Bangladesh for cutting dependency on edible oil imports

Bangladesh has witnessed its annual oilseeds output double from over 0.6 million tons in 2009 to over 1.2 million tons at present. But the home production can hardly meet 10% of the country’s edible oil requirement.

The remainder is imported as crude oil or oilseeds through spending over Tk28,000 crore a year to foot the bill.

But with a huge surge in prices of both soybean and palm oils, Bangladesh’s edible oil import bill is expected to reach anything beyond Tk35,000 crore in the current fiscal year.

According to data provided by the state-run Trading Corporation of Bangladesh (TCB), the retail price of soybean oil (five-litre bottles) saw a rise from Tk520 in May 2020 to Tk980 in just two years.

Against this backdrop, the country is now speeding up efforts to increase domestic production and cut import dependency on an urgent basis. Instructions have come from the highest levels of the government to expedite the process of harnessing the local growth potentials of oilseeds.

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Officials at the Ministry of Agriculture told Dhaka Tribune yesterday that a project to the tune of over Tk278 crore is underway to increase oilseeds production in the country. With a mandated project area in 250 selected upazilas of the country, the initiative aims at producing better yielding seeds and providing them to farmers so that they can replace the current low-yield varieties.

Seed replacement key to increasing yield

Local soybean production contributes approximately 5% of total annual soybean demand in Bangladesh. Domestically produced soybean is used predominantly in the feed industry while edible oil is imported both in crude form and as beans that are crushed locally.

Due to the low potential yields of available soybean varieties, soybean cultivation was limited until recently. Of late, soybean has been gaining popularity as a cash crop, particularly among farming households in the southern part of the country.

Since 1990, more than 10 high-yielding varieties of soybean have been released in Bangladesh, but roughly 70% of soybean farmers are still cultivating "Shohag" – a variety, officially released in 1991 but which now needs to be replaced with better varieties.

According to a recent report by the United States Department of Agriculture (USDA), some of Bangladesh’s new generation oilseed varieties are popular because of their higher yield advantages, but a limited supply of seeds has been a major constraint.

Only 30% of soybean farmers are planting better kinds like BARI Soybean-5 and BARI Soybean-6, developed by the Bangladesh Agricultural Research Institute (BARI).

The Bangladesh Institute of Nuclear Agriculture (BINA) and Bangladesh Agricultural University also released several high-yielding soybean varieties, but planting is also limited.

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Overall, the unavailability of high-yielding varieties and a lack of quality seeds are hampering the expansion of soybean cultivation in Bangladesh, the USDA observes.

Agriculture officials in Dhaka said the project would help more farmers have access to high-performing oilseed varieties. It would help the country cut import dependency for edible oil to some extent.

Besides, moves are underway to increase per unit productivity of rice so that some arable land can be brought under oilseed cultivation as paddy takes up as much as 70% of Bangladesh’s available arable land.

In Bangladesh, competing crops limit the available area for soybean cultivation.

Soybean competes with crops like winter rice (Boro), watermelons, sunflowers, and peanuts in the river basin islands (char land) of the southern coastal region of the country.

Char land can be used for soybean cultivation because the relatively low levels of water availability and increased salinity in the late winter and summer seasons make some char lands unsuitable for rice production in the Boro season.

Generally, soybean cultivation requires less irrigation and less fertilizer than rice.

Bangladesh relies on US, Argentina, Indonesia

According to USDA estimates, Bangladesh’s soybean imports for 2021-2022 stand at 2.6 million tons and soybean oil imports at 0.7 million tons. There are about 80 soybean oil refineries in Bangladesh that import crude soybean oil and refine it for the domestic market.

On the other hand, according to Trade Data Monitor (TDM), in the last fiscal, the United States captured 43% of the market share in soybean exports to Bangladesh, followed by Brazil (36%), Canada (14%), and Uruguay (7%).

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In 2020-21, an overwhelming 76% of Bangladesh’s total soybean oil imports came from Argentina, followed by 13% from Paraguay, 9% from Brazil and 2% from others.

Some 87% of Bangladesh’s over 1.4 million tons of palm oil imports were sourced from Indonesia in 2020-21 while the remainder came from Malaysia.

TDM is a trade data company, based in the USA and Switzerland, that keeps track of monthly import and export statistics for over 100 countries.