Introduction and overview

Despite strong economic growth and a steady decline in poverty in Bangladesh over the past decade, natural disasters regularly cause serious damage to the country’s infrastructure and agricultural sectors, severely affecting food access and food availability for the poor and vulnerable. As 80 percent of Bangladesh’s population lives in rural areas and around 53 percent of the rural population is classified as poor, climate shocks and stresses have particularly negative implications for their food, livelihood security and welfare. In Bangladesh a total 36 million MT of rice and around 2.6 million MT of wheat are produced in a year. More over some times during crisis more food grains are also imported to meet emergency situations. For safely storing the food grains, proper food storage capacity needs to be increased, for which the govt is working. At present, the total storage capacity of government warehouses and silos is around 2.1 million MT and this capacity will be increased to 2.7 million MT by 2020 and around 3 million MT by 2025. Moreover there are some private warehouses for storage on rental basis.

 

Government institutions on food and storage

The public food operation of Bangladesh is based on a set of policies and an organizational structure designed to carry out these policies. The Director General of Food (DGF) under the ministry of food is the primary organization consists of a number of branches entrusted with the task of procurement, storage, movement and distribution of food.

As a price stabiliser Public Food Distribution System (PFDS) acts as a buffer stock agency, buying paddy, rice and wheat when prices are low and later supplying that food grain to the market when prices are high. The GoB uses their PFDS network to transport the grain from the Silo or central storage deports (CSDs)  to the local supply  deports (LSDs).  As per UNDAF, WFP also using these GoB’s PFDS system for managemet of their cereal food commodities. The lack of storage capacity in areas prone to natural disasters may result in delayed response to relief distribution.  Improved processing system can produce higher output and reduce the storage, transit and handling losses as well as reduce post-harvest losses.

Storage plays the key role in the entire process of procurement. Under given situations of price and supplies, the level of procurement is functionally related to that of the storage facilities. Disparities between capacity utilisation at CSD and LSDs stem from the high demand for local transport. Capacity utilization and stock turnover vary considerably from season to season as warehouses are more fully and often over utilized during the height of the domestic procurement drive but remain relatively underutilized the rest of the year, taking them available to relief agencies.

List of Officers at the office of DG Food who are responsible for Management and operation of country's overall food system, Implementation of national food policy strategies and Establishment of dependable national food security system in the country along with meeting the emergency food requirement.

 

Regional and district controller of food

Officers' information (Silos)

 

Various storage types

Following types of storage system are now prevailing in the country:

1. Homestead storage.
2. Trade level storage.
3. Mill cum trade level storage.
4. Automatic milling storage.
5. Government storage for buffer stock.
6. Modern storage system.

While storage facilities and functions assume great importance, particularly in the case of subsistence crop, little is known about the various aspects of the initial storage of rice and paddy. The big rice-millers have large storage godowns in their compounds. They perform a considerable part of this function in the area they are located. The traders at the primary market do not have any storage facilities.

BADC warehouse and cold storage with capacity           

Storage capacity of public sector

Storage facilities in Govt CSDs, LSDs and Silos

Bangladesh has adequate storage facilities all across the country for storing various types of food grains. These warehouses have huge storage spaces which are often underutilized during any given month or season of the year. But some of them are old which needs to be renovated.

For storage of food grains, there are total 654 storage facilities of different types (LSD-635, CSD-12, Silo-6 and 1 Multi-purpose Warehouse) with a total capacity of  approximate 21,00,000 MT of rice and. These warehouses have good facilities in terms of equipment, skilled labour, stacking facilities, fumigation capacities at affordable prices, ventilation, augmented storage facilities, parking, security. In addition, 8 more Modern Silos and 158 LSDs with a total capacity of 6,40,000 MT are being constructed which is expected to be completed by 2020. The present district wise Food grain Storage Capacity (MT) at various LSDs, CDSs and Silos are shown below:

 

District wise Food grain Storage Capacity (MT)

 

 

