A gradual shift towards smarter public spending in agriculture can help build a more productive and resilient agrifood system, protect farmers and create jobs in Bangladesh, according to a new World Bank report.
The report, Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh’s Agrifood System, says Bangladesh continues to give high priority to agriculture, allocating around 10 per cent of total public expenditure to the sector. However, agricultural growth has slowed in recent years, productivity gains have weakened and diversification into higher-value products has lagged behind, despite growing consumer demand for fruits, vegetables, protein-rich foods and processed products.
The report notes that a large share of public spending goes towards subsidies and rice-related support. At the same time, key areas needed to improve farm productivity and incomes, including research, extension services, irrigation, market access and climate resilience, remain underfunded.
Fertiliser subsidies remain the largest form of agricultural support, accounting for around 80 per cent of the Ministry of Agriculture’s budget. According to the report, these subsidies have helped farmers maintain production and price stability. However, because the subsidy is linked to the volume of fertiliser purchased, farmers with larger landholdings receive a greater share of the benefits. The top 20 per cent of landholders receive around half of all fertiliser subsidy benefits, while the bottom 40 per cent receive only about 15 per cent.
The report also highlights a significant imbalance in fertiliser use. Only around 5 per cent of farmers apply a balanced mix of nutrients within recommended levels. It says correcting this imbalance could substantially increase crop yields and create a major opportunity to improve agricultural productivity.
“Agriculture is central to Bangladesh’s development, job creation and poverty reduction. But climate risks, changing 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,” said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan.
“The good news is there is a clear path forward. By modernising support delivery and gradually rebalancing agricultural spending towards high-return investments, Bangladesh can build a more resilient and productive agrifood system that delivers more and better-paid jobs,” he added.
The report says public spending remains heavily concentrated on rice production, which discourages diversification. Rice accounts for around 72 per cent of cultivated land and receives nearly 80 per cent of subsidy benefits. In contrast, high-value subsectors such as livestock, fisheries, vegetables and agro-processing offer stronger prospects for income growth and employment generation.
The World Bank recommends a phased reform approach. In the short term, it suggests expanding soil testing, strengthening farmer advisory services and introducing the Farmer’s Card and e-voucher system to ensure agricultural support reaches poorer and climate-vulnerable areas.
Over time, the report says improved delivery mechanisms could free up resources for investments that increase productivity, promote higher-value agriculture and provide greater benefits to poor farmers.
“Modernising fertiliser subsidy design and delivery offers a significant opportunity to save foreign exchange, raise agricultural productivity, improve soil health and ensure support reaches the farmers who need it most,” said Mansur Ahmed, Senior Economist at the World Bank and co-author of the report.
