Bangladesh Budget 2025–26: Will It Be Enough to Safeguard Agriculture and Food Security?
Md Sadat Anowar
Agriculture plays a vital role in Bangladesh’s economy, accounting for approximately 12% of the GDP and employing nearly 40% of the population. It is a key pillar for both food security and economic resilience, with major crops like rice, wheat, jute, and vegetables serving domestic needs and contributing to export earnings. The country has made significant progress in food production, largely driven by smallholder farmers who sustain millions and underpin rural livelihoods. In addition to crops, agricultural exports such as tea, fish, and tropical fruits contribute to economic diversification, poverty reduction, and income growth in rural areas. Nonetheless, the sector faces serious threats from climate change, limited resources, and underdeveloped infrastructure. To ensure long-term sustainability and food security, strategic public investment and the adoption of climate-resilient farming practices are essential. Major obstacles include climate vulnerability, poor infrastructure, restricted market access, and financial limitations.
Most farming families in Bangladesh are marginal or small-scale farmers, typically owning less than 1.5 acres of land. A recent IFPRI report indicates that these farmers make up roughly 83% of the agricultural population and cultivate around half of the country’s arable land. The study also emphasizes the critical role of land in agricultural output, noting that 56% of rural households do not own any land. Additionally, Bangladesh has been experiencing a steady decline in cultivable land—shrinking by about 0.3% annually—which poses a significant challenge to sustaining food production.
Bangladesh is increasingly experiencing climate-related disruptions such as frequent droughts, floods, and storms, all of which negatively impact crop yields and degrade soil health. Forecasts indicate that these issues are likely to worsen, making it urgent to implement adaptive and resilient measures in agriculture. Barisal, once known as Bangladesh’s breadbasket, has seen a decline in rice productivity—mainly due to recurring cyclones and rising salinity from sea-level rise. Data from the 2018–19 Bangladesh Integrated Household Survey (BIHS), conducted by IFPRI, shows that rice yields per hectare in Barisal are approximately 36% and 33% lower than those in Rangpur and Khulna, respectively. In addition, the recent spike in potato prices is also linked to unpredictable weather patterns.
Over time, rice production in Bangladesh has shifted from being dominated by the monsoon season to relying more heavily on the dry winter season, with Boro rice now being the primary crop. Boro rice accounts for over half of the country’s total rice output, while Aman rice contributes most of the remainder, and Aus rice makes up only a small fraction. This shift is largely driven by climate change. Erratic rainfall, flooding, and cyclones frequently damage Aus and Aman crops, whereas Boro rice, grown during the dry season, is less vulnerable to such weather extremes. However, Boro cultivation depends almost entirely on irrigation, as it cannot rely on natural rainfall. Therefore, maintaining and expanding irrigation infrastructure is vital, and the government must ensure a stable electricity supply to support water pumping systems for Boro rice fields.
Agricultural growth in Bangladesh is constrained by insufficient storage capacity and a disjointed supply chain, which result in substantial post-harvest losses. Inadequate transport infrastructure further hampers farmers’ ability to move their produce efficiently, limiting their reach to broader markets and reducing potential earnings. There is also a considerable disparity between the prices farmers receive and what consumers pay. Studies on Bangladesh’s agrifood system suggest that these price differences are driven by market inefficiencies and the influence of syndicates. To tackle this, policymakers need to implement targeted solutions that both ensure fair compensation for farmers and help stabilize food prices for consumers.
On June 2, 2025, Finance Adviser Dr. Salehuddin Ahmed unveiled Bangladesh’s national budget for the fiscal year 2025–26—a critical fiscal blueprint, especially as the country edges closer to its graduation from Least Developed Country (LDC) status in 2026. With inflation biting, food prices rising, and climate volatility looming large, all eyes were on how the budget would address the two foundational pillars of national stability: agriculture and food security.
The total proposed expenditure for the year stands at Tk 7.90 trillion, a modest reduction from last year’s Tk 7.97 trillion. The government aims to raise Tk 5.64 trillion in revenue, most of it through the National Board of Revenue (NBR). Yet beneath these macroeconomic figures lies a story of a sector that feeds the nation—and the people behind it—waiting for meaningful transformation.