Storage and warehouse facilities of BADC

Bangladesh Agricultural Development Corporation (BADC) under the Agricultural Ministry has developed a huge warehouse network all over the country for preservation of food stuff specially frozen Fish, various Seed, Fruits and Vegetables. They use these warehouses for their own requirement at the same time rent them on commercial basis to different organizations when ever deemed suitable or to meet urgent requirements. For any requirement they can be contacted at :

Modern Food Storage Facilities Project

Despite strong economic growth and a steady decline in poverty in Bangladesh over the past decade, natural disasters regularly cause serious damage to the country’s infrastructure and agricultural sectors, severely affecting food access and food availability for the poor and vulnerable. As 80 percent of Bangladesh’s population lives in rural areas and around 53 percent of the rural population is classified as poor, climate shocks and stresses have particularly negative implications for their food, livelihood security, and welfare.

Government has received an IDA credit toward the costs of the Modern Food Storage Facilities Project (MFSP), being implemented by the Directorate General of Food, Ministry of Food. The modern food storage facilities could considerably improve the efficacy of the government’s emergency response and recovery efforts in disaster-prone areas and could enhance the efficiency of its Public Food Distribution System. Modern storage facilities in different strategic locations across the country will allow grain to be kept in bulk for up to 2/3 years in better conditions relative to the godowns used currently, with reduced grain losses and enhanced nutritional value of the grain distributed. At least 10 million people (or some 25 percent of the population living in the project area) are expected to directly or indirectly benefit from the project, primarily vulnerable and poor people in areas regularly affected by floods and cyclones. About 500,000 households (around 2.5 million people) will directly benefit from facilitated access to household silos, half of which will be women and children.

With strengthened capacity for improving stock management in the modern silos, and comprehensive analyses for enhancing the overall policy framework on strategic grain reserves, GoB will be able to make sound and informed decisions as it reconciles the following 3 strategic objectives that impact the domestic food market:

• Supporting the poor and vulnerable through effective Social Safety Net programs
• Improving the country’s disaster preparedness to meet food security needs caused by disaster-induced food shortages
• Devising non-distortive market interventions for food price stabilization, mainly for coarse grain consumed by the poor and vulnerable.

Specific objectives of the project

The overall project development objective is to increase the grain reserve available to households to meet their post-disaster needs and improve the efficiency of grain storage management.

• Develop 8 Silo complex of capacity 5.36 lakh MT
• Facilitate households’ access to domestic silos to ensure household level food security (5 Lakh)
• Reduce storage losses
• Adopt the best suited technology for preservation of food grain quality, quantity and nutritional level
• Ensure safe storage of food grain during calamities
• Ensure Better monitoring and improved governance and management of food stocks.

Strategic sites for silo with capacity

Household silos 

Under the 2007 Emergency Cyclone Recovery and Reconstruction Project (ECRRP, P111272), household-level silos or grain storage bins were developed in Bangladesh. These units are specially designed 70-liter, food-grade plastic bins tested to ensure that chemical contaminants do not migrate into the stored food. They hold about 40kg of paddy equipped with a watertight lid, preventing water intrusion from surges and floods. Provision of home storage units under ECRRP has been extremely successful; under FAO coordination some 20,000 units were distributed. Based on the lessons learned from the ECRRP, this project’s investment in small-scale storage at the rural household level is expected to bring important benefits to the farming community – in the form of safer storage of rice, seed and the enhanced capacity of affected households to have seed readily available for subsequent planting seasons.

 

Warehouse/storage facilities in private sector

Bangladesh is a significant exporter of readymade garments, frozen fish, vegetables and shrimps to different destinations of the world for which the private sector has developed a strong and efficient right-on-time logistics chain, including cold-chain. Hundreds of Shipping Agents, CC & FF companies, ICD management companies, are operational in the country and most of them – being affiliate to international logistics companies do provide high quality services fitting with the international standards (tracking, storage, transport, deliveries). All those companies are able to provide warehousing services. This being said, as part of a right on time logistics chain, they are more used to short term storage (the time necessary to complete the clearance and shipping procedures), than for a longer period, usually used by INGOs for their contingency stock for example.

Now a day lots of private entrepreneurs are constructing sheds and warehouses to facilitate storage arrangements of various items. They are renting it out to the general people including NGOs.

