The World Bank has called on Bangladesh to overhaul its agricultural spending model, warning that current subsidies disproportionately benefit large landholders while underfunding investments needed to boost productivity and climate resilience.
In a report released June 15, the Bank said Bangladesh allocates about 10 percent of total public expenditure to agriculture, but growth in the sector has slowed and diversification into higher-value products has lagged behind shifting consumer demand for fruits, vegetables, protein-rich foods, and processed items.
Fertilizer subsidies account for roughly 80 percent of the Ministry of Agriculture's budget, according to the report. However, because the subsidy is tied to the volume of fertilizer purchased, larger farms capture a disproportionate share. The top 20 percent of landholders receive about half of all fertilizer subsidy benefits, while the bottom 40 percent receive only about 15 percent.
Fertilizer use is also heavily imbalanced. Only about 5 percent of farmers apply a balanced mix of nutrients within recommended ranges, the report found. Correcting this imbalance could substantially raise crop yields, the Bank said.
Public spending is skewed toward rice production, which occupies around 72 percent of cultivated land and receives about 80 percent of subsidy benefits. High-value subsectors such as livestock, fisheries, vegetables, and agro-processing offer stronger opportunities for income growth and employment but remain underfunded.
"Agriculture is central to Bangladesh's development, job creation, and poverty reduction. But climate risks, shifting consumption patterns, tighter fiscal space, and rising price and supply disruptions of fertilizers 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 report recommends a sequenced reform approach. In the near term, it calls for expanding soil testing, strengthening farmer advisory services, and rolling out a Farmer's Card and e-voucher system to direct agricultural support toward poorer and climate-vulnerable areas. Over time, the Bank said, better delivery mechanisms could free up resources for investments that raise productivity and support higher-value agriculture.
"Modernizing fertilizer subsidy design and delivery offers a significant opportunity to save foreign exchange, increase agricultural productivity, improve soil health, and ensure that support reaches the farmers who need it most," said Mansur Ahmed, Senior Economist at the World Bank and co-author of the report.
The report, titled "Repurposing Agricultural Public Spending for Quality Growth and Jobs in Bangladesh's Agrifood System," comes as Bangladesh faces tighter fiscal constraints and rising fertilizer costs linked to the ongoing Middle East conflict. The Bank's recommendations aim to shift spending from broad-based subsidies toward targeted investments that could improve productivity and create better-paid jobs in the agrifood sector.
Sources: worldbank.org
