AGRI_Annex_3_DRAFT.pdf

Starting and Operating a Farm Streamlining the regulatory burden to start and operate a farm reduces the barrier to formalization for small-and medium-scale commercial farms. Decentralized government offices improve rural access to government services. Efficient and well-implemented regulations also require coordinating the activities of multiple government agencies, while balancing policy considerations such as land and resource use, human health, and environmental safety.

Indicators:

A. Time, cost, and procedures for business registration and licensing of a mid-sized staple grain farm. Requirements may include national or local trading licenses, chemical storage requirements, workplace or employee registration, environmental permits, and company registration.

B. Index on access to business registration information.

Case Study Farm Crop Rice Farm size 50 hectares Location Rajshahi Legal Form Sole Proprietorship Annual Revenue BDT 29 million Land tenure 50 year lease Market Farm gate, local market

Bangladesh

A. Procedures, Time, and Cost to Start-up a Farm

No. Procedure Time (days)

Cost

(BDT)1

Agency

1 Local Trade License

The trade license is a prerequisite to operating any business in Bangladesh and is specific to the union or municipality.

Companies with multiple offices across municipalities would need a trade license for each location. Facilitation fees are common.

5-7 3-5,000 depending on the amount of authorized capital

Relevant union council in Rajshahil

2 Tax Identification Number (TIN) Certificate

The TIN certificate has no official cost. In practice, all respondents noted paying “handling charges” averaging BDT 5,000 (and ranging up to BDT 10,000) in order to facilitate the process. To obtain a TIN, businesses must provide two copies of a passport size photo, the applicant’s national ID card, the company’s local trade license, and proof of a bank account.

Additionally, a value-added tax (VAT) certificate is necessary for farms engaged in exporting or food processing (not applicable to the case study farm). The VAT certificate takes an average of 7 days to obtain from the National Revenue Board at no official cost. Unofficial costs average

4 0 National Revenue Board

1 Exchange rates as of June 2012 (BDT 81.98 per USD). Costs are rounded to the nearest dollar.

BDT 5,000.

Total 2 procedures 10 days USD $49

A. Access to Business Registration Index (0-5)

Question Index Score:

Comments

1. Are registration documentation and information on fees publicly available?

Yes

2. Are registration documentation and information on fees available online?

No

3. Is registration possible in every state/province? Yes The local trade license is issued at the union (local/municipal) level. The TIN certificate is issued by the National Revenue Board, which has offices in each of Bangladesh’s seven divisions.

4. Are registration steps the same regardless of business size (measured by size of workforce or revenue)?

Yes

5. Are registration steps the same regardless of the nationality of ownership?

Yes

Obtaining Inputs: Seed Strong seed and fertilizer regulations and institutions promote farmers’ access to high-quality seed while making the licensing process for suppliers efficient and transparent. Competition is key: more suppliers and an extensive distribution network ensure a greater supply of affordable, quality seed. Overly-burdensome regulations can stifle the sector by discouraging new entrants and creating incentives for agrodealers to operate informally.

Indicators:

A. Time, cost, and procedures to obtain operational licenses for a seed supplier.

Requirements may include import license, seed dealer license, license for storage facilities, national or local trading licenses, and inspections.

B. Time, cost, and procedures to register a new proprietary seed variety.

Case Study Seed Supplier

Activities Import, Wholesale Distribution, and Retail Sales (does not grow or multiply seed)

Type of Seed Hybrid Rice Location Dhaka Ownership Domestic, non-state-owned enterprise

A. Licenses and Permissions for Seed Provider

No. Procedure Time (days) Cost (BDT) Agency 1 Local Trade License

The trade license is a prerequisite to operating any business in Bangladesh and is specific to the union or municipality.

Companies with multiple offices across municipalities would need a trade license for each location. Facilitation fees are common.

5-7 3-5,000 depending on the amount of authorized capital

Dhaka City Corporation or relevant union council

2 Import Registration Certificate (IRC)

An IRC is required for any business importing goods into Bangladesh. The agro-input provider must apply to the Export/Import Authority within the Ministry of Commerce.

Required documents include:

• Membership Certificate to Chamber of Commerce & Industry

• National ID card

• Tax Identification No. (TIN)

• Bank solvency certificate

The IRC costs a minimum of BDT 5,000 depending on the company’s amount of authorized capital, and is valid for one year.

