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ADB $40 Million Loan to Boost Food Security, Farm Incomes in Bangladesh
Source: adb.org
Source Date: Thursday, July 01, 2010
Country: Bangladesh
Created: Jul 05, 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending financial assistance to Bangladesh to grow high-value crops including vegetables, spices, and fruits that will boost incomes for poor farmers and support the nation’s food security.

A loan of $40 million equivalent from ADB’s concessional Asian Development Fund is being provided for the Second Crop Diversification Project. It will be used to support the development of high-value crops in 27 districts in the southwest and northwest of Bangladesh - including some of the poorest, least developed and most climate-vulnerable areas in the country.

Over 75% of Bangladeshis are involved in agriculture, with rice the dominant crop. However, the country lacks sufficient supplies of fruit and other nutritious foods, forcing it to rely on pricey imports. In response, the government has put in place an agriculture development strategy to diversify crops, ensuring national food self-sufficiency and increased incomes for farmers.

The new project will build on the gains of an earlier ADB-assisted Northwest Crop Diversification Project. It will provide farmers in targeted districts with the latest in high-value crop production techniques, including “green” technologies for organic manure. The focus will be on crops with proven market demand, high profitability, and potential for commercialization, including fruits, vegetables, pulses, spices, cut flowers, potted plants and value-added agriproducts.

“Agriculture projects continue to be important for promoting social inclusiveness, particularly of women and ethnic minorities, and this initiative will benefit marginal, small and medium farmers in target areas, as well as generating employment opportunities for landless people,” said Jiangfeng Zhang, Senior Country Economist for ADB’s Bangladesh Resident Mission.

With Bangladesh highly susceptible to extreme weather events due to its low-lying position along the Bay of Bengal, the new project will pilot test climate-resilient varieties of crops in drought and flood-prone areas. Training in the production and post-harvest processing and marketing of high-value crops will be provided equally to men and women, and to reduce post-harvest losses and improve produce quality, the project will support investments in low-cost community-based infrastructure such as collection and post-harvest handling centers, and small scale cool, cold and dry storage facilities.

As small farmers typically lack savings to make business changes, the project will provide about 175,000 of them with access to agriculture credit to diversify into new crops.

“The project will also undertake a feasibility study on setting up a quality standards certification system for fruit and vegetable farms to pave the way for access to domestic retail outlets, including supermarkets, and to reduce food contamination,” said Mr. Zhang.

The new initiative complements and incorporates lessons from agriculture projects undertaken by ADB’s development partners in Bangladesh, including World Bank, Danish International Development Agency, International Fund for Agricultural Development, Islamic Development Bank and Food and Agriculture Organziation.

ADB’s loan, which will finance 87% of the total project cost of $45.8 million, has a 32-year term with an 8-year grace period. Interest during the grace period is set at 1% per annum, rising to 1.5% for the rest of the term. The government is extending $5.42 million, with farm communities extending around $390,000 equivalent.

The Department of Agricultural Extension and Bangladesh Bank are the executing agencies for the project, which is expected to be completed by June 2016.
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