Term paper

Eco200, Section-1
Agricultural Economics

Spring 2021

Topic: Impact of Covid-19 on the Agricultural Sector of Bangladesh

Submitted to
Ehsanur Rauf Prince
Senior Lecturer, Dept. of Economics
East West University
Submitted by
Group name: Green agro
Members:
Name ID
Lavlu Mia 2018-3-30-019
Nahida Jahan Reme 2018-3-30-008
Ishratul Jannat 2018-2-30-074
Jannatul Ferdose 2019-1-30-083
Fahim Hossain Soyket 2018-2-30-027

Date Of Submission: 2 may , 2021

 Impact of Covid-19 on the Agricultural Sector of Bangladesh

Introduction

Agriculture remains the most important sector of Bangladeshi economy, contributing 19.6
percent to the national GDP and providing employment for 63 percent of the population. Now
agriculture doesn’t mean only Rice, food, vegetable and farms with that including fishers,
livestock and many of sector.

COVID-19 had an impact across all economic sectors including the agriculture sector.
Because of the lockdown, farmers were simultaneously facing lower demand for their
produce, higher cost of transportation and inputs including labor. COVID 19 impacted
Bangladesh agriculture in many ways. Crop, livestock and fisheries sector has suffered
significantly due to COVID19.Flower farmers of the country experienced 300 core Taka losses
due to COVID19 pandemic. Like Rice sectors vegetables also suffered from economic losses due
to COVID 19. Livestock and fisheries sector had also huge economic loses which is really
unbearable. However, the extension personnel from public sector were always with the farmers
as per Government's guidelines. Agriculture is the major sector for our economy and contributes
to a significant part of the GDP. This sector is going through a major crisis now because of the
pandemic. Two-thirds of rural households rely both on farm and non-farm incomes. Pro-poor
agriculture growth has stimulated the non-farm economy in Bangladesh: a 10 percent rise in farm
income generates 6.0 percent rise in non-farm incomes (The Financial Express, 21 September
2020). Agriculture contributes 14.74 per cent to the country’s GDP and provides employment to
about 41 per cent of the labour force, according to the Labour Force Survey 2015-16. griculture
sector of Bangladesh was impacted by the Covid pandemic during the second half of FY20 and
first half of FY21. Available official data mainly provide information on agriculture production
for the second half of FY20. According to the data, the agriculture production, especially that of
rice and wheat during FY20 was higher compared to the previous year. However, the production
of rice, particularly aus and aman rice during FY21 was adversely affected due to the
consecutive floods which affected about one-third of the districts in the country. Approximately
2.57 million hectares of paddy fields were inundated which affected about 1.27 million farmers
in 37 districts. An early estimate indicates that aman rice, which accounts for 36 per cent of total
rice produced in the country, was 1.0 million metric ton less than the targeted amount. As a
result, domestic stock of rice through public food procurement was significantly less at the end
of December, 2020 (7.63 lac m ton as on January 14 , 2021 which was 15.70 lakh m ton as on
January 16, 2020 - about 51.4 per cent less compared to the year before). Similarly, production of
jute was adversely affected due to flood and production was 6.2 per cent less compared to that in
the previous year. Domestic market prices of rice and jute posted a significant rise because of
low production and delay in import (particularly rice). Food inflation although declining but still
higher than the pre-Covid period (January-February, 2020). the agriculture sector of Bangladesh
has witnessed a contrasting performance during Covid period, an early resilience during initial
phase of Covid pandemic and weak performance in the following periods. Loss of production of
rice and other agricultural crops mainly occurred due to flood which had no relationship with the
Covid. Overall, the weak performance of agriculture sector at the end of 2020 portrays that the
sector is yet to recover despite the fact that this didn't have direct interface with the Covid
pandemic.