10 5,000 Office of the Chief Controller of Import & Export (CCIE), Ministry of Commerce

B. Procedures, Time, and Cost to Register a Proprietary Staple Grain Variety

1 Application for registration of a new proprietary plant variety for notified crops

According to the Seed Act (Amendments in 1997 and 2005), seed companies must register new notified crop varieties with the Seed Certification Agency (SCA). There are 5 crops “notified” by the Government of Bangladesh – wheat, rice, jute, seed potato, and sugarcane. Notified crops must undergo a mandatory two seasons of field testing in order to be registered, and applicants must provide detailed breeder’s results for the new variety. A company seeking to register a seed variety already in use in another country would apply to the Plant Quarantine department in the Ministry of Agriculture for an import permit. The permit would allow them to procure a maximum 20 kg of seed as a sample. The import permit takes an average of 5 days to obtain at a cost of USD $1.

All non-notified crops can be produced or introduced immediately upon obtaining a registration number from the National Seed Board within the Ministry of Agriculture.

Registration numbers are issued without testing or cost.

Companies typically test the quality of new non-notified varieties themselves before sale, and such seed would be sold as “Truthfully-Labeled Seed.” Seed providers can also opt for a voluntary certification process by the SCA – identical to the testing process for notified seed – which allows them to sell the seed as “Certified Seed.”

10 0 Seed Certification Agency

(SCA)

3 Seed Dealership License

All seed dealers must be licensed. The seed dealership license covers all seed-trade related activities, including import, wholesale distribution, and retail sale. About 16,000 licensed dealers currently operate in Bangladesh. The dealership license does not require any inspection, but each application requires the signature of an officer from the Ministry of Agriculture or the Bangladesh Agricultural Development Corporation (BADC) who can vouch that the company is duly engaged in the seed industry.

7 0 Field Offices of Seed Wing, Ministry of Agriculture

Total 3 procedures 23 days USD $110

2 Multi-location performance trials

The SCA first determines the applicant’s seed sources. The Variety Testing wing then carries out varietal description activities (DUS tests) and conducts multi-location field evaluations (VCU tests). Field tests cost BDT 36,000 per year per variety, which includes one season of testing in 9 agro-ecological zones (or two years and BDT 72,000 total). Given Bangladesh’s growing seasons there are limited times of year to conduct field testing. Winter rice (boro) has one season per year, and the company would apply in September or October. Summer rice also has only one season a year, while maize can be grown year-round so two seasons of field tests can be completed in one year.

730 72,000 SCA

3 Recommendation for release

The results of field tests are evaluated by the SCA and a recommendation is made to the National Seed Board for release of the new variety.

30 0 SCA

4 Variety release by National Seed Board

The National Seed Board, chaired by the Secretary of the Ministry of Agriculture and whose membership includes the SCA, Bangladesh Agricultural Research Council, Ministry of Agriculture, representatives of seed companies, seed scientists, universities, and research institutes (BIRI for rice, BARI for wheat), meets twice a year to review new seed varieties. Once approved, the Board issues a registration certificate for the new variety.

60 0 National Seed Board, Seed Wing, Ministry of Agriculture

5 Gazette notification

To market seeds of notified crops, the new variety must be on the national list of varieties through publication in the official gazette.

30 0 Government Printing Bureau

Total 5 procedures 860 days USD $878

Question Response Comments

1. Does the authority in charge of seed variety registration accept testing data from the breeder?

N/A Data for this index was not collected for this country

2. Do current regulations allow for a faster or facilitated registration process for seed varieties that have already been registered or field-tested in another country?

N/A

a. If YES, with which country(s) and what is the facilitated process?

N/A

3. Is Bangladesh party to a regional agreement with respect to common procedures for variety testing, registration, and/or release that is effectively implemented in practice?

N/A

a. Is it implemented in practice? N/A

Obtaining Inputs: Fertilizer promote farmers’ access to high-quality fertilizer while making the licensing process for suppliers efficient and transparent. Competition is key: more suppliers and an extensive distribution network ensure a greater supply of affordable, quality fertilizer. Overly-burdensome regulations can stifle the sector by discouraging new entrants and creating incentives for agrodealers to operate informally.

Indicators:

A. Time, cost, and procedures to obtain operational licenses for a fertilizer supplier.

Requirements may include import license, fertilizer dealer license, licenses for storage facilities, environmental permit, national or local trading licenses, and inspections.

B. Index on the legal and institutional framework for the fertilizer sector.

Case Study Fertilizer Supplier and Retail Sales (does not manufacture or repackage fertilizer)

Fertilizer Inorganic Compound Fertilizer (e.g. NPK)

Location Dhaka

A. Licenses and Permissions for Fertilizer Provider

1 Local Trade License

The trade license is a prerequisite to operating any business in Bangladesh and is specific to the union or municipality.

Companies with multiple offices across municipalities would need a trade license for each location. Facilitation fees are common.

