Module 7 - Bangladesh: Autonomous Organization for Facilitating Market-led Export

The reduction of rural poverty in Bangladesh clearly requires improved agricultural growth and diversification into products, including export products, with higher income elasticities. This requires improved farm technology, both for intensification of food grain production (to release land for higher-value crops) and to enable farmers to grow diversified crops, for which Bangladesh has a comparative advantage. Bangladesh has very limited experience in commercial horticultural production and marketing, however, and lacks extension systems that can provide improved production technologies and marketing information for export horticulture.

Project Objectives and Description

The goal of the Agricultural Services Innovation and Reform Project is to raise agricultural productivity and incomes through production intensification and diversification, supported by more demand-driven and locally responsive agricultural services. The project provides support through a quasi-private organization (HORTEX) to pioneer horticultural production and export activities that emphasize contract farming with NGOs or private entrepreneurs using participatory approaches to extension.

HORTEX is an autonomous, nonprofit, facilitating organization that is not itself commercially involved in production and export. A managing director and a governing body consisting of 11 membersthree from the government, one from the central bank, five from the private sector, and two from NGOsprovide the management structure.

HORTEX works with private entrepreneurs, NGOs, and government agencies to forge productive alliances and provide catalytic technical services, combined with limited investment, in export operations that may operate at a loss until adequate export volumes are developed. HORTEX provides assistance in grading, packaging, quality control and export logistics; assists in marketing; facilitates contracts with overseas interests; and explores potential joint venture investments.

In its first season of successful operation (1998), HORTEX arranged with an NGO for contract production of French beans, identified interested buyers in Europe, selected appropriate varieties, developed and contracted for supply of export-quality boxes, trained NGO extension staff, and organized export logistics. HORTEX initially bore the costs of seed, fertilizer, and cartons as demonstration costs. Based upon analyses of market opportunities and domestic production possibilities and constraints, HORTEX has identified other potentially profitable products such as chili peppers, okra, bitter gourd, yard long beans, and baby pineapple. These products include both new export commodities and traditional exports. For traditional exports, quality has historically been poor, packaging has not conformed to international trade standards, shelf life has been limited, and prices have been low. For these commodities, HORTEX facilitates entry into nontraditional markets and improves returns from traditional markets by introducing improved production practices, postharvest handling, and packaging to improve quality and reduce spoilage.