Bangladesh urged to rethink farm spending to boost growth and jobs

The report, Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh’s Agrifood System, highlights that around 10 percent of the country’s total public expenditure is directed toward agriculture.

Agriculture remains one of Bangladesh's biggest economic strengths, but a new World Bank report says changes in public spending are needed to improve productivity, create jobs, and build a more resilient food system capable of meeting changing consumer demand and growing climate challenges.

The report, Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh's Agrifood System, highlights that around 10 percent of the country's total public expenditure is directed toward agriculture. Despite that commitment, growth in the sector has slowed in recent years, while productivity gains and diversification into higher-value agricultural products have struggled to keep pace with market trends. Consumers are increasingly demanding fruits, vegetables, protein-rich foods, and processed products, yet much of the current support system remains concentrated on traditional crop production.

Fertilizer subsidies dominate agricultural spending

A significant share of agricultural funding is allocated to fertilizer subsidies, which account for roughly 80 percent of the Ministry of Agriculture's budget. The subsidies have helped maintain production levels and stabilize prices, though the report argues that the benefits are not distributed evenly among farmers. Because support is linked to fertilizer purchases, larger landowners receive a disproportionate share of assistance. According to the findings, the top 20 percent of landholders receive about half of all fertilizer subsidy benefits, while the bottom 40 percent receive only around 15 percent.

The report also points to concerns over fertilizer use. Only about five percent of farmers currently apply nutrients in balanced proportions within recommended ranges. Researchers suggest that correcting this imbalance could significantly improve crop yields and overall farm productivity.

Rice-focused support limits diversification opportunities

Public spending remains heavily concentrated on rice production, which occupies approximately 72 percent of cultivated land and receives around 80 percent of subsidy support. While rice remains essential for food security, the World Bank argues that this focus may be limiting growth in sectors with stronger income and employment potential.

Livestock, fisheries, vegetables, and agro-processing industries offer opportunities to generate higher-value output and create jobs across rural communities. Greater investment in these areas could help farmers respond more effectively to evolving domestic demand while expanding economic opportunities beyond traditional crop farming.

World Bank officials also note that climate risks, supply disruptions, and fertilizer price pressures linked to international conflicts are placing additional strain on existing agricultural support systems.

Gradual reforms could improve productivity and resilience

The report recommends a phased approach to reform. In the short term, it calls for wider soil testing services, stronger agricultural advisory programs, and expanded use of digital tools such as the Farmer's Card and e-voucher systems. These measures would help direct support toward poorer farmers and areas that are more vulnerable to climate impacts.

Over time, improved targeting could free up resources for investments in research, irrigation, market access, climate resilience, and other areas that generate higher long-term returns.

The World Bank says modernizing how fertilizer subsidies are delivered could improve soil health, increase agricultural productivity, reduce pressure on foreign exchange reserves, and ensure assistance reaches farmers who need it most.