Storage facilities of WFP

Generally, WFP avails the storage facilities of the Government or private sources if the alternatives are not available at the site of operation. Sometimes, there being no established storage facilities in remote operational areas different INGOs build temporary storage arrangements for own use and also for the use of Partners. WFP has its own such Storage arrangements at the Rohingya Camp area at Cox’s Bazar which they are sharing with the partners. Some of these types of Warehouse facilities are listed below:

Storage facilities of WFP at Cox’s Bazar

Cold chain

Bangladesh is predominantly an agro-based country and agriculture sector contributes about 17-18% of the GDP, employs over 45% of labour force. In the global climatic zones, Bangladesh is a tropical country where average daytime temperature ranges between 23 degrees Celsius to 34 degrees Celsius. Seasonal vegetables and fruits require storage refrigerated warehouse facilities (called as “Cold Storage”).  Many perishable products such as tomato, carrot, green chilli, beans, cauli flower, & mango needs to be preserved as around 30-40% of them get wasted due to perishability and absence of proper post-harvest storage, processing plants and transportation facilities in the season. Nevertheless, there is an acute shortage small cold storage to preserve vegetables and fruits. Unfortunately, due to inadequacy of post-harvest cold storage facilities, the farmers suffer a huge loss and damage of perishable produces and become victims of exploitation by middlemen and local wholesalers at both producers and consumers end. Therefore, to preserve them and save them from being waste, requirement of adequate number of Cold chain facilities all over the country is inevitable.

Average useful storage life of some essential items is shown in the table:

Cold storage facilities

In Bangladesh there are public and private cold storages facilities. Govt is gradually constructing Cold storages based on the increasing requirement. Business entities also investing in this sector for their own need also for renting it to others. Feeling the importance USAID and UNICEF is also assisting corporate bodies to construct cold storages for fruits/vegetable and pharmaceuticals. Available Cold storage facilities in the country are:

District wise number of various types of Cold storages with capacity

 

List of cold storage facilities

There are different types of cold storages depending on the types of items to be preserved. Now a days lots of frozen fish are exported to the developed countries around the world and those exporters have their own cold storages. As Bangladesh is an ago-based society, here lots of fruits and vegetables are produced which are preserved in cold storages. To facilitate such acts the government-specially BADC and private entrepreneurs have developed Cold storages. Some of cold storage facilities of Private Owners are listed at Art 4.6.3 

Bonded warehouse facilities

Bonded warehousing means generally the facility provided to export oriented industries for importing inputs/raw materials and packaging materials without paying any duty or taxes. The National Board of Revenue (NBR) provides Bonded Warehousing benefits to a wide range of industries to encourage export-oriented industrialization and facilitate exports. Availing the bonded warehouse facility is important for the export-oriented industries, as it enhances their export competitiveness. Bonded Warehousing facility is accorded following the provisions under Sections 84-119 of the Customs Act, 1969 (Chapter 11), and various rules and orders issued from time to time by the NBR.

Categories of bonded warehouses: Depending on the types of inputs/raw materials used, the purpose of their use, and the type of exports, bonded warehouses are basically of two categories: Special bonded warehouse and General bonded warehouse.

1. Special bonded warehousing is applicable for 100% export-oriented readymade garments industries, which include woven garments, knitwear and sweater manufacturing industries.
2. General bonded warehousing applies to other 100% export-orient oriented industries. These include:
3. 100% export-oriented ship building industry,
4. Accessories industries for:
   1. Deemed exports (e.g 100% export-oriented packing/carton, label, polybag, button, hanger etc. firms).
   2. Direct exports.
5. General Bonded Warehouse for home consumption e.g. British American Tobacco. These are basically deferred payment facility for 6 months.  Duties are paid when raw materials/goods are cleared.
6. Diplomatic & privileged persons bonded warehouse (e.g. M/s Toss Bond (Pvt) ltd., M/s H Kabir & Co. Ltd; Biman Bangladesh Airlines; Bangladesh Parjatan Corporation). Duty free articles are sold from these bonded warehouses in foreign currency to diplomats & privileged persons residing in Bangladesh.
7. Bonded enterprises situated in the Export Processing Zones.
8. Bonded enterprises situated in the Economic Zones.
9. 100% export-oriented deemed-to-deemed export industries.

