The FY2026-27 national budget identifies agriculture as one of its 10 strategic priorities. The budget outlines an ambitious vision to transform it into a key driver of national prosperity by developing a self-reliant, climate-resilient, and technology-driven modern agricultural system.
Accordingly, agriculture and its related sectors (ARS), including livestock, environment, land, and water resources, have been allocated Tk 46,821 crore (60 percent for operating and 40 percent development expenditure), a nominal 2.3 percent increase over the revised FY2025-26 budget. However, agriculture’s share of the total national budget has declined to 5 percent, reaching its lowest level in the past 14 years.
Despite its declining share of GDP, agriculture remains the backbone of Bangladesh’s economy; it is central to food and nutrition security, rural livelihoods, employment and poverty reduction. The sector has achieved self-sufficiency in rice and fish, made notable progress in livestock, fruits, and vegetables, and demonstrated resilience during the Covid pandemic and the Russia-Ukraine war. However, it continues to face rising input costs, post-harvest losses, price volatility, climate shocks, weak market access, slow mechanisation, poor agro-processing and market linkages, shrinking farmland, declining soil fertility, increasing pest and disease pressures, and climate change. These challenges are further compounded by sluggish productivity growth, limited crop diversification, slow technology adoption, and weak institutional coordination.
Agricultural diversification
Bangladesh’s agri-food system and consumer demand are shifting towards higher-value foods, yet rice still occupies about 72 percent of the country’s cultivated area. Because agricultural subsidies are largely universal, rice farmers receive most government support. A recent World Bank (WB) study estimates that rice farmers receive nearly 80 percent of subsidy benefits, reinforcing a structural bias against diversification despite growing demand for fruits, vegetables, fish, livestock products, and processed foods. Therefore, the issue is not only the size of the agriculture budget but also its composition and efficient use. The WB also found that the largest 20 percent of farmers capture about half of all fertiliser subsidies, while the bottom 40 percent receive only 15 percent. Moreover, excessive use of fertilisers, particularly nitrogen, and pesticides has reduced productivity and increased environmental costs. Although this year’s subsidy allocation remains unchanged, the agriculture ministry’s development budget has increased by 96.5 percent, providing an opportunity to reorient spending.
Rather than maintaining universal subsidies, greater emphasis should be placed on targeted, pro-poor support and investments that promote diversification, including mechanisation, efficient irrigation such as solar-powered systems, alternative wetting and drying (AWD), livestock and aquaculture innovations, non-crop agricultural insurance, soil testing, AI-based advisory services, and climate-smart agricultural practices. Household Income and Expenditure Survey (HIES) data and the WB report show that consumer demand is steadily shifting from cereals to higher-value products. Yet the FY2026-27 budget keeps unchanged allocations for the livestock and fisheries sector, which is inconsistent with a demand-driven diversification strategy, despite some positive tariff measures for feed inputs.The composition of the agriculture budget, therefore, deserves careful reconsideration.
Export promotion and import substitution
Despite significant gains in agricultural production over the past two decades, Bangladesh remains dependent on imports, while agricultural exports are still limited. To diversify its export basket and reduce import dependence, policies should be guided by evidence of comparative advantage and address key constraints, including food safety and quality standards, inadequate infrastructure, and tariff and non-tariff barriers. However, the agriculture budget gives limited attention beyond some tariff measures and investments in pack houses and quarantine laboratories. Imposition of import duties on cashew nuts and Pangas fish fillets is, nevertheless, a positive step that could encourage domestic production and import substitution.
Mechanisation
Bangladesh is no longer an agricultural labour-abundant country, with acute labour shortages during transplanting and harvesting seasons. Addressing these challenges requires greater investment in scale-appropriate mechanisation to improve labour productivity. While mechanisation has largely focused on rice cultivation, particularly tillage, pesticide application, and threshing, greater emphasis is needed on transplanting, weeding, harvesting, and mechanisation for non-rice crops, livestock, and fisheries. However, the budget gives limited attention to this priority beyond mentioning mechanisation under the Farmer Card programme. Although it includes loan waivers and low-interest agricultural credit, these facilities should be redesigned to better meet the needs of agro-entrepreneurs through demand-driven loan amounts, repayment terms, and supportive credit policies.
