Bangladesh is currently facing two major challenges that appear unrelated but share a common economic solution. According to baseline data from the Department of Agricultural Extension (DAE), the country generates 32 million tonnes of municipal solid waste annually. Over 70 per cent of this, approximately 22.4 million tonnes, is biodegradable organic matter, and most of this is rotting in open landfills, polluting the air and groundwater and spreading diseases. Meanwhile, the fertiliser import bill reached Tk 293 billion in FY25, and Tk 170 billion has been allocated for agricultural subsidies in FY26. Integrating organic waste as a resource (not a burden) may provide a solution to both issues.
The concept of a "circular economy" is how this can be achieved, namely by recovering value rather than disposing of it, as is done in a linear economy: take, use, dispose. An example of this concept in practice is 'The Skate Ltd' plant in Jessore. It currently receives and processes 80 to 100 tonnes of organic waste a day, generating compost and biogas with its own machinery. It produces more than 200 tonnes of compost fertiliser per month and also has a nominal biogas generation capacity of 864 kW. According to the company, it processes one tonne of garbage to save one cubic metre of landfill.
The advantage of the model is that it pays for itself. The plant generated revenue of about Tk 24.30 million with a gross margin of around 79 per cent during FY26, and had an operating cash flow of about Tk 6.4 million for the first nine months of this year, all positive. Notably, the cost of municipal collection is almost insignificant compared to this: 84 per cent of revenue in this period came from selling compost to farmers at Tk 6,000 per tonne. Furthermore, most of the compost was sold through ACI's national network, which makes it credible to buyers. It is a green business based on the pure balance of market forces and not on taxpayers' money.
Consider now the fertiliser subsidy in Bangladesh: many farmers are unable to afford fertiliser at market prices. Thus, chemical fertilisers are subsidised in Bangladesh, which promotes ever-greater use of chemical fertilisers. As a result, soil health is degraded by the overuse of chemical fertiliser, a deepening dependence on fertiliser imports, and increased pressure on the Government's finances. Even though compost is not a complete replacement for chemical fertilisers, it doesn't have to be. Field data cited by Skate Ltd. suggest that compost raises crop yields by an additional 25 to 30 per cent and, in some instances, allows a 25 per cent reduction in chemical fertiliser use.
What will this really save the exchequer? The total budget for the fertiliser subsidy in Bangladesh for FY26 was Tk 170 billion. If organic compost were adopted on a sustainable scale as an alternative to chemical fertiliser to replace at least 10 per cent of its usage nationwide, the savings would be in the range of Tk 170 billion a year, a significant amount, even though it is currently beyond the capacity of Skate Ltd. With a daily waste intake of 80 to 100 tonnes, the plant is proof of a viable concept but still far away from making an impression on the national fertiliser consumption of seven million tonnes annually. However, according to Skate Ltd's projections, with proper scaling across different districts and city corporations, they would yield around 4 million tonnes of certified compost annually, which could fulfil 57 per cent of the national fertiliser demand and replace the need for chemical fertiliser. What it demonstrates is that the unit economics work, and scaling them is a matter of replication, not invention.
The model yields results beyond the balance sheet; it has value that is not reflected in the market. For example, methane is released when organic waste rots in open landfills and can be up to 80 times more potent than carbon dioxide over a 20-year period. Skate Ltd's aerobic composting process is estimated to avoid about 20,000 tonnes of CO2-equivalent emissions a year. The Jessore plant also processes approximately three million litres of sludge each year - reducing the transmission of diseases such as cholera and typhoid and protecting groundwater - as well as saving the local administration landfill space they would otherwise have to pay for. None of this appears on a profit-and-loss statement, but it is real value, nonetheless.
The social dividend, too, is in play. In Bangladesh, waste work has long been informal and hazardous. By incorporating skaters from within its own community, people who in the past have been scavengers, Skate Ltd has created a formal team for sorting and quality control. Over 60 per cent of this team is women, who are provided with equipment, transport, health checks and a maternity leave policy. Thus, if done properly, green business can also be inclusive.
It will require policy decisions to turn the success of one plant into a national model. To that end, municipalities should provide secure land, assurances of a waste supply, and long-term public-private partnerships when awarding contracts to waste-management companies, rather than the give-and-take of ad hoc contracts. In addition, demand for compost among farmers should be generated through government-supported awareness campaigns. Organic options should be scaled up as fertiliser subsidies are phased down over an extended period - not cut off, which would force farmers into a transition they cannot plan for. There is no need for Bangladesh to make a painful compromise between clean cities and affordable agriculture. The waste already exists, and it is the policy framework, along with the awareness and financing to "scale up from one compost plant to many", that will turn it into wealth.
Dr A S M Shakil Haider is Assistant Professor (Economics), Department of Economics & Social Sciences, BRAC University. [email protected]. Anwar H Hridoy is a Graduate Student (MSAE), BRAC University.
