Impact of COVID-19 on Agribusinesses in Bangladesh - Insights from Industry Leaders May 20, 2020 - South ...
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Impact of COVID-19 on Agribusinesses in Bangladesh Insights from Industry Leaders May 20, 2020
List of Attendees 1. Mr. Anwar Faruque, Ex-Secretary, Ministry of Agriculture 2. Mr. Mohammed Yousuf, Director General, Directorate of Agricultural Marketing 3. Mr. M Sayeduzzaman, Chairman, Bangladesh Crop Protection Association (BCPA) 4. Mr. A M Sadrul Alam, Secretary General, Bangladesh Crop Protection Association (BCPA) 5. Mr. AMM Golam Towhid, Managing Director, Syngenta Bangladesh Limited 6. Mr. Zahidul Islam, Executive Director, Bayer Crop Science 7. Mr. Sazzadul Hassan, Managing Director, BASF 8. Mr. S A M Ashfakul Abedin. Executive Director, Auto Crop Care Limited 9. Mr. Ruman Hafiz, Executive Director, Shetu Corporation (Bangladesh) Limited 10.Mr. S I H M Musfiqur Rahman, Country Director, Haychem (Bangladesh) Limited 11.Mr. Saif Uddowlah, Director, Petrochem (Bangladesh) Limited 12.Mr. Saiful Huda, Director, Naafco Limited 13.Mr. Sadid Jamil, Managing Director, Metal Agro Limited 14.Mr. Sopan Malik, Managing Director, A R Malik Seeds Limited 15.Mr. Sudhir Nath, Business Director, ACI Seeds Limited 16.Ms. Fawzia Yasmeen, Director, Ispahani Agro Limited 17.Mr. Humayun Kabir, Managing Director, Supreme Seeds Company Ltd
1 Executive Summary
2 Recommendation highlights: By industry
3 Supply chain challenges and impact
Contents 4 Financial challenges and impact
5 Cross sector impact analysis
6 Four opportunity areas
7 Recommendations: By impact area
8 Learnings and observationsExecutive Summary
COVID-19 and measures taken to control the pandemic are This report compiles insights from senior industry leaders to
having a crippling effect on health and economic systems provide an in-depth understanding of the ground reality of
across the globe. Agriculture & food sectors, though a part COVID-19’s impact on agribusinesses, measures taken by
of the essentials list, are not immune to the disruptions the stakeholders, potential opportunity areas, and finally,
pandemic has caused in the supply chains and the financial recommendations to minimize the impact on the industry.
markets, both domestic and international, and can
expect interruptions in the coming months. Subsectors of agribusinesses highlighted:
Considering the growing concerns and uncertainty around 1. Seeds
the pandemic, South Asian AgTech Hub for 2. Agrochemicals
Innovation (SAATHI) hosted an Online Roundtable to discuss 3. Farm machinery
the “Impact of COVID-19 on Bangladeshi Agribusinesses”
on 13th May 2020. Impact areas covered:
The event was hosted by Mr. Mahbub Rahman, Country 1. Financial
Representative – SAATHI, Mr. Girish V Aivalli, CEO – 2. Operational
3. Trade
SAATHI. The Guests of Honour were Mr. Anwar Faruque,
Ex-Secretary, Ministry of Agriculture and Mr. Mohammed
Recommendations directly from industry leaders:
Yousuf, Director General, Directorate of Agricultural
Marketing. 1. Regulations
2. Banking and Finance
.
