STAR BUSINESS REPORT

The Russia-Ukraine war and the US-Israeli war on Iran, along with the depreciation of the taka, have sharply raised production costs for Bangladeshi farmers, a prominent economist said yesterday, calling for agricultural subsidies to be more than doubled in the upcoming budget.

ASM Golam Hafeez, professor of agricultural finance and banking at Bangladesh Agricultural University, said the government should increase agricultural subsidies to Tk 35,000 crore in the FY2026-27 budget – more than double the Tk 17,241 crore allocated in the current fiscal year.

He was speaking at a seminar titled “National Budget 2026-27: Roadmap for Sustainable Agricultural Development in Bangladesh,” organised by the Bangladesh Agricultural Economists Association (BAEA) at the Bangladesh Agricultural Research Council in Dhaka.

The blockade of Hormuz during the US-Israeli war on Iran has disrupted fertiliser imports, increasing subsidy requirements, the agricultural economist noted.

The war has also resulted in rising oil and gas prices across the globe, including Bangladesh, raising energy expenses for irrigation, machinery and transportation, he also said.

Besides, the rising dollar exchange rate has driven up the cost of imported fertilisers, seeds, fuel and machinery, further compounding the crisis. Agriculture received 5.9 percent of the total national budget in the current FY2025-26, the professor noted.

Based on a projected budget of Tk 9.3 lakh crore for the upcoming FY2026-27, he expects Tk 88,350 crore to be allocated to the sector.

To address climate change, he said the agriculture budget should prioritise climate-smart agriculture, the development of climate-resilient crop varieties, and establish climate risk-based crop insurance along with a disaster assistance fund.

The budget should also include support for canal re-excavation, water conservation and solar-powered irrigation, he added.

The professor also called for special adaptation funding for haor, char and coastal areas, and the development of cold storage and resilient supply chains.

Also speaking at the event, Zonayed Abdur Rahim Saki, state minister for planning, mentioned that the government recently approved a Tk 3 lakh crore fund for the FY2026-27 Annual Development Programme, 30 percent higher than the previous year.

The agricultural sector received Tk 10,843 crore, or 3.61 percent of the total allocation.

He identified agro-processing as a key area for expansion, and flagged limited land availability, declining soil fertility, capital shortages for marginal farmers, market access difficulties and a severe labour shortage as key challenges.

Mohammed Amin Ur Rashid, minister of agriculture, said currently, due to the lack of accurate demand data, a significant amount of agricultural produce is being wasted.

The Farmers Card, currently being piloted by the government, aims to reduce this by aligning production with demand, he added.

Sultan Salauddin Tuku, state minister for fisheries and livestock, said developing the agriculture, livestock and poultry sectors while strengthening the economic capacity of marginal communities is essential to bolstering the national economy.