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Special on Logistics
Freight hike hurts vegetable export: Some remedies
Ershad Khandker

          Bangladesh Fruits, Vegetables and Allied Products Exporters Association (BFVAPEA) has announced a stoppage in export of perishable items because of the recent announcement by Biman of raising freight rate. Biman has raised airfreight to US to 2.12 per K.G. from US $ 1.12 per K.G. for the Middle Eastern route with a raise of 40% in other routes. This is the seventh rise in freight in the last nine months according to some sources. The suspension of export is a serious matter, the country earned 5.0 billion takas last year from vegetable export and the sector has been showing increasing promise and the exporters are eager to improve their performance further. However, the vegetable exports have resumed on May 8 as the High Court Division of the Supreme Court issued stay order on the enhanced airfreight. Biman has cited standard commercial considerations for raising the fare, stating that it wanted to bring the fare in line with other international carriers. Ostensibly this is a departure from the stance of supporting the vegetable exporters with special rates signaling the end of the honeymoon period. Vegetable exporters have received various assurances from the highest level and the subsidised fare was a reflection of that blessing from the higher authorities. This rise perhaps shows the depth of the problem Biman faces. The national carrier is no longer able to continue giving such privilege to the vegetable exporters despite knowing the soft spot the government has for this sector.
Cargo space and rate are the two most important things for vegetable exporters at this nascent stage of the development of this sector. This is so for obvious reasons. And the vegetable exporters have faced shortage on both counts for years. Biman has been the only airliner that has given consistent support to the vegetable exporters that maybe because of the stated support of the Prime Minster to the growth of this sector, according to a source in Brac. Over the years, the vegetable lobby has met the secretary, the minister and other officials of the concerned ministry and asked for support even going to the extent for asking for buying cargo planes for Biman to use for vegetable exporters and other non perishable exporters as well. They have received assurances of support but no action has been forthcoming.
Buying a cargo plane for Biman can solve the problem of space and rate. But the passenger airliner needs to show enough depth in its finances to be able to first be considered a viable passenger airliner. Only then Biman can think of expanding and perhaps having a dedicated cargo plane. A passenger airliner can only sustain a business and thrive through its passenger business. Sure Biman can have a sister concern that can start a cargo fleet. But Biman has other worries like sorting out its current mess to become a profitable organisation with money and operational strength that allows it to operate a fleet of modern passenger airliners and also offer on time arrival and departure and high class and recognisable standard of service that matches other profitable passenger airliners. That dream or aim is far from being a reality. But talk of cargo airlines is not in the realm of being remotely plausible or feasible. Every country has a need to have a national passenger carrier first. The national carrier becomes a symbol of the country. That national carrier has to be a passenger airliner first.
The government of Bangladesh can think of starting a new company that offers only cargo service to various exporters and importers? Has that question ever been considered? One thing is for sure, Bangladesh can only start a national cargo airliner with the help of international donor agencies because right now the government has more pressing priorities, with finances already stretched to meet ramification of high price of oil in the international market.
The vegetable exporters that this writer has spoken to, have expressed their disinclination toward asking for special treatment by using the emotional value that the vegetable sector can have in the mind of everybody. The farmers and other people involved with vegetable sector are more than capable of meeting the challenge of the demand of international trade. However, it is the nature of dynamics of international trade these days which makes things so difficult for the vegetable exporters .How can they compete when a country like the US offers support to their farmers? Exporters from India Kenya, Ghana, Guatemala and Honduras receive support in the form of cash subsidy from their government while competing for the European market. It has become difficult for the vegetable exporters the world over because of the structural problems that the underdeveloped countries have. Governments in developing countries are busy meeting their debt payments, and keep their macro indicators stable. Looking at individual sectors may not be possible right at this moment.
The vegetable and fruits export sector is fledgling, developing itself enough to start feeling confident only now. This is an important subjective factor to consider. The sector needs support and encouragement and allowing the sector to grow and flourish is important. After all vegetable exporters have shown that they are capable of earning foreign exchange for the country. What can be done in the current situation with all the different factors taken into account? The vegetable exporters should formulate a long-term strategy and place it to the government. That strategy paper should contain a well researched growth plan and target that they can promise to fulfill if they are assured of certain privileges, which are needed at this juncture. Special loans from banks, special reduction of import tariff for the much needed machinery for improving production and expansion of operational capacities so that vegetables can be used to start new businesses in allied food products in which Bhutan, Nepal, Pakistan and India have shown such promise.
Our growers are exporting Broccoli, French Beans and other different kinds of vegetables that are considered delicacies in the European market. We should aim to become full-fledged food exporters with a bevy of items made in good and hygienic factories packaged nicely, and exported in volumes to be able to recoup the investment. Offering special incentives to become businessmen who grow vegetables and process them in plants for export could encourage graduates of agricultural universities and departments. That is the dream that this writer has. To see qualified professionals and fresh young graduates taking up agriculture farming for exporting and vegetables and allied food products. Right now, that dream is going to be difficult to be reached.
The government should look into the current impasse and offer a solution. Our long-term aim should be to receive support and advise fro specialised agencies and donor countries so that we get assistance, advise and a market that offers our products concessional facilities the kind offered to other sectors. Some kind of grand strategy is the need of the hour. But first, we need exports to resume forthwith. Perhaps the private sector can step in. It is a shame that everybody knows about the shipment cycle of the vegetable export and the problem the sector has. It is not something new. Yet there is no consensus and there is no exit strategy to relieve the sector from the tag being a problem sector.


  More Headline
Freight hike hurts vegetable export: Some remedies
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