Agriculture Sector in Economics

Agriculture is the most important sector of Bangladeshi economy, contributing 19.6 percent to
the national GDP and providing employment for 63 percent of the population. Agriculture in
Bangladesh is heavily dependent on the weather, and the entire harvest can be wiped out in a
matter of hours when cyclones hit the country. According to the World Bank, the total arable land
in Bangladesh is 61.2 percent of the total land area (down from 68.3 percent in 1980). Farms are
usually very small due to heavily increasing population, unwieldy land ownership, and
inheritance regulations. The 3 main crops rice, jute, and tea have dominated agricultural exports
for decades, although the rice is grown almost entirely for domestic consumption, while jute and
tea are the main export earners. In addition to these products, Bangladeshi farmers produce
sugarcane, tobacco, cotton, and various fruits and vegetables for the domestic market.

The 3 main crops rice, jute, and tea have dominated agricultural exports for decades, although
the rice is grown almost entirely for domestic consumption, while jute and tea are the main
export earners
Rice is the staple food in the everyday diet of Bangladeshis. The production of rice, which can be
harvested 2 or even 3 times a year, reached 19.9 million metric tons in 1998-99. The production
of wheat reached about 2 million metric tons in 1998-99. Both crops play an important role in
achieving self-sufficiency in food production. However, due to weather conditions the
production of rice and wheat fluctuate greatly, forcing Bangladesh to import food from the
international market or turn to international aid. Bangladesh imported 1.6 million tons of wheat
(mainly from the United States) in 2000 in order to meet the demand in the local market.
Jute, often called the "golden fibre" of Bengal, is the main export-earner for Bangladeshi
agriculture, as Bangladesh remains the world's second-largest producer of jute (after India) and
the world's largest exporter of fiber. Jute is traditionally used for the fiber of carpet backing,
burlap bags, cheap paper, and various other purposes. Its importance for the Bangladeshi
economy comes from the fact that almost 3 million farms are involved in jute production. In
1999 Bangladeshi export earnings from jute amounted to US$55 million, with the country
producing 720,000 metric tons of jute, although this is about one-third of the jute production of
the middle of the 1980s. The decline in jute production is attributed to declining world prices for
this crop and to farmers switching to other crops.
Bangladesh also produces tea leaves, mainly for export, although the export of this product
contributes only 1 percent of the country's hard currency earnings. In 1998-99 the country
produced 56,000 metric tons of tea leaves, but it could produce twice that amount. The main
obstacle to increasing production is in falling prices for tea in the international market and in
management and regulation problems in the industry in the country .

Fishing is another important activity in the country, contributing 4.9 percent to the GDP (1999-
2000) and providing 6 percent of the total export income. The overall fish production was around
1.6 million metric tons (1999-2000). Bangladesh mainly exports its shrimp
Impact of Corona Pandemic in Agriculture sector

COVID 19 impacted Bangladesh agriculture in many ways. Crop, livestock and fisheries sector
has suffered significantly due to COVID19.Flower farmers of the country experienced 300 crore
Taka losses due to COVID19 pandemic.

About 80% of respondents experience a decrease in income from February to March and 93% of
respondents expect their income to decrease further in April.

Among respondents, 25% of respondents expect to have no income in April, and 55% have no
savings to fall back on

