Bangladesh and the open market
The mango market of Kanshat in Chapainobabganj district in the north of Bangladesh is the country's biggest mango market. At the end of July -- the end of the mango season -- only one or two varieties of mango like Fazli and Ashwina can still be found. But traders coming from Dhaka to buy the fruit think the price is high. Mango farmers are very unyielding when it comes to haggling over prices.
Mango farmers of Belalnagar, a village near to Kanshat, say that demand for mangoes is slowly increasing. Shahidul, a mango farmer of Belalnagar, showed us many newly cultivated mango orchards which were previously rice or sugarcane fields.
For all latest news, follow The Daily Star's Google News channel. So why the change?
The answer is easy to see. It's what the customers want and increased demand has led to higher prices. Local people say that for several years now, big companies such as Pran, BD Foods, and Abdul Monem Limited have been buying mangoes in addition to other traders from Dhaka.
And over the last few years a number of Bangladeshi trading enterprises have been exporting processed mango, along with pineapple, rice and spices. These companies have appeared in recent years as new customers for the mango farmers of Belalnagar.
From Bengal to Africa
A few years ago, Pran Agro-Processing Limited established a factory on the Natore-Rajshahi highway to process agricultural products.
The manager of the factory, Abdul Qadir, told us that mangoes are collected from contract-farmers and then processed by machine to produce pulp or condensed juice.
So far Mr Qadir says his factory has 20 contract farmers on their books. During the mango season this year, he says that between 300 to 350 tonnes of mangoes were bought on a daily basis.
"As the market expands," Mr Qadir said, "demand has increased. Next year, we will have to rummage around to unearth more mango farmers."
It is not only mangoes that are selling like hot cakes. So too is traditional aromatic rice, spices, olives and tomatoes. All these products come from contract farmers, are processed and then exported.
The owner of one processing company, Amjad Khan Choudhury, told us in Dhaka that demand for fruit juice in the foreign market is increasing day by day.
Most of that demand comes from the Middle East, but now a few north-east Indian states including Assam and Tripura are also buying. Mr Choudhury says that recently there have even been orders received from Africa.
He claimed that this increased demand has meant that Pran soft drinks have now familiar brands in Ethiopia, Ghana, Senegal, Mali, and Mauritania.
"Africa could have be a good market for us," he says. "Consider our juices. They have a very satisfying taste. But unfortunately Bangladesh has in my view been too pre-occupied with exporting garments, and has not looked hard enough into finding other areas of trade."
If entry to the Indian market was easier, and more attention was paid to efficiently and speedily sea-freighting products to Africa, it is probably true to say that the mango and pineapple farmers of Bangladesh would not have to sell their products for such nominal prices.
Yet it has to be remembered that exporting processed agricultural products is a comparatively new initiative in Bangladesh.
Because profits are not huge, many doubt how long the industry can remain sustainable.
Dr Mustafizur Rahman, an economist for the Centre for Policy Dialogue, says that Bangladesh's limited supply capacity is a problem made more serious when it comes to exporting processed agricultural products.
"Quality control is a big challenge in the food export business," he says, "and it needs to be improved by a long way before we can begin large amounts of products to sophisticated markets like Europe."
Limited number of export items
Export diversification has often been promoted in words over the last two decades, but it cannot be claimed that any mentionable product has been successfully exported except some pharmaceuticals and ceramics.
In fact, as the market for jute and tea has shrunk, 80 percent of export income has come from readymade garments.
"The reality is that the diversification of export goods is not happening," Dr. Mustafizur Rahman claimed.
"Bangladesh is getting zero-tax benefits in the European market, but we are incapable of capturing the opportunity."
The main reason is that new export items which are capable of competing in the world market care not being produced.
Why not?
Businessmen say there are two key reasons: a weak infrastructure -- especially when it comes to electricity supply -- and an absence of good governance.
One of the country's top businessmen, Syed Manzur Elahi, says that factories are losing out enormously because of electricity shortages.
"Factories are cut off ten to 12 times a day. In the last few years electricity production has not increased.
"Then there is corruption, present along every step of the journey. If you want to pay the electricity bill you won't be able to do it easily. The amount of bribes that taxmen ask for is simply unbelievable.
"Even in the 1980s there was some sort of delicacy in doing such things openly. That doesn't exist now. They don't hassle me much. They know that I have connections. But for the small companies it is the kiss of death."
The Executive Chairman of the Board of Investment, Mahmudur Rahman, says that the government is trying to deal with the electricity problem by providing factories with cheap gas, so that they can produce electricity themselves by using generators.
"Industries like ceramics are making huge growth, as they have captive electricity. They can produce cheaply than the Power and Development Board," he said.
But Mr Rahman admits that the business climate for smaller enterprises is not so rosy.
The reality of the open market
But there are grounds for optimism too. Fifteen years ago in Bangladesh, import tax was around 18 percent. Today it is only three percent. Except for a few sensitive items, all products can be imported.
After a preliminary round of protests, most businessmen of Bangladesh have accepted the reality of the open market.
Many now say that it all happened for the greater good of the country's economic health, and that more investments are being made today. In many cases domestic products are competing with imported products in price and quality.
Furthermore, government bureaucracy in relation the import-export business has reduced significantly. Many unpopular permit laws do not exist anymore, and many businessmen are happy with these positive changes.
However, the worry is that these welcome developments will be meaningless unless the twin problems of weak infrastructure and poor governance are improved.