Agro product exports in eco-friendly packaging in decline

The exports of agro products in environment-friendly packaging have been declining for the last two years, as exporters look to save money amid rising expenses.

According to a recent commerce ministry report, the exports of agro products in environment-friendly packaging slumped by 33,000 tonnes in the last two fiscal years after witnessing a rapid rise for three years since 2017.

Cargo fare hikes, rising product prices, a volatile forex market, and a lack of government support are forcing agricultural goods exporters to use cheap packaging that does not adhere to international standards instead of eco-friendly ones.

According to the ministry data, Bangladesh exported nearly 3.73 lakh tonnes of agricultural products in environment-friendly packaging in the last six years.

The data reveals that 68,000 tonnes of vegetables and fruits were exported in the fiscal year 2021-22 (FY22) in eco-friendly packages. The amount was 70,600 tonnes in FY21, 1.01 lakh tonnes in FY20, 51,500 tonnes in FY19, 40,000 tonnes in FY18, and 41,750 tonnes in FY17.

Industry insiders said agro goods exports were hampered during the Covid-19 pandemic. But even as the pandemic came under control, the Russia-Ukraine war put further pressure on Bangladesh’s export economy.

Now a volatile forex market and rising inflation are burdening exporters with additional expenses, forcing them to choose cheaper packaging for export items to save costs.

Bangladesh Fruit, Vegetable, and Allied Products Exporters Association General Secretary Mansoor Ahmed told The Business Post that goods exports are marred with problems.

“Exporters are struggling to run the packing centres as they do not get much support from the government,” he said.

Describing the impacts of the dollar appreciating against the taka, Mansoor said exporters are forced to spend more because of the high dollar rate while the return is low.

In addition, air cargo transportation rates for Bangladesh are now 35-40 per cent higher than neighbouring countries, including India, he said.

“After all these extra costs, spending Tk 90 on corrugated fibreboard (CFB) cartons is further burdening exporters who are lagging behind other competitors in the region. Hence, exporters are now exporting goods in cheaper cartons at a cost of Tk 30 to reduce expenses,” he said.

The price hike of agro products in the local market is also playing a major role behind the rising expenses of exports.

Mansoor said, “The increase in the demand for vegetables and fruits in the country has led to an increase in their prices. By buying goods at higher prices, the exporters are lagging behind the competitor countries.”

However, government officials say that no matter the costs, exporters should send goods in proper packaging. 

“Traders will not face much problem [in packing products] as the government is providing a 20 per cent incentive for the export of agricultural products, which is very rewarding for them,” said Sayed Rafiqual Amin, director of the Plant Quarantine Wing under the Department of Agricultural Extension (DAE).

He said, “If exporters do not adhere to compliance issues, the country will suffer a great loss. Exports will not be sustainable even if traders make a little more profit temporarily.

“It will create a negative image of Bangladesh. In the long run, countries, especially those in Europe, will not import agro products from us. Therefore, CFB cartons should be used to export goods according to the rules.”

In August 2014, Prime Minister Sheikh Hasina directed the commerce ministry to manufacture new agricultural products and export them in environment-friendly packages.

Following her instructions, the DAE built a central packing house in the capital’s Shyampur area, which was partially launched on May 16 in 2017 to export mangoes to Europe.

Later, the ministry took initiatives to increase exports by environment-friendly packaging through the DAE from different places of the country, including the Shyampur packing house.

Before establishing the packing centres, goods were exported without being packaged in CFB boxes.

According to the commerce ministry data, Bangladesh currently exports fresh vegetables, fruits, and other agricultural products to 35 countries, with most of the goods going to Europe and the Middle East.

For the goods going to Europe, exporters use 4-5kg CFB cartons, while 5-10kg CFB cartons are used for the Middle Eastern markets.

In the last six years, out of 3,72,900 tonnes of fruits, vegetables, and other agricultural products, 1,14,780 tonnes were exported to Europe, 1,76,716 tonnes to the Middle East, and 81,404 tonnes to other countries.

According to the DAE, vegetable production in the country increased almost seven times in the last 12 years, making Bangladesh the third largest vegetable producer in the world right after China and India.