Before The Pandemic Situation

Before the pandemic situation how was our country Agricultural situation. We know that more
Agricultural means of food security, but it is a livelihood for a vast population in Bangladesh.
And means reducing poverty and fostering stainable economic development. Accounting says
that, the 90% of poverty reduction between 2005 and 2010 by agricultural. In 2016, 60.63% and
59.6% land was sustainable for agricultural, and arable respectively indication that around 10%
of land was unsustainable for growing crops. In 1991, the sector employed 69.61% of the
employed which has whittled down today to 39.07% in 2017. every 2 of 5 employed people
work in agriculture. When the RMG sector taking over as a major contributor if GDP then
bangladesh has come forward to a long way. However, agriculture continues to play a critical
role in the country and the world, with the promotion of sustainable agriculture stated in SDGD
2. The crops, livestock, fisheries, and forests are the main 4 components of agriculture.
Aus/Amon/Boro rice Paddies, Jute, Potato, and wheat as major crops and they can make 55% of
crops sector. Rice is the main food of Bangladesh which makes up 48% of rural employment and
half of agriculture’s contribution to GDP. After 1971 with average rates agricultural increasing
from 1.096 MT/hectare to 3.041 MT/hectare in 2015. Jute is the 2nd most important vegetable
fiber in the world, only second to cotton. Global production is estimated to be at 3.3 mn MT/year
with Bangladesh estimated to have produced 1.349 mn MT in 2017. Potatoes are the world’s
most important food crops. Nearly 90% of the total product comes from Europe, and
Bangladesh, the amount of harvest which is introduce us higher yielding varieties. Bangladesh is
one of the leading fish producing countries in the world, producing 4.134 mn MT in FY17.
Which is contributing to a daily consumption averaging 62.6g fish per person. The industry made
up 3.61% contribution to GDP in FY 17.
The Pandemic Situation

COVID-19 has disrupted agricultural and food systems around the world. Timely and credible
information is imperative to support these systems and protect food and nutrition security,
especially for the most vulnerable. The covid-19 pandemic is a crisis completely different scale
and magnitude. This pandemic is an ongoing global crisis which affects all the economic sectors
including the most fundamental sector, agriculture. And it requires at an unexpected response.
Bangladesh public and private sector have come together and work for the immediate threats of
covid-19. This situation has broken the economic growth. Rice production for the 2020-21
marketing year is expected to rise to 36.3 million tonnes in Bangladesh. They are expected to
import 200,000 tonnes of rice in the 2020-21 marketing year. But the pandemic is outbreak that.
The 2020-21 marketing year wheat imports are forecast upward to 6.4 million tonnes. Unlike rice
and wheat, Bangladesh’s corn imports are expected to decrease as increased domestic production
is expected along with lower demand from the feed sector. This impact bad for our country
Agricultural situation and our farming also of farmers.

Economics condition in agriculture sector on pandemic

Gatiso (2018) uncovered that farming creation had diminished during the EVD pestilence,
contrasted with their earlier year's creation.This decrease underway could be because of a
lessening in the size of cultivable ranches activated by the end of business sectors and absence of
go betweens who buy rural items from ranch entryways and transport them to the market places.
In Bangladesh dairy farmers have sought immediate support from the government as they cannot
sell milk due to the countrywide lockdown in the aftermath of the new coronavirus. Everyday
around 12 to 15 million litres of milk remain unsold across the country, which caused Tk 570
million in daily losses to the marginal dairy farmers. Bangladesh currently produces 9.9 million
tonnes of milk annually, which is 70% of the total national demand. But about 12 to 15 million
litres of milk have remained unsold for lockdown. The country's dairy farmers are in deep crisis
because they are forced to sell milk at Tk 10 to Tk 12 a litre somewhere in the country while in
other areas they cannot sell at all [Roy (2020)]. On other hand Bangladesh's fares make up over
70% of the crabs in the Chinese market. China quit bringing in crabs this year in an offer to stem
the episode of another covid-19

Source: dhakatribune

Table. Estimated Economic Output for Bangladesh Agricultural Supply Chains

In April 2013, the H7N9 avian flu scourge caused the value list of meat and poultry and their
items to tumble to 101.5 on a year-on-year premise. Because of the episode, China's poultry
industry endured lost more than RMB 40 billion. Simultaneously, customers' trust in poultry
items declined, which had a significant impact on meat and poultry costs.Thus Bangladesh
Poultry Industries Central Council (BPICC) said that the offer of poultry chicken and eggs has
dropped in the market because of shutdown which has caused destruction on the poultry
business. BPICC as of now anticipated their misfortune will be between Tk1, 150 crore, and Tk
1,650 crore. In the case of vegetables it is assumed that due to the outbreak of Covid-19
Bangladesh will lose $20 million export earnings.
Source: dhakatribune

Table. Bar chart for Economic Output for Bangladesh Agricultural Supply Chains

The World Bank in Bangladesh

In Bangladesh, a $96.2 million Emergency Action Plan, mobilized as part of a Livestock Dairy
Development project, provided, among other things, cash transfers to 620,000 small-scale
vulnerable dairy and poultry farming households.