3. Supply Chain and Operations
4. Agricultural Infrastructure
5. Stakeholder Cooperation
SAATHI | 01Recommendation Highlights: By Industry
Agrochemicals Seeds Farm Machinery
Ensure banking support for agri-
Consider waiver or reduction of AIT and Provide economic and operational
machinery importers and distributors
custom duty for crop protection support to strengthen local production
selling machinery at EMIs over 36
industry of seeds
months
Open sources of registered Manage current hurdles to hybrid seed Extend interest free loans and increase
agrochemicals to enable import of same imports for continued access to higher access to subsidies to the farmers to
products from other suitable sources yielding seeds enable access to Agri Machinery
SAATHI | 02Supply Chain Challenges and Impact
Disrupted supply chains have heavily Challenge Impact
impacted the agriculture sector
Poor coordination in execution of
Disruptions to business
Government’s orders at the local
operations
level
Delays in farmers getting
Inability to move products from
critical farm inputs for
warehouses to distributors
upcoming seasons
Gradually activate market systems. For ex: Increase in fear of coronavirus Limited business activities Ex:
among farmers, employees, and 50% growers failed to go to
If there are 3 bazaars in a village, we can field during peak time
channel partners
open only one bazaar for a shorter
duration, ensuring that farmers can come
and sell their products with
Shortage of supply of Increased transportation costs
transportation support from local transportation facilities along the for agribusinesses to move
management” supply chain products
SAATHI | 03
SAATHI | 03Financial Challenges and Impact
Disrupted supply chains have heavily Challenges Impact
impacted the agriculture sector Delay in credit payments from
Severe lack of cash in the market farmers and dealers to
due to limited banking facilities companies creating cash
crunch in the market
Inability of companies to
Lack of clarity on access to
access financing options, and
concessional financing options
increasing working capital
provided by the government
constraints
Department of Agricultural Marketing Lower price realizations for Lower incomes for farmers,
farmers even during harvest and lesser cash for investing in
presently calculating production cost next season’s crops
season
of vegetables and paddy in order to fix
product selling price in every level like
farmers gate, wholesale market,
Lack of corporate account
and also retail level to ensure fair price Delays to critical business
systems and high transaction
transactions
to farmers costs of 1.5%
SAATHI
SAATHI | 03| 03
SAATHI | 04Cross Sector Impact Analysis
Seeds Agrochemicals Farm Machinery
Inability to sell seeds due to closed shops, and Shortfall in cash flows for companies who sold
farmer cash constraints, resulting in only 20% of Price of agrochemicals likely to increase due to a agri-machinery to farmers on lease or credit, as
sales targets met for agribusinesses shortage of supply caused by disruptions in local only 20-25% of the EMI loans were collected
Financial production and inability to process imports in a timely
Failure to clear payments by companies as
manner Failure in bank loan repayments due to cash
money blocked at dealers end due to shortage
constraints for companies
of cash in the market
Potential shortage in supply of quality seeds for
Increase in the average lead time required for
upcoming sowing seasons as local seed Barriers to the movement of tractors, and
introducing crop protection products into the market
production has been hampered along with combined harvesters, as agri-machinery and
due to delayed port clearances and transportation
delays in getting imports from supplying equipment not relieved under Govt. guidelines
hurdles
countries due to lockdown restrictions
Operational
Inability of farmers to purchase seeds for Inability of input dealers to open shops freely to supply Inability of service staff such as mechanics to
sowing vegetables in the upcoming summer products, due to restrictions from local authorities move to repair machinery due to lockdown
season due to cash constraints restrictions
Spike in international freight fares and seeds Import of pesticides from a fixed registered source has
has dampened production for import reliant caused supply challenges as sources are hiking their
Hurdles in transportation and delays at ports
seed companies prices
caused difficulties for products that required to
Trade be transported from the port to the warehouses
Inability to import higher yielding hybrid seeds Supply from China and India being delayed due to and ultimately to the consumers
will dampen overall yield in Bangladesh during manufacturing and supply challenges in these
upcoming seasons countries
SAATHI
SAATHI | 04| 04
SAATHI | 05Four Opportunity Areas
1 • Increase local cultivation of import dependent crops like onion,
pulses and wheat to make Bangladesh self reliant
Local Cultivation Hybridization • Tap into export opportunities for crops such as vegetables and
Agricultural potatoes having an exportable surplus to drive farmer incomes
Productivity • Adopt hybridization and crop diversification to drive farm
productivity