A Modest Rise for a Crucial Sector
For FY 2025–26, the allocation for the broader agriculture sector—including the Ministry of Agriculture, Ministry of Fisheries and Livestock, and the Ministry of Food—has been set at Tk 39,620 crore, which marks a 3.6% increase from the previous year. Specifically, the Ministry of Agriculture alone is receiving Tk 27,224 crore, a bump of around Tk 2,500 crore compared to the revised budget of FY 2024–25.
While the increase is welcome, many experts believe it falls short of what’s needed to truly modernize the sector. Share of agriculture sector in the national budget has declined over the past decade, despite agriculture employing over 40% of the workforce and underpinning rural livelihoods.
The Fertilizer Factor and Energy Link
One of the most visible aspects of the budget is its focus on fertilizer subsidies. This year, the government has earmarked Tk 20,000 crore for agriculture subsidies—up from Tk 17,000 crore last year—with the lion’s share directed at keeping fertilizer prices affordable for farmers. This move is undoubtedly politically prudent, especially with high global fertilizer prices and energy shortages.
However, experts have raised concerns that this heavy subsidy model is unsustainable in the long run. Much of the subsidy’s value is tied to the availability of natural gas, which powers the production of urea fertilizer. The government has kept VAT waivers in place for imported LNG to stabilize production, but domestic gas shortages remain a serious bottleneck. Without more resilient alternatives or energy diversification, this system could become even more fragile.
Seeds of Innovation or Business as Usual?
Beyond subsidies, the budget introduces some forward-looking initiatives aimed at modernizing agriculture and improving food logistics. There are provisions for promoting climate-resilient irrigation systems, cold storage facilities, and a digital supply chain database. The government has also outlined plans for specialized agro-processing zones and identified 59 bottlenecks in agri-export channels that it hopes to address through improved logistics and customs reforms.
These steps indicate a growing recognition of the need to move beyond traditional input-based support. Yet the scale of these investments remains relatively small, and the budget stops short of offering a clear roadmap to scale up research and development, mechanization, or climate adaptation technologies—three areas that will be essential for long-term agricultural sustainability.
Food Security: Inflation Looms Large
Bangladesh has made remarkable progress in food self-sufficiency, particularly in rice production. According to FAO and national statistics, the country produces around 39 million metric tons of rice annually. But food security today is about more than quantity. Persistent food inflation—hovering around 10%—has eroded real incomes, especially in urban and peri-urban areas. Moreover, as wheat remains heavily import-dependent, any external supply shocks could still pose significant risks to national food stocks.
The budget does attempt to pre-empt this by allocating funds for strategic food reserves and ensuring continued food aid for low-income households. But rising urbanization, shifting dietary patterns, and increasing climate unpredictability mean that policymakers must think beyond emergency stockpiles and look toward building resilient food systems that prioritize diversified production, nutrition-sensitive agriculture, and supply chain stability.
Critics Say: Still Not Bold Enough
Despite the government’s efforts, many economists argue that the current approach is still too conservative. The increase in the agriculture budget is, in real terms, marginal when adjusted for inflation. Critics are urging the government to commit at least 10% of the national budget to agriculture, with a minimum of 5% earmarked for subsidies, leaving the rest for productivity-enhancing investments.
The continued over-reliance on subsidies delays the much-needed shift toward investment in innovation, farmer training, precision farming, and soil health restoration. Without these, Bangladesh risks falling behind in achieving sustainable food systems by 2030.
A Budget of Continuity, Not Transformation
In sum, the FY 2025–26 budget reflects a continuation of familiar patterns: safeguard production through subsidies, offer marginal increases to sectoral allocations, and introduce limited tech-friendly reforms. But the realities of climate change, demographic shifts, and LDC graduation demand a more ambitious and transformative approach.
If Bangladesh wants to ensure long-term food security and agricultural competitiveness, it will need to treat agriculture not merely as a rural welfare program—but as a dynamic, high-stakes sector worthy of serious innovation, investment, and institutional reform.
Author’s Biography:
Md Sadat Anowar is currently working at the International Food Policy Research Institute (IFPRI) as a Research Analyst. Prior to that, he worked at esteemed organizations such as the Aga Khan Foundation (AKF), South Asian Network on Economic Modeling (SANEM) and Centre for Policy Dialogue (CPD).