The major challenges that contributed to the recent slowdown in agricultural growth include the
lack of agricultural diversification, rice-focused agricultural policies, poor logistics and
transportation, limited processing and commercialization, weak food safety and quality
regulations, recurrent natural disasters and climate change negative effects. The COVID-19
pandemic has affected Bangladesh agriculture, especially non-crop sectors (such as dairy, poultry
and fish farming), but the aftermath could spur policy change and innovation to build back better
and improve Bangladesh’s resilience and participation in global value chains.

The World Bank is helping Bangladesh address food insecurity in challenging times, such as
frequent climate-induced disasters or crisis situations like the current COVID-19 pandemic. For
example, the Modern Food Storage Facilities Project is increasing the storage capacity of
Bangladesh’s national strategic grain reserves by 535,500 tons for 4.5 million households.
During the COVID-19 crisis, the Livestock and Dairy Development Project has activated one of
the largest Contingent Emergency Response (CERC) in World Bank history to help business
continuity for 620,000 among the most vulnerable households in the livestock sector.
Protection and Revival of the Agriculture Sector

COVID-19 had an impact across all economic sector including the agriculture sector. Because of
the lockdown, farmers were simultaneously facing lower demand for their produce, higher cost
of transportation and inputs including labour. To understand the impact of COVID-19 on the
farmers, BIGD conducted this study in June 2020. The study estimates that COVID-19 caused a
seven per cent loss from the expected yield of Boro rice production in 2020, which amounts to a
national loss of BDT 3,687 crore. Because of the high costs of inputs, lower production and
demand, Boro farmers lost an estimated 40 per cent of their expected profit in 2020. Lockdown
strategies entail a number of protective measures to flatten the curve against COVID-19
infection, which include border closures, travel restrictions, restaurant closures, and trade
disruptions. Consequently, this is leaving a significant impact on the agriculture sector, which is
already reeling from the deep cut in the price of products because of low demand and a
simultaneous increase in the cost of transporting the produce. Historically, quarantines and panic
lead to a spike in hunger and malnutrition, as evidenced during the Ebola Virus outbreak in
Sierra Leone in 2014. The Bangladesh government has emphasized the importance of the
agriculture sector during these times of crisis, with Prime Minister Sheikh Hasina directing the
Ministry of Agriculture to facilitate farmers and to provide them with all necessary materials to
ensure that agricultural production does not suffer. The Bangladesh government has emphasized
the importance of the agriculture sector during these times of crisis, with Prime Minister Sheikh
Hasina directing the Ministry of Agriculture to facilitate farmers and to provide them with all
necessary materials to ensure that agricultural production does not suffer. For revive the
economy.

Government support in agriculture sector on pandemic

Agriculture is a major sector for our economy, and is crucial to reduce our food
insecurity. Now, agriculture doesn’t only mean by rice, vegetables, or fruits it also
includes fisheries, poultry, livestock etc. Because the world has never experienced a thing
like Covid-19 before, the situation is likely to direly afflict the agriculture sector as well.
The agriculture sector is going through a major crisis now, without a doubt. A disruption
of the entire supply chain and a reduction of the mobility of labour due to social
distancing and decreased transportation are just a few of the problems.

This is the time to harvest crops in the field, and a crisis of available labour is reduced by
introducing mechanization in agriculture. Mechanization is not a new concept, but the
question is, why has adequate preparation not been taken already? We also need to think
about the agricultural labour community, about their next or future employment, as they
lose their jobs due to both this pandemic and mechanization.