5-7 3-5,000 depending on the amount of authorized capital

Dhaka City Corporation or relevant union council

2 Membership in Bangladesh Fertilizer Association (BFA)

The agro-input provider must join the relevant national business association for fertilizer in order to obtain an Import Registration Certificate and to initiate registration of a new fertilizer product.

The Fertilizer Management Act (2006) stipulates that association membership is necessary “if applicable,” which is not clearly defined. In practice, companies, particularly fertilizer importers, join the BFA.

30 5,000

Bangladesh Fertilizer Association (BFA)

2 All yellow boxes signify incomplete or unconfirmed data.

3 Import Registration Certificate (IRC)

An IRC is required for any business importing goods into Bangladesh. The agro-input provider must apply to the Export/Import Authority within the Ministry of Commerce.

Required documents in the application include:

• Membership Certificate to Business Association or Chamber of Commerce & Industry

• National ID card

• Tax Identification No. (TIN)

• Bank Solvency Certificate

The IRC costs a minimum of BDT 5,000 depending on the company’s amount of authorized capital, and is valid for one year.

10 5,0002 Office of the Chief Controller of Import & Export (CCIE), Ministry of Commerce

4 Dealership License – Importing

The Department of Agricultural Extension licenses fertilizer providers. The DAE has three types of licenses within the dealership license for: importers, manufacturers, and suppliers (both wholesale and retail). An import license covers all activities, including import, repackaging, wholesale and retail sale. A company need only obtain one of the three types of licenses. A supplier license typically takes seven days and BDT 1,000 to obtain.

Along with the registration fee, applicants for a dealership license must provide:

• Membership in the Bangladesh Fertilizer Association (for importers)

• Board of Investment/Board of Small & Cottage Industries Corporation registration (for manufacturers)

• Import Registration Certificate

• Local Trade License

• VAT Certificate

• Tax Identification No. (TIN)

• National ID card

Note that fertilizer is also imported and distributed through government channels. The government-owned Bangladesh Chemical Industries Corporation (BCIC) manufactures urea, TSP, MOP, and DAP fertilizer and sells through a network of licensed wholesalers and dealers. A wholesale license from BCIC has no fee, but requires a deposit of BDT 200,000. Retailers place a deposit of BDT 30,000. The wholesale license is issued to up to 10 firms per upazila while there can be up to 9 BCIC-licensed retailers at the union level. The BCIC sets the price of fertilizers and distributors make a set profit margin. Respondents noted

30 1,000 Department of Agricultural Extension

(DAE)

B. Fertilizer Distribution Index (0-11)

Score: 8

Comments

1. Is there a fertilizer law(s) and regulations? Yes Fertilizer (Management) Act, 2006 and Fertilizer (Control) Order, 1999.

2. Does the fertilizer law or regulations specify the following:

a. Set truth-in-labeling guidelines? (e.g. fertilizer bag labels must includes the Netherland’s official language(s), net weight or volume, “guaranteed analysis” of minimum levels of nutrients claimed, directions for use, and health and safety precautions)

Yes Clause 7 in the Fertilizer Control Order of 1999:

Fertilizer bag labels must include the following either in Bengali or English:

• Name of fertilizer

• Nutritional contents

• Net weight

• Manufacturer’s name and the country

• Guaranteed analysis of minimum levels of nutrients claimed

b. Prohibit the sale of open, mislabeled, or adulterated bags of fertilizer?

c. Establish rules for the accreditation of third-party certification of fertilizer quality? (e.g. an accredited private laboratory network)

No Certification can only be done by five approved government laboratories.

3. Is there a regulatory body (such as the Ministry of Agriculture) with the mandate to enforce the law and regulations by punitive action?

Yes • Ministry of Agriculture (MOA), Fertilizer Wing

• Department of Agricultural Extension (DAE)

• Fertilizer and Seed Monitoring Committees at the Upazila level (Sub-district)

4. Does the regulatory body have the authority to inspect:

a. Fertilizer production and storage facilities? Yes

b. Fertilizer at the point of sale (e.g. at retail shops)? Yes

5. Does the regulatory body(s) have the authority to take fertilizer samples and conduct laboratory analysis? (e.g.

to measure nutrient content)

Yes

a. Do sampling and analysis methods follow international standards (e.g. ISO standards or International Fertilizer Association guidelines)

Yes Bangladesh Soil Resource Development Institute (SRDI) has a published testing methodology book which should follow international standards.

that fertilizer sales are subsidized, sometimes up to 50% of the total cost. According to one respondent, the BCIC has about 80% market share of total fertilizer sales. The private sector does not actively compete with the BCIC in selling the four main fertilizer types, and instead provides other fertilizer products.