Facilities enjoyed by bonded enterprises situated in the Export Processing Zones are delineated in the Customs (Export Processing Zones) Rules, 1984.

 

Bond license: In order to avail the Bonded Warehousing facility, interested enterprises will have to take a Bond License from the Customs Bond Commissionerate.

In order to obtain a bonded warehouse license, applicants need to complete a bond license application form and submit the same with necessary documents and application fee to the respective Bond Commissionerate, or any Customs, Excise and VAT Commissionerate authorized by the NBR to issue bonded warehouse license.

After receiving the Bond Licenses, licensee industries will be able to take clearance of their inputs/raw materials or packing materials imported under Back-to-Back Letter of Credit without paying any import duty or other taxes. However, the volume of these inputs and packing materials will have to remain within the limits of the entitlements referred to in their Bond Licenses. Full duty and taxes will be applicable on any amount of inputs/raw materials that exceed the entitlements referred to in the Licenses.

 Bond entitlement: Bonded warehouse facilities are subject to yearly entitlement. Yearly entitlement is allowed based on production capacity of capital machinery and previous year’s performance (i.e. export and usage of raw materials) of the bonder. However, direct exporters in the RMG sector are not required to have annual entitlement. They can import inputs/raw materials and related items based on the requirement of Utilization Declaration (UD) and Master LCs. Requirement of General Bond: Bonded warehouse license holders are needed to submit general bond of differing values to Customs in order to clear their consignments. Commissioner of Customs may increase the value of General Bond. At present, value of general bond for different types of bond license holders are as follows:

• Deemed Exporter: BDT. 10,000,000
• Direct exporters (Knit, Woven, Sweater): BDT. 30,000,000
• Both Deemed and Direct Exporter: BDT. 20,000,000
• Diplomatic, Duty Free and Duty paid Bond: BDT. 30,000,000

All the imported goods cleared under Bonded Warehouse license are stored at the bond holder's warehouses. In case of failure to export, importers are to pay duty charges and taxes for the rest of the goods imported. Bond holders are required to maintain bond registers and other documents. 

Bonding period: For export-oriented industries, bond period varies from industry to industry. Bonding periods are shown below:

Import under UD/UP: How much inputs and packaging materials will be used in manufacturing exportable products is basically determined by the Utilization Declaration (UD) or the Utilization Permission (UP). In the case of readymade garments industries, the UD issued by Bangladesh Garments Manufacturers and Exporters Association acts as the basis. In the case of other export-oriented industries, the UP issued by the Customs Bond Commissionerate acts as the basis. This UD or UP is finally settled after the manufactured products are exported.

Bonded storage

Bangladesh has been successful in developing a number of EPZs and granting bonded warehouse status to factories producing for export. It now needs to develop supplemental bonded facilities to reduce the cost and time for delivery of the imported materials used in the production of exports. These facilities would include:

• Off-Dock Container Yards for Inbound Containers
• Rail ICD near Tongi
• Truck ICDs to the South-East and North-West of Dhaka
• A common-user customs bonded warehouse

Off-dock container yards

Off Dock Container Yards have been introduced in many countries to alleviate port congestion; they are used to store and de-stuff inbound containers and clear the cargo, these three activities are the primary cause of port congestion. However, to help ease congestion at Chattogram seaport, facilitate quick clearance of FCL (Full Container Load) cargo by allowing unstuffing/delivery from outside the port area, and facilitate trade, Government encourages the establishment of Off-Dock facilities in the form of private container freight stations (CFSs) or inland container depots (ICDs).

Eligible private sector operators are licensed as CFSs/ICDs to store selected low risk import items and empty containers and conduct Customs clearance formalities and allow unstuffing/delivery of selected categories of import consignments. These private ICDs/CFSs require to obtain permission from the National Board of Revenue, Ministry of Shipping, Chattogram Port Authority, Department of Environment and other relevant government agencies. They also need to fulfil certain conditions to get warehouse license from Customs House, such as:

1. Location proximity (will have to be within 20 kilometers of the port).
2. Provision of proper office for customs officials.
3. Adequate facilities for container handling, such as fork lift, cranes, straddle carriers etc.
4. A well-secured warehouse, and tight security system with installed close circuit television (CCTV) cameras).

