The Food Sector in Bangladesh: Opportunities and Challenges at a Crossroads
The Food Sector in Bangladesh: Opportunities and Challenges at a Crossroads
The food processing industry in Bangladesh is growing at an annual rate of 7.7%, driven by increased domestic and international demand. The food service market is projected to grow from $3.79 billion in 2024 to $7.47 billion by 2029, with a CAGR of 14.5%. In 2021-22, agricultural output was 70 million tons, with food grains accounting for 45.89 million metric tons. The food market’s revenue is expected to reach $151.40 billion in 2024, growing annually by 9.3% from 2024 to 2028. Exports of processed food have been growing at an annual rate of 16.6% over the past four years.
Earnings and revenues for food companies have grown by 9.6% and 10% per year, respectively, over the last three years. Food inflation was 12.52% in August, with the CPI rising to 122.30 points in April 2024. Average food inflation rose to 10.22% in April 2024, up from 8.71% in 2023. Meanwhile, non-food inflation slightly decreased to 9.34% in April 2024 from 9.39% in June 2023. The food processing industry employs 2.2% of the total workforce, 19% of the industrial manufacturing workforce, and 6.5% of the total manufacturing labor force. Higher employment, changing lifestyles, rising per capita income, and dual household income which is supposed to boost consumption, leading to economic growth.
In the first half of FY23, a fast-moving consumer goods company producing chips, biscuits, and bread saw a 34% profit growth to Tk 0.91 million. Fish processors and shrimp exporters, such as Gemini Sea Food and Apex Foods, also experienced significant profit increases. Gemini Sea Food’s income nearly doubled to Tk 43.32 million, while Apex Foods’ profit grew by 73% to Tk 20.38 million. Conversely, Agricultural Marketing Company’s (Pran) profit dropped by 4% to Tk 43 million, and BATBC’s revenue growth fell by 4% in 2023. Unilever Consumer Care posted a 40% profit increase to Tk 736 million despite a 1% sales revenue decline. State-run Zeal Bangla and Shyampur Sugar Mills continued to incur losses.
Bangladesh economy has been facing challenges since 2019, including high inflation, rising interest rates, and local currency devaluation. During the fiscal year 2022-23, the food industry performance was impacted, with sales growth for listed food and allied companies halving despite price increases, suggesting reduced consumption. Twelve food companies listed on the Dhaka Stock Exchange reported a combined sales increase of 10.7% year-on-year to Tk 3,837 crore in 2022-23, compared to a 20.7% growth in 2021-22.
However, the sales growth of the food-processing companies was strong in FY23 as it operates in the low-end segment. The industry sales growth decelerated despite adjusting prices in line with a hike in input costs. This means people are consuming less amid the erosion of purchasing power.