Tk 2,000cr fund faces shrimp sector hurdles

Bangladesh’s once-lucrative shrimp export industry is struggling to survive despite a new Tk 2,000 crore special fund launched by Bangladesh Bank to revive the frozen fish sector, with exporters warning that high interest rates, restrictive conditions and bureaucratic hurdles could prevent the money from reaching the businesses that need it most.

The industry, which was once a billion-dollar export earner, has seen shrimp exports fall below $300 million a year, while more than half of the factories registered with the Bangladesh Frozen Foods Exporters Association (BFFEA) have reportedly shut down in recent years.

Exporters say the sector is being squeezed from multiple sides – declining production, raw-material shortages, power problems, uncompetitive farming practices and limited access to affordable financing.

They fear that unless the new fund is properly administered and existing businesses are prioritised, it could repeat the shortcomings of earlier government and development-financing initiatives.

Exports fall as factories shut
Export Promotion Bureau data show that Bangladesh’s shrimp exports exceeded $400 million in FY2022-23 before falling below $250 million in FY2023-24.

Exports recovered slightly to around $300 million in FY2024-25, but declined again to just over $285 million in FY2025-26.

Export volume was roughly 19,000 tonnes in FY2025-26, down from more than 25,000 tonnes in FY2022-23. Industry insiders put the latest volume even lower, at around 17,000 tonnes.

The decline has occurred as more than half of the factories registered with BFFEA have closed in recent years, industry representatives said.

They attributed the closures to a combination of power shortages and raw-material crises, which have made it increasingly difficult for processing plants to operate at viable capacity.

New fund faces old problems
Bangladesh Bank announced the three-year special financing facility through a circular on August 30, targeting entrepreneurs who want to establish new frozen-food processing plants, reopen closed factories or expand struggling businesses.

However, BFFEA President Mohammad Shahjahan Chowdhury, also managing director of Riverain Fish & Food Processing Industries Ltd in Chattogram, said previous financing schemes had often failed to reach genuine businesses.

“Getting loans under such funds from scheduled banks is quite difficult,” he said.

According to Shahjahan, non-genuine borrowers often manage to secure financing under the 7percent interest facility, while genuine fish exporters are left paying interest rates of 14-15percent.

“Unless bureaucratic complexities are removed and real businessmen are brought under the facility, this kind of fund will not bring any benefit,” he said.

His concern is that the latest fund could suffer from the same implementation problems if banks and authorities fail to ensure that eligible businesses receive the loans under the announced terms.

Previous project offers cautionary example
Exporters have also drawn comparisons with the $240 million Bangladesh-World Bank Sustainable Coastal and Marine Fisheries Project, which ran from 2018 to 2025.

One of the key objectives of the project was to increase shrimp production and exports.

Although the World Bank’s own assessment rated the project’s outcome and performance as satisfactory, coastal shrimp farmers and industry representatives say the project produced little tangible improvement in production.

They point to the continued decline in shrimp exports as a sign that previous interventions failed to address the sector’s fundamental problems.

“Under this project, a few buildings came up, and a few shrimp blocks were built. Nothing more than that happened.

Buildings and shrimp blocks alone will not increase production,” Shahjahan said, speaking on behalf of frozen fish businesses in Cox’s Bazar.

The experience has raised concerns among exporters about whether the new Bangladesh Bank facility will be utilised effectively.

Why finance new factories when old ones are closing?
Another major concern is the provision allowing loans of up to Tk 30 crore for new frozen-food processing factories, with repayment over a maximum period of seven years.

Industry representatives question the logic of financing new factories when existing processing plants are struggling or have already shut down because of shortages of raw materials.

BFFEA Senior Vice President Tariqul Islam Zaheer, managing director of Achia Sea Foods Limited in Khulna, warned that large loans for new factories could create opportunities for misuse.

“If Tk 30 crore loans are given for setting up new factories, many will misappropriate the funds or attempt such malpractice under the pretext of factory establishment,” he said.