 Private ICDs/CFSs perform three main functions:

1. Handling of import containers of selected items (selected 37 low duty import items).
2. Handling of all export containers. 
3. Storing and handling of empty containers.

Import items eligible to be cleared through private ICDs: Customs allows the following import items to be taken to private ICDs for completion of Customs formalities there:

In taking delivery of containers to private ICDs, NoC from the concerned shipping agent and Chattogram Port Authority have to be obtained.

Handling of import consignments: Import items are scanned at the respective port gate before containers carrying such items are taken out on-chassis from Chattogram Port to respective off-docks. Import goods are physically examined at off-docks following risk management techniques. In the case of raw cotton, the application of the LMD system initiated by Chattogram Chamber of Commerce to measure weight will be conducted in the private ICDs. Customs assessment is done at Chattogram Customs House and release order is issued therefrom. Goods are unstuffed and delivered from private off-docks.

 Export formalities: Customs officials stationed at the private ICDs supervise the stuffing of export goods into containers, and where necessary, conduct physical examination. Assessment is done at Chattogram Custom House. After completing formalities at private ICD, stuffed containers are allowed to enter the port area, and on completion of the remaining formalities, shipped on board for export.

Handling of empty containers: After unstuffing and delivery of import consignments either from the port area or the private ICDs, respective shipping agents (Main Line Operator or MLO) take the empty containers to their nominated depots or CFSs for storage. Some of these are later used for stuffing of export consignment, and some are re-exported as empty containers. If the empty containers are not disposed of within the allowed time limit, these containers are liable for disposal through auction.

Rail ICD

The existing Dhaka rail ICD in Kamlapur operates more efficiently than the container yard in Chattogram Port, but its location in the congested center of the city causes restricts access. A better location for this facility would a site nearer to the garment factories at a site with good road access. Since a significant number of the garment factories are located northwest of Dhaka, the plan to establish a rail ICD at Tongi should be implemented as soon as possible. A similar facility in the Narayaganj area would not be needed since the knitwear manufacturers use less imported fabric and yarn and are more likely to use road transport, which is both faster and cheaper. While the Dhaka rail ICD serves traders supplying imports to the consumers in Dhaka, it is unclear whether this facility should remain open given the increasing congestion and the potential value of the site if used for commercial purposes.

 

Truck ICD (Private ICD)

At present there are 18 Private ICDs in Chattogram (Ctg) area, which are functioning very smoothly with the assistance of CPA, Customs and other concerned authorities. List of ICDs are as follows:

Common-user bonded warehouse

Customs currently authorizes the operation of the bonded facilities in a. Chattogram Port, b. Benapole land port, c. Export Processing Zones, d. Dhaka Rail ICD, and e. Factories producing exclusively for export.

What is missing from this collection are privately managed, common-user bonded warehouses for the storage of imported raw materials. Most export manufacturers have bonded production facilities, but relatively few have been willing to bear the risk of maintaining a large inventory of fabric in order to reduce their order cycle time for future orders. It is left to the traders and suppliers to perform this task, but they have been reluctant because the dysfunctional duty drawback system would not make it profitable. TPF45FPT If a customs bonded warehouse is provided for this purpose, then they could import fabric and sell it to factories under a temporary import arrangement. By establishing an inventory from which producers could quickly obtain imported fabric that can then be locally dyed, these warehouses would allow producers to reduce order cycle times by 2-4 weeks and thereby compete more effectively in existing markets. While there is no immediate precedence for this type of warehouse, the systems and procedures developed for handling temporary imports to the EPZs, the Dhaka ICD and the Off-dock container yards can be adapted for a privately operated common-user facility.

Disclaimer: Inclusion of company information in the LCA does not imply any business relationship between the supplier and WFP / Logistics Cluster, and is used solely as a determinant of services, and capacities.

Please note: WFP / Logistics Cluster maintain complete impartiality and are not in a position to endorse, comment on any company's suitability as a reputable service provider.