The food processing industry is continuing production amid the strictest lockdown over the pandemic now in place, but it is facing obstacles in marketing products at home and abroad, people involved in the sector have said.
Transportation cost and production cost have increased, but sales of products in the local market have declined. As a result, some companies are reducing their production, which is having an impact on local raw material suppliers.
According to a number of companies in this industry, the food processing factories are operating amid the lockdown, but transporting their products to shops by small vehicles has become very difficult.
Sometimes the law enforcers bar small vans, carrying goods, for a long time, which makes them unable to enter the designated areas. This is hampering the marketing of processed food.
Jasim Uddin, chief operating officer (Brand and Marketing) of Bashundhara, told The Business Standard, "Those responsible for delivering goods to shops are being harassed."
He said the law enforcers sometimes do not allow goods-laden vans to move and the company's main office has to make phone calls to clear the halted vehicles. As a result, delivery of goods on time is not possible.
"If there is any problem in the mills, local and foreign technicians are needed, but it is not possible to solve the problems quickly amid the lockdown. All in all, production is not going to be as usual," he added.
The processed food exporters are facing even more severe problems as they cannot export goods on time due to ship and container congestions. Those who are able to ship the goods have to pay rents several times higher compared to normal times.
Industry insiders said the cost of transporting goods inside the country has doubled. On the other hand, containers are not available for export despite several times higher rent being paid.
Normally, shipping a 20-foot container to Dubai would cost $300-350, which has currently increased to $1,100, said sources.
Besides, the price of raw materials has increased by 20-25% on average. This has resulted in increased production cost, but product prices have not increased accordingly, people involved in the sector have said.
They also said demand for their products has declined due to restrictions on people's movement and the limited time during which shops are kept open.
The food processing companies have reduced production due to the difficulties in marketing goods at the local and international levels. Production of a number of products, like milk and dairy products, has dropped by almost half compared to normal times.
Md Mosleh Uddin, chief operating officer, Dairy, Akij Food and Beverage Ltd, told TBS, "Grocery shops have reduced the milk and dairy products they keep because they do not know how long they can keep the stores open. People's movement is also limited. So, we are producing goods, but we cannot sell them much. As a result, we have to reduce production by half."
"If we reduce production, it will have a direct impact on farmers, because they cannot stop producing milk," he said.
Pran RFL Group Director (Marketing) Kamruzzaman Kamal told TBS the company has been facing more difficulties in exporting goods abroad than in marketing at home. The firm has to spend at least four times more than the usual cost for exporting products. Despite the hike in cost, containers are not available and they cannot ship their goods.
Opening packaging industry essential for food processing
Keeping the packaging industry closed amid the lockdown has posed another problem for the food processing industry. These factories make different types of packets, cartoons and labels. Some big companies have a large volume of these in stock, but small and medium enterprises do not have that. If these backward linkage factories are not opened soon, the food processing companies will have to stop marketing goods for lack of packaging.
Syed Mohammad Shoaib Hassan, vice-president of the Bangladesh Agro-Processors Association, told TBS, "If the packaging industry remains closed during the lockdown, there will be severe problems because most companies have very little stock of packaging material."
"We are already facing difficulties in providing good quality cartons for export products. If the packaging is not good, there will be problems in the quality of the product, which will create further problems for us in the future. For all these reasons, it is necessary to reopen the packaging industry."
Meanwhile, there is no obstacle in transporting vegetables, fish, meat and eggs. However, due to the increase in transport cost, consumers have to buy these products at higher prices.
Mostafa Kamal, a vegetable seller in Karwan Bazar, said the goods have to be brought to Dhaka at a cost which is almost double than the normal. This definitely will have an effect on the prices of products.