Research and development
Data from the Bangladesh Bureau of Statistics (BBS) and the WB show that agricultural growth, particularly rice productivity, has slowed, threatening progress in poverty reduction, and food and nutrition security. At the same time, agriculture faces increasing climate-related and other biotic and abiotic stresses, including floods, droughts, cyclones, and salinity intrusion. Addressing these challenges requires greater investment in agricultural education, research, extension, and technological, institutional and policy innovations, particularly in developing high-yielding, climate-resilient crop, livestock, and fish varieties. Reforming the National Agricultural Research System (NARS) through merit-based recruitment, promotion, and incentives is equally important.
Greater investment is also required to modernise extension services through ICT-enabled platforms and AI-driven climate advisory systems. Research evidence indicates that limited financial as well as non-financial incentives, like recognition by the district director, significantly improve the service delivery of government agricultural extension agents. Although Bangladesh has developed over 150 rice varieties, only a few older varieties dominate farmers’ fields, reflecting weak extension and dissemination. Integrating climate advisory into extension services, strengthening extension staff capacity, and investing in digital public infrastructure that provides real-time, location-specific recommendations on inputs, weather, and market prices are increasingly essential. Despite these pressing needs, the FY2026-27 budget provides limited emphasis on agricultural research, extension, and digital climate advisory systems.
Agricultural marketing
The FY2026-27 budget continues to emphasise agricultural production over marketing, despite farmers’ persistent inability to receive fair prices, particularly during harvest seasons. Although the budget speech highlights reducing the role of intermediaries and developing modern marketing and cold-chain infrastructure, apart from a cold storage facility for mango in the Barind region and upgrading quarantine laboratories, there is no clear allocation for modern markets and cold-chain facilities for perishable products.
The Department of Agricultural Marketing (DAM) should be strengthened with adequate manpower and development funding, while its warehouse receipt programme should be expanded nationwide to include non-cereal crops as well. More importantly, the government food grain procurement programme should function as an effective price support mechanism through direct procurement from farmers rather than intermediaries and millers. In this regard, the West Bengal government’s digital paddy procurement system, known as e-Paddy, is often referred to as one of the successful examples. The planned digital procurement of 41.29 lakh metric tonnes of food grains through the Krishoker App is a welcome initiative. However, its success will depend on effective implementation, improving farmers’ digital literacy, and addressing long-standing concerns over moisture-content requirements.
Coordination and policy coherence
Agriculture in Bangladesh is a multi-sectoral field involving numerous ministries and agencies. Therefore, the success of the FY2026-27 budget will depend on how effectively these institutions coordinate and utilise public resources. Building a resilient agri-food system requires stronger institutional collaboration, policy coherence, and better linkages among agricultural education, research, and extension (ERE) to accelerate technology generation, adoption, and diffusion. Bangladesh can draw lessons from successful models such as Wageningen University & Research (WUR) in the Netherlands, which integrates education, research, and extension.
Agricultural policies should also be reoriented to support fiscal sustainability, food and nutrition security, and climate resilience. We often see the gap between promises and delivery, which highlights the need for governance to shift from process to performance. Ultimately, the effectiveness of the budget will depend on implementation. If budget allocation, especially the development budget, is executed efficiently, resources are well targeted, and farmers receive timely and equitable support and information, the budget can promote innovation, improve productivity, strengthen food security, and enhance climate resilience. Otherwise, many of its intended objectives may remain unrealised.
Prof Dr AHM Saiful Islam is an agricultural economist and professor at Department of Agricultural Economics in Bangladesh Agricultural University (BAU), Mymensingh. He can be reached at [email protected].
Views expressed in this article are the author's own.
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