Agriculture deserves higher allocation in upcoming budget

Agricultural produce includes all outputs coming from cultivation of crops, rearing of animals and birds, production of fish and plantation of trees. Agricultural subsectors are broadly classified as crops, livestock, forestry and fisheries. The gross domestic product coming from these subsectors are regarded as agricultural GDP. The share of agricultural GDP to total GDP of the country was about 50% in 1973-74. This has declined to 11% in 2024-25.

A proportional decline was also noticed in each subsector of agriculture. Currently crops, livestock, forestry and fisheries subsectors represent only 5.06, 1.81, 1.72 and 2.34 percent of the GDP, respectively. Because of high growth rates in industry and service sectors, the share of agriculture and its subsectors in total gross domestic product has declined. But total agricultural production continued to increase to cater the needs of growing population of the country.

The sector has achieved remarkable success towards self-sufficiency, with food grain production quintupling between 1972 and 2025. The production of food grains has registered a long term annual growth rate of about 3 percent during the last 52 years, that accounted to 110 lakh tonnes in 1973 and 503.54 lakh tonnes in 2025.

The production of other crops, fisheries and livestock has also shown a significant increase. Despite a significant increase in domestic production, the country has to depend on imports of a large quantity of food grains, edible oil, pulses and spices every year. The cost of milk, meat, egg and fish per unit is beyond the reach of the common people and about one fourth of population does not have the adequate access to proper nutrition.

Climatically, Bangladesh is one of the most vulnerable and risk-prone countries in the world. It contributes only about 0.5% to global CO2 emissions, but bears the most dangerous consequences of the climate change. Recent flash floods in the Haor areas of northeastern Bangladesh, primarily in late April and early May 2026, have submerged thousands of hectares of Boro paddy fields, causing severe damage to crops during the peak harvest season.

Reports indicate over 13,000 hectares were submerged in Netrokona alone, with thousands more in Habiganj and Sunamganj. Farmers are facing massive financial losses, with many reporting their entire annual income source, the Boro crop, being washed away just before harvest. A farmer died in Nasirnagor, Brahmanbaria on May 2, 2026, after witnessing his six bighas of cultivated Boro paddy submerged by floodwater.

Bangladesh's agricultural sector is facing a severe crisis due to rising input costs such as fuel, fertilizer, pesticides and labor. On the other hand plummeting market prices for crops at farm level have significantly been reducing farmer’s profitability. Production costs for key crops like Boro rice have surged by about 40% in recent years. Many farmers are unable to manage the supply of adequate quantities of material inputs including irrigation water. This is leading to a decline in farm profit and real income of farmers. A farmer named Ali Akbor of Sunamganj says, “We have no profit from crop production. We are somehow surviving after hard toiling in agriculture” (Prothom Alo; April 25, 2026). Rising costs and low output prices have been putting many farmers into debt cycles and forcing many of them to exit farming. Some of them were reported to have committed suicide (For evidence see Jahangir Alam, 2026. Agricultural Budgeting in Bangladesh: Trends, Priorities and Stratigic Outlook. Participatory Research and Action Network).

The biggest affliction in our economy is high rate of inflation, which causes severe hardship for the poor and those with fixed incomes. The most concerning issue is the high rate of food inflation, which has significantly worsened the suffering of the poor and vulnerable. As of April 2026, Bangladesh's food inflation accounted for 8.39%, a significant decrease from 14.10% in July 2024, driven by improved supply-side measures.

The key condition for reducing food inflation is increased production in the agricultural sector. Recently, agricultural production has been rising, but the growth rate is progressing very slowly. Currently, real growth in the agriculture sector is very low. The growth rate, which was 6.55 percent in the 2009-2010 fiscal year, has now fallen to around 2.42 percent in 2024-2025. This represents a slowdown even compared to the 3.3 percent growth observed in the previous year.

Bangladesh's agricultural sector faces challenges from relatively low budget allocations, despite employing about 45% of the workforce. The share of agriculture in the national budget and Annual Development Programme (ADP) has generally seen a declining trend. Subsidies are primarily focused on fertiliser, electricity for irrigation, and machinery. Due to the depreciation of the taka against the dollar, fertiliser and agricultural machinery imports have become costlier, necessitating even a larger amount of subsidies in agriculture. The recent budgetary and subsidy allocations are stagnating and insufficient to increase the growth in agriculture at required level and maintain food security.

In order to ensure food and nutritional security for all by 2030, the agricultural sector’s production growth rate must be raised to 4-5 percent. For this, investment in agriculture needs to be increased; however, in reality, this is not happening. Compared to the original budget of the 2011-12 fiscal year, the size of the 2024-25 budget has increased by 4.78 times.

In comparison, the agriculture budget has increased by only 3.78 times. In the 2011-12 fiscal year, the share of the agriculture budget in the total budget was 10.65 percent. In the 2024-25 budget, it dropped to 5.94 percent. Similarly, the share of agricultural subsidies fell from 6.4 percent to 2.16 percent. In other words, the agriculture budget and subsidies have not increased proportionally to the increase in overall budget. In the FY 2025-26 the total budget and the agricultural budget reduced including subsidies.

The amount of agricultural credit has increased more than threefold over the last 16 years giving an average annual growth rate of about 8%, but yet it covers only 22% of the farmers. The share of agricultural credit is only about 2% of total institutional credit. A concessional 4% interest rate is allowed for import-substitute crops (pulses, oilseeds, maize, spices), but the farmers reported that local bank branches are reluctant to give this loan to those who desperately need it. The repayment rate of agricultural credit is quite satisfactory, much better than that in other sectors. Sometimes repayment exceeds the amount of disbursement. It reveals that the farmers are in intense pressure for repayment of loans and occasionally they become very frustrated and commit suicide.

Bangladesh is facing serious food security challenges due to high input prices, occurrence of early floods in haor areas damaging Boro Paddy and external shocks. Under the present circumstances, the outlook for Bangladesh's agricultural sector in the FY2026-27 national budget is expected to be one of sustained high-priority support, focusing on food security, modernisation, and adaptation to climate change. The budget should be formulated with a total amount of Tk 94,000 crore (10% of total budget) allocating to grater agriculture sector, with a provision of TK40,ooo as subsidies (10% of the value of agricultural output). The next budget should include several other measures that would provide support to farmers including targeted tax reductions, and duty exemptions.

To ensure sustainable agricultural growth and enhanced food security, a more comprehensive approach focusing on mechanization, processing, diversification, procurement, energy security, value chain development, and inclusive financing is necessary. An independent Agricultural Price Commission should be established to monitor production cost, assess the magnitude of domestic and international market price volatility, determine tax and tariff rates on agricultural products and suggest support prices for farmers.

Jahangir Alam is an agricultural economist.