Bangladesh agricultural growth slows despite 10% public spending share: World Bank

Highlights:

• World Bank calls for smarter farm spending
• Rice-focused support hampers crop diversification
• Top landowners receive half of fertiliser subsidy benefits
• Only 5% of farmers use balanced fertiliser mix
• Higher-value agriculture lags behind changing food demand
• Climate risks expose gaps in agricultural spending

Bangladesh allocates about 10% of its total public spending to agriculture, but agricultural growth has slowed, productivity gains have weakened and diversification into higher-value products has lagged, according to a new World Bank report.

The Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh’s Agrifood System report notes that a gradual shift towards smarter agricultural spending could help build a more productive and resilient agrifood system, protect farmers and create jobs.

World Bank notes that consumer demand is increasingly shifting towards fruits, vegetables, protein-rich foods and processed foods. However, agricultural production has not diversified at the same pace.

The report says a large share of public spending continues to be directed towards subsidies and rice-related support, while areas critical to improving farm productivity and incomes – such as research, advisory services, irrigation, market access and climate resilience – remain underfunded.

Fertiliser subsidies remain the largest form of agricultural support, accounting for about 80% of the Ministry of Agriculture’s budget.

While these subsidies have helped farmers maintain production and price stability, the report says the benefits are distributed unevenly because they are linked to the amount of fertiliser purchased.

According to the report, the top 20% of landholders receive about half of all fertiliser subsidy benefits, while the bottom 40% receive only around 15%.

The report also highlights imbalanced fertiliser use. Only about 5% of farmers apply a balanced mix of nutrients within recommended ranges, despite the potential for significantly higher yields through improved practices.

World Bank Division Director for Bangladesh and Bhutan Jean Pesme said agriculture remains central to Bangladesh’s development, job creation and poverty reduction.

“But climate risks, shifting consumption patterns, tighter fiscal space, and rising price and supply disruptions of fertilisers due to the Middle East conflict are exposing gaps in policies and spending,” he said.

“The good news is there is a clear path forward. By modernising support delivery and gradually rebalancing agriculture spending toward high-return investments, Bangladesh can build a more resilient and productive agrifood system that delivers more and better-paid jobs.”

The report says public spending remains heavily concentrated on rice production, which discourages diversification.

Rice occupies around 72% of cultivated land and receives about 80% of subsidy benefits, even though sectors such as livestock, fisheries, vegetables and agro-processing offer greater opportunities for income growth and employment.

To address these challenges, the World Bank recommends a phased reform programme.

In the short term, it suggests expanding soil testing, strengthening farmer advisory services and rolling out the Farmer’s Card and e-voucher systems to ensure support reaches poorer and climate-vulnerable areas.

Over time, the report says improved delivery mechanisms could free up resources for investments that raise productivity, promote higher-value agriculture and provide greater benefits to poorer farmers.

World Bank Senior Economist and report co-author Mansur Ahmed said modernising fertiliser subsidy design and delivery could help save foreign exchange, improve soil health, raise agricultural productivity and ensure support reaches farmers who need it most.