2 • Invest in digital platforms that can protect companies during
shock situations, and drive overall productivity and efficiency in
Digitization Farm Advisory Traceability agribusinesses
Initiatives • Invest in digitization for traceability in supply chains, data-driven
advisory to farmers, and tracking of vendor payments
3
• Decrease dependency on labour by providing farmers access to
Commercial Farm Mechanization tractors seeders, transplants, and reapers
Agriculture • Drive commercial agriculture as this will be critical in improving
productivity in the future
4 • Increase partnerships with foreign companies to ensure
Cross-Border New Technologies New Business Models beneficial business models and technology solutions can be
transferred to Bangladesh’s agriculture sector
Partnerships • Expedite the establishment of agro-processing zones and to
reduce massive food wastage and loss
SAATHI | 06Recommendations from the Industry (1/2)
Regulations • Ensure minimum price protection for farmers to enable them to continue production for next season
• Provide a waiver or withdrawal of Advanced Income Tax on import of all finished products and raw
materials for crop protection industry
• Enable companies to import same registered products from other suitable sources, having same
specifications, considering import restrictions caused by COVID-19
• Facilitate smooth and speedy clearance of imported products at the ports
• Allowing tolling for agrochemical manufacturing and repacking companies to maintain quality standards
and safety in manufacturing
Banking and Finance
• Extend flexible term and lower interest rate loans (1-2%) to agribusinesses for managing working capital
needs
• Provide clarity on the access to concessional financing such as stimulus packages and agri-loans to ensure
beneficiaries, particularly growers, can avail its benefits
• Provide interest free or nominal interest loans for farmers to enable them to meet their daily labour and
inputs costs, and farm machinery expenditures
• Facilitate provisions for adequate crop insurance policies for farmers to protect them from shocks
SAATHI | 07Recommendations from the Industry (2/2)
Supply Chain Operations • Stabilize supply chain and gradually activate market systems
• Fix transportation hurdles and increasing costs to enable movement of agri-inputs for their timely supply for
upcoming season
• Establish farmers markets in every district to allow cooperative farmers to sell their produce directly, provided the
provisions for warehouses are made for sorting, grading etc.
• Include veggies in the relief basket by tracking all districts with surplus food production to to ensure farmers
receive fair prices produce
Agricultural Infrastructure • Improve storage capacities for food grains
• Construct specialized cold storage facilities in all districts to store surplus vegetables and fruits so that farmers
can store their produce and getter higher prices upon selling when prices are better
• Develop online marketing platform run by Department of Agricultural Marketing where agribusinesses,
supermarkets, truck suppliers etc. are listed and can buy products directly from farmers
Stakeholder Cooperation • Create a committee involving relevant stakeholders from public and private sector to focus on crops with
exportable surplus, and on crops that are heavily import reliant
• Collaborate with all stakeholders i.e. DAE, PPW, NGOs, and industry associations to share knowledge, technology
solutions, and financing opportunities to overcome current pandemic situation
SAATHI | 08Key Learnings and Observations
ü Government’s adequate management of Boro harvesting
in Haor areas helped farmers and businesses mitigate the
crop loss due to early flood. The measures included
transporting labourers to Haor areas from other parts of
the country and arranging machines for harvesting
ü Engagement of agribusinesses with Industry association
Indo Bangla Cooperation
and government bodies led to Agri inputs being considered
Indian and Bangladeshi agriculture sector is very similar
as essential products early on from a geographical and cultural perspective. However,
India is ahead of Bangladesh when it comes to
ü Continuous engagement with Ministry of Agriculture and established technology solutions and Agri business
local administration is needed to ensure execution of models. There is, thus, immense scope for Indian
Central Government guidelines at local levels agribusinesses to transfer knowledge, technology
solutions and successful Agri-business models to
Bangladesh, by working together with companies,
ü Spread of awareness among farmers about Agri-
government bodies, banks and regulators in the country.
machinery such as combine harvesters & reapers due to
abrupt shortage of labor caused by the pandemic This is also an opportunity for Bangladesh to diversify
import partners and work together with Indian
companies to access high quality farm inputs, agri-
machinery, and other products.
SAATHI | 09Contact Us
Girish Aivalli, CEO
https://www.linkedin.com/co
girish.aivalli@saathi.asia
mpany/saathi-asia/
https://twitter.com/saathiasia +91 9818141779
https://www.facebook.com/ Level 3, Augusta Point, Sector 53,
SAATHIASIA/ Golf Course Road
Gurgaon: 122002
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