The Bangladesh government has introduced a stimulus package of Tk5,000cr for the
farmers with 4% interest rate, which is indeed a very satisfactory news for agriculture.
The question also arises here about the justification of the interest rate for farmers, as
agriculture and food security is our priority now.

Netizens and experts are suggesting to not only reduce the interest rate for farmers, but
make it 0%, as it’s not only about the credit for farmers. This stimulus package would
help to run the supply chain, for transfer and distribution of raw materials, and help the
outputs of generations of farmers.

This stimulus package contains financing, management of the finance, and overall
monitoring. The distribution of this stimulus package is itself another concern now. That
is because there is no such database available, and it is going to be a real challenge to
identify, monitor, and evaluate the proper distribution channel.

Local monitoring through NGOs or local government can be operated, but again, the
question of transparency and effectiveness in reality also lies in it.

Recommendation

The COVID-19 pandemic has not so far caused a supply shock for staple grains. Nevertheless,
several large exporters have restricted exports, while some countries that rely on imported grains
to feed their populations have ramped up purchases to ensure they have sufficient stockpiles to
see out the pandemic. *Ensure market transparency via the provision of timely market
information. A lesson from the 2007/08 food price crisis is that transparency and information
sharing are important. This can help mitigate panic buying and generate trust in markets. It can
also improve trust among countries, thereby encouraging co-operative solutions. Countries can
also benefit from peer learning in terms of what kinds of policy approaches are proving effective
*Provide clear and transparent communication at the domestic level.Keep domestic, regional and
international markets open. Well-functioning domestic markets, regional co-operation and an
open international trading system are all important to connect producers to market opportunities,
and help food get to where it is needed. Open borders and well-connected internal markets can
help to contain supply disruptions. This is especially important in the case of net food importing
countries. *Enhance trade facilitation and logistics. Facilitating the movement of perishable
products across borders would reduce food loss and waste related to handling difficulties, while
facilitating border checks could ease access to essential agricultural inputs such as pesticides and
veterinary medicines. Digital tools may help to facilitate border procedures, for example, by
allowing electronic copies of sanitary and phytosanitary certificates. *Explore ways to maintain
transport links, to the extent possible, in order to facilitate the movement of food products and
ensure farmers’ access to input and output markets. *Co-operate with private stakeholders to
identify and address bottlenecks to the smooth functioning of food supply chains. *Work with the
private sector to find alternative supply channels to handle potential surpluses (or potential food
loss and waste) that have resulted from the closure of restaurants, schools, hotels and catering
businesses. This would benefit both consumers and smaller farmers, who are more likely to be
dependent on those outlets and buyers. *Where appropriate, provide flexibility around regulatory
requirements in order to facilitate the movement of food products to alternative outlets.

Conclusion

Despite Bangladesh’s relatively small geographical area, impacts of COVID-19 on farming

communities may unfold distinctly in different areas. Impacts were analysed depending on the
crops present in the field. Five broad categories/sectors could be distinguished:

1. Farms in areas where winter rice, or “Boro”, is harvested, a. Haor areas (wetland
ecosystem), April–Mayb. Other parts of the country, April–June
2. Farms in the coastal region, where vegetables, melons, fisheries (small scale/private) etc.
predominate, April–May
3. Farms in areas – Barind Tract (Rajshahi), Dinajpur, Thakugaon, Pachagarh, hill districts, etc.
– where mainly fruits are cultivated (particularly mango, lychee, banana, jackfruits, etc.),
May–June/July
4. Fishery areas – especially for export-oriented shrimp farming and transportation of prawn
seeds from hatcheries at Cox’s Bazar to Khulna-Satkhira in the coastal region
5. Dairy products and the poultry sector.

The COVID-19 pandemic is a major economic and labour market shock, presenting significant
impacts in terms of unemployment and underemployment for informal workers. In rural areas,
the livelihoods of especially the self-employed and wage workers are at risk, because agri-food
supply chains and markets are being disrupted due to lockdowns and restrictions of movement.

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