Agricultural allocation falls in real terms compared to inflation: Agro expert

In the proposed FY2026-27 budget, there are some positive initiatives for the agriculture sector, but overall allocations are considered insufficient compared to needs, said former president of the Bangladesh Agricultural Economists Association, Mohammad Jahangir Alam.

In an immediate reaction, he said when compared with the total budget increase and inflation, the growth in agricultural allocation is so low that in real terms it should be considered a decline in the agriculture budget.

Jahangir Alam, also professor at Bangladesh Agricultural University, said a total of Tk46,821 crore has been allocated for the ministries of agriculture, fisheries and livestock, environment, forests and climate change, land, and water resources in this year's budget. 

In FY2025-26, the allocation for agriculture was Tk46,268 crore. This means the allocation has increased by only Tk553 crore, or 1.19% in a year.

On the other hand, the total national budget has increased by about 18.73%, while current inflation is close to 9%. Therefore, the nominal increase in agricultural allocation is not aligned with inflation. "When adjusted for inflation, the real agricultural budget has declined," he said.

According to Jahangir Alam, a more worrying issue is that agriculture's share in the total budget has been continuously declining.

He said in FY2011-12, agriculture accounted for 10.65% of the total budget. In FY2025-26, it fell to 5.86%, and in the FY2026-27 proposed budget, it has further declined to 4.99%.

"This clearly shows that the priority of the agriculture sector in the national budget is continuously decreasing," he said.

In the proposed budget, agricultural subsidies have been set at Tk17,001 crore. In the previous fiscal year, the amount was Tk17,241 crore, meaning subsidies have decreased by Tk240 crore, or 1.39%.

Jahangir Alam said given rising input costs, higher production expenses, and stagnation in agriculture, cutting subsidies is concerning. In his view, both allocations and subsidies should have been increased to stimulate agricultural production.

He also said in recent years, agricultural growth has not reached the expected level. In the last fiscal year, agricultural growth was 2.42%, and it is projected to reach 2.78% in the current fiscal year. However, the long-term average agricultural growth rate of the country is above 3%.

At the same time, Bangladesh has been importing around 70-80 lakh tonnes of food grains annually, especially rice and wheat, over the past three years. 

According to him, if investment and allocation in the agriculture sector are not increased, production growth will be hindered and import dependence may rise further.

Jahangir Alam said Bangladesh has been experiencing high food inflation for the past four years. To control food inflation, increasing agricultural production is essential. However, the current trend in the agriculture budget is not sufficiently supportive of production growth.

In his view, at least 10% of the total budget should be allocated to the agriculture sector in order to ensure long-term food security.

He described the initiative to waive agricultural loan interest for loans up to Tk10,000 for farmers as a positive step. According to him, this will bring some relief to poor farmers burdened with debt.

However, he said only 2% of the country's total credit goes to the agriculture sector, and only 22% of farmers have access to formal agricultural loans. The rest are forced to borrow from private or informal sources at high interest rates.

"Access to agricultural credit must be rapidly expanded to cover at least 50% of farmers," he said.

Jahangir Alam's analysis shows that the Agriculture Ministry's own allocation has increased by about 6%. However, allocations for other agriculture-related important ministries have declined.

In his view, to treat agriculture in an integrated manner, investment is needed not only in crop production but also in water resources, fisheries, livestock, and the environment.

However, he also noted that the budget contains several positive measures. These include VAT exemption on the import of 36 raw materials used in pesticide production; a proposal to reduce customs duty to zero on zinc ash used in producing zinc sulphate fertiliser; withdrawal of 7.5% VAT at the trading level of fertiliser; and removal of 7.5% advance tax on all types of pesticide imports.

According to him, if these initiatives are effectively implemented, the prices of agricultural inputs may come down somewhat.

He also believes that the reduction of source tax on some agricultural products may bring some relief to the market.

In Jahangir Alam's view, although the budget includes some positive and incentive-based initiatives for the agriculture sector, the overall allocation and subsidy level are still not sufficient compared to current needs.

"If the government wants to prioritise agricultural production, food security, and controlling food inflation, then allocation and investment in the agriculture sector must be significantly increased in the future," he said.