“The focus here should be on ensuring running factories stay operational and on reopening those that have shut down,” Zaheer added.

Exporters argue that restoring production capacity at existing facilities would be a more immediate and practical way to revive exports than establishing new processing plants.

Bangladesh far behind regional competitors
Low shrimp productivity is another major obstacle.

Industry figures show Bangladesh produces only around 400kg of shrimp per hectare, compared with approximately 5,000-6,000kg per hectare in India, Vietnam and Thailand.

The huge productivity gap has made it difficult for Bangladeshi exporters to compete with regional producers on price.

Industry leaders say the country’s continued reliance on traditional shrimp farming is one of the reasons for the sector’s declining competitiveness.

Vannamei access remains a major issue
Exporters are also calling for Bangladesh to address its inability to compete in the international market with Vannamei shrimp, which has become a major export product for countries such as India and Vietnam.

Zaheer said Bangladesh’s dependence on traditionally farmed shrimp was undermining profitability.

“European buyers are purchasing Vannamei shrimp from India and Vietnam and want to pay us the same price for our traditionally farmed shrimp,” he said.

“Selling shrimp at $5 per kg, there is no way to turn a profit through the traditional method,” he added.

The industry argues that Bangladesh needs to improve farming methods and production efficiency if it wants to regain its position in the global shrimp market.

Solar condition worries factory owners
The new financing facility also imposes an environmental condition that could prove difficult for some existing factories.

According to Bangladesh Bank’s circular, beneficiaries must source at least 15percent of their total electricity from solar power within two years.

Failure to meet the requirement would result in the beneficiary being barred from accessing the current facility as well as similar central bank funds in the future.
The circular provides an additional loan of up to Tk 5 crore for businesses willing to install solar infrastructure.

However, factory owners, particularly those operating in urban and densely developed industrial areas, say they often lack adequate space to install solar panels.

They also say relocating factories or establishing separate facilities for solar generation would require significant additional investment, potentially placing further pressure on already struggling businesses.

Raw-material crisis remains unresolved
While the new fund focuses heavily on financing processing businesses, exporters say access to finance alone cannot revive the sector.

A major problem is the shortage and high cost of raw materials needed to keep processing plants operating.

With many factories already closed, industry stakeholders argue that increasing production at the farming level must be treated as a priority alongside financial support for processors.

They also want greater coordination between government agencies responsible for fisheries, banking, exports and industrial development.

Fund must reach genuine businesses
Shrimp exporters are now urging authorities to go beyond announcing the Tk 2,000 crore facility and ensure that the money is actually used to rebuild the sector.

They want bureaucratic procedures simplified, scheduled banks instructed to provide loans to genuine entrepreneurs under the stipulated terms, and stronger monitoring to prevent misuse of funds.

They also want priority given to operational factories facing closure and factories that have already shut down, rather than putting the main emphasis on new plants.

At the same time, industry stakeholders are calling for structural reforms to increase shrimp productivity, resolve raw-material shortages, improve farming practices and enable Bangladesh to compete with regional producers.

The sector also needs a clear policy on modern shrimp varieties and export competitiveness, they said.

A sector at a crossroads
For an industry that once generated around a billion dollars in export earnings, the decline to roughly $285 million represents a dramatic loss of Bangladesh’s position in the global frozen shrimp market.

Exporters say the Tk 2,000 crore fund could provide a much-needed lifeline – but only if it is channelled to genuine businesses and accompanied by broader reforms.

Otherwise, they warn, the latest financing initiative could follow the path of previous schemes and development projects that consumed substantial resources without producing the sustained increase in shrimp production and exports the industry needs.

For the shrimp sector, they say, the issue is no longer simply about securing another loan facility.

It is about keeping surviving factories open, bringing closed plants back into operation, raising farm productivity and making Bangladeshi shrimp competitive in the global market.