota free access to the EU market


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1. Government subsidy given on export price to the exporter. 2 Generalized System of Preference. 3. Everything But Arms.

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OTHER FACTORS ARE ALSO SUPPORTING A BELIEF IN FUTUR GROWTH

The industry is already well established and optimism is strong as local demand is growing

as Bangladesh is experiences +5% yearly growth in GDP

Only minor product adaptation and staff training is needed in order to explore new

markets

Large amounts of seasonal fruits and vegetables are not utilized today and are just

waiting for the processing industry to get started

Demand in the fishing industry is outweighing existing supply

Bangladesh has a very cost-efficient labor force


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IT WILL REQUIRE AN EFFORT TO GAIN MARKET SHARES IN THE EU AND THE US

Investment capital and new technology needs to be transferred from abroad

Training of local workers need to be in focus

Production quality most be increased

A broader product range targeted the main EU and US market will have to be

developed

Marketing skills to penetrate the EU and US markets will have to be learned


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AGENDA

• Food sector overall

• Fishing industry

• Vegetable industry


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BANGLADESHI FISHERY SECTOR IS A LARGE AND IMPORTANT SECTOR

With 166,000 km2 of sea area and more than 200 rivers with a total length of 22,155 km Bangladesh is endowed with abundant

water resources

White fish and shrimps are available more or less in every district of the country making fishing one of the most important industrial

sectors in Bangladesh

The sector contributes with ~5% to GDP and accounts for 4.3% of all foreign exchange

earnings

1.2 mill people are engaged in the sector on full-time and ~10 mill on part-time basis. 8% of the total population is directly or

indirectly engaged in the industry


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2.564 Mill MT FISH ARE PRODUCED YEARLY -CLOSE TO 80% COMES FROM INLAND SOURCES

Inland fisheries

Closed water

1.060.000 MT

Open water

1.006.000 MT

Marinefisheries

Trawl fishing

34.159 MT

Artisanal fishing

463.414 MT


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MARINE FISHING ARE GROWING AT 9% ANNUAL

Bangladeshi waters are rich in nutrient creating favorable fishing conditions

Marine fishing includes industrial fishery with large trawlers and artisanal fishery with mechanized and non-mechanized

boats

In FY07-08 34,159 MT fish was produced by trawl fishing and 463,414 by artisanal

fishing

Growth of marine fishing has been moderate about 9% during the last five years (trawl fishing 5% and artisanal

fishing 10%)

The main fish types caught in sea are Illish, Bombay Duck, Pomfret, Jew fish and

Sea Cat fish


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http://upload.wikimedia.org/wikipedia/commons/8/8d/Ilish.JPG

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TRAWL FISHING IS DOMINATED BY UNSUSTAINABLE BOTTOM-FISHING

Modern fishing trawlers were introduced in the eighties and the fleet has grown rapidly

in the last 10 years

In 1997 there were only 14 white fish trawlers in Bangladesh and 41 shrimp

trawlers. In 2009 the figures are 133 and 49

182 of the vessels have onboard fish processing facilities

Out of the 182 trawlers and vessels, only 8 of them are mid-water fishing vessels, the rest are bottom-water fishing vessels being very

damaging to the environment

Government has not since 2005 given license to new fishing vessels, but it is expected that around 40 mid-water licenses will be given in

months to come


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INLAND FISHERY IS ALSO GROWING – AND EVEN STRONGER THAN MARIN FISHERY

Inland fisheries has grown by 26% during the last five years and in FY07-08 ~1.000 mill MT fish was produced in both inland

open and closed-water

Out of the 2.066 mill MT produced fish in FY07-08 only 0.135 mill MT

was shrimp and prawns

The main fish types caught in inland water in FY07-08 were carp, cat fish, snake head, live

fish and Illish


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GROWTH IN WHITE FISH PRODUCTION BUT ALSO OVERCAPACITY IN PROCESSING

Of the 2.563 mill MT produced fish in FY07-08, 92% were white fish and 8% shrimps

and prawns

The production of white fish has increased 23% during the last five years

There are 145 fish processing plants with an annual production capacity of 265,000 MT

Of the 145 plants 92 are in operation. 53 are out of operation, mainly due to lack of

raw materials and working capital. Of the 92 plants 54 process shrimps, while 10 of them

only white fish. The remaining do both.

68 of the plants have approval by the EU to export to EU countries


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THE FISHING INDUSTRY IS FACED WITH A NUMBER OF CHALLENGES

Persistent shortage of fish supply is a major issue as local and international demand is increasing even more then

supply

Need for new machinery, technology and development of products and marketing

for the EU-market is obvious

Quality standard has to be improved and regularly monitored

Lack of electricity and gas supply and weak infrastructure are constraining

production

Shortage of working capital and the risk of natural disasters are other challenges


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BUT THE CHALLENGES ALSO OFFERS OPPORTUNITIES

Processed fish supply is not large enough to satisfy demand. Supply can be increased:

• Technology to increase effectiveness in inland and marine fishing (adapted fishing gear, drift of machineries etc.).

• Increased investments in hatcheries and closed water productions (ponds etc. )

Products could be adapted to high paying European markets

Utilization of waste materials in existing processing could be further developed (new

technology)


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SUPPORT TO DANISH COMPANIES WISHING TO ENTER THE BANGLADESH MARKET IS POSSIBLE

The Business to Business programme supports Bangladeshi and Danish companies seeking to

engage in long term strategic partnerships

Support can be applied for in three phases:

1. A Contact phase

2. A Pilot phase

3. A Project phase

Up to 90% of all costs can be covered with a maximum of DKK 5

mill.

For more information please see: http://www.ambdhaka.um.dk/en/menu/Develo

pmentIssues/Businesstobusiness%28B2B%29Programme/


http://www.ambdhaka.um.dk/en/menu/DevelopmentIssues/Businesstobusiness%28B2B%29Programme/



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If you would like to know more about the fishing industry in Bangladesh and about your business opportunities please

contact the Royal Danish Embassy in Dhaka at [email protected] (B2B-Coordinator, Morten Siem Lynge)


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AGENDA

• The food sector overall

• The fishing industry

• The fruit and vegetable industry


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Study to be done in late 2009

More information will follow

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