Boston, MA -- (SBWIRE) -- 06/27/2013 -- We hold a sanguine outlook for the Bangladesh agriculture sector. Coming from a low base, there is much more room for growth and improvement in sub sectors such as grains and livestock. Indeed, the growing presence of foreign players in the agriculture industry is a clear sign of the rewards to entry in sub sectors such as poultry production. That said, as the agriculture sector in Bangladesh employs close to 70% of the working population but contributes to only 20% of the country's GDP, there is a obvious need for improvement in efficiency of operations. The existence of small-scale farms - continue to hold back the sector from enjoying considerable productivity gains. For 2012/13, we expect modest gains in production of food grains and do not foresee any significant shortfalls in production in terms of meeting demand.

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Key Forecasts

- Wheat production growth to 2017: 62.0% to 1.6mn tonnes. The main driver behind this growth will be an improvement in yields. We note that in Bangladesh, wheat cultivation remains a preferred option for non-irrigated land given the low farm input use (fertiliser, insecticides and labour).
- Sugar production growth to 2016/17: -56.2% to 68,000 tonnes. With farmers increasingly planting more profitable cash crops such as cotton, we do not foresee the trend of declining sugar production to reverse any time soon.
- Poultry production growth to 2016/17: 17.2% to 232,000 tonnes. Better economic conditions and higher disposable incomes will help to drive demand for meat. Better disease control is also expected to support the recovery of the sector.
- 2013 real GDP growth: 6.1%, down from 6.3% in 2012. Predicted to average 6.3% from 2012 to 2017.
- 2013 consumer price inflation: 7.6% year-on-year (y-o-y) average, from 10.6% y-o-y in 2012. Predicted to average 7.5% from 2012 to 2017.
- 2013 central bank policy rate: 6.75% average, from 6.75% in 2012. Predicted to average 6.9% from 2012 to 2017.
- BMI universe agribusiness market value: US$18.0bn in 2013 (up from US$17.4bn in 2012; forecast to grow annually by 4.0% on average to 2017)

Key Revisions To Forecasts

Our 2012/13 poultry consumption forecast has increased, from 191,000 to 205,700 tonnes. This is due to the growing presence of foreign poultry producers which produce on larger scale and more efficiently than domestic farms.

Key Developments

The bumper wheat crop this season has come on the back of higher government support prices from BDT 1,050/40 kg to BDT 1,200/40 kg. Farmers have also reportedly used high-yielding varieties developed by the Bangladesh Agricultural Research Institute (BARI) - Bari-19, 20, 25, 26 and 'Prodip', thus boosting production. The abundance of water and availability of fertiliser, coupled with a prolonged winter season have given rise to this bumper crop as well.

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