Fertilizer manufacturers (not applicable to this case study) would additionally require an Environmental Clearance Certificate from the Department of Environment. There is no inspection or cost to the certificate. In practice facilitation fees common – respondents listed costs of BDT 5-10,000.

Total 4 procedures 76 days USD $183

6. Is there a tiered licensing system for fertilizer suppliers that sets license and fee requirements in proportion to the activities and risks of business in each stage of the supply chain (e.g. importers, distributors, and retailers)

No All fertilizer suppliers must obtain a Fertilizer Dealer License regardless of the size of the business or the business activity.

7. Is there a government monopoly or major public sector role in procurement, importation, or distribution of fertilizer?

For Urea, only the private sector is involved in procurement, production, and distribution.

For TSP (phosphate) and MoP (potash – potassium) fertilizers, Government and private sector importers procure fertilizers from international markets.

Accessing Rural Land Farmers must have a secure interest in land to invest in the long-term success of their farms. Yet the transfer of rural land is often lengthy and unpredictable, reflecting poor property systems: fake or non-existent titles, decaying paper records, inaccurate land surveys, and lack of surveyors. As a result, rural land transfers are costly and inefficient, and may not provide farmers with the security they need.

Indicators:

A. Time, cost, and procedures to transfer farmland.

Requirements may include cadastral survey, title and encumbrances search, valuation and inspection, government consent to transfer, stamp duty and transfer tax, and registration of deed of sale.

B. Index on access to property registration information.

C. Index on legal framework for leasing farmland, including customary land.

Case Study Land Transaction Buyer & Seller Both Buyer and Seller are LLCs Farm size 50 hectares Purchase Price BDT 2,882,166 Location Rajshahi Land Tenure Titled land

A. Procedures, Time, and Cost to Register the Transfer of Agricultural Land

3 The time and cost for this procedure reflect official time and cost excluding bribes and unofficial payments.

1 Verify title documents and ascertain title

The first step is to test/verify the title deed. A title deed may be tested in the concerned Sub-registry office to show that the deed provided by the Seller is in order, and all Bia deeds (proof of previous owner(s)) tested to prove a chain of ownership. Time required depends on availability of information/docs, access, co-operation of concerned office, etc. Speed money may be required, otherwise the timeframe will be longer.

Property ownership may be shown by way of a record of rights (RoR) kept in the concerned land office (i.e. Union Land Office (Union level), Office of Assistant Commissioner of Land (Upazila level) or District Record Room (District level), as necessary). RoR is locally known as Khatian/Parcha, and includes a Khatian Number, District and Upazila name, Mouza (a particular constituency) name, Jurisdictional List (JL No.)

number, name of the owner who possesses the land, plot number, total area of land in a plot, exact area of land, etc.

To get a certified copy of the RoR, a minimal amount of BDT 100 is required (plus extra fees from BDT 2,000-3,000). It takes 10-30 days; if facilitated, it can take 1-2 days. These are typically obtained at the District level.3

It must also be confirmed that the proposed land has not been mortgaged with any bank or financial institution; is not

10-30 700 Union Land Office, Office of the Assistant Commissioner of Land, District Record room, settlement office (for land survey at Upazila or Divisional level), concerned Sub-registry office securing payment with any other institution or individual; has not been leased out to others; and has no legal claim or any litigation case against it and the deed has not been tendered as evidence before any jurisdictional court of litigation.

2 Mutation in Seller’s name

The Seller must get the land mutated in his/her name with the concerned land office, otherwise one cannot sell. The Seller has to apply to the Land Office, and the Land Office has to see that the Seller purchased the land using proper methods, then they will mutate his/her land. After receiving an application from the Seller, the Land Office gives notice to concerned persons. Around 15-30 days are given for filing any objections. If there are no objections, the Land Office mutates the land in the name of the Seller; registers his name in the Record of Rights, giving him a new title; and issues a holding number to the Seller, by which government collects rent. This process takes 3-6 months (3 months if no objections), and involves a minimal fee of BDT 700-1,500. To register in a Sub-registry office, a certified copy of a mutation Khatian in the name of the present owner (Seller) is necessary. It is the Buyer’s duty to check that the land is mutated in the Seller’s name.

90-180 700-1,500 Land Office

3 Obtain non-encumbrance certificate and other documents and assess potential claims

The Buyer must make sure that there is no valid claim from adjacent land owners, government authorities or other individuals; perform physical verification regarding access to the land; collect a Mouza Map published by the Office of the Land Survey; collect up to date rent receipts from the Union land office that has been paid by the Seller; obtain a non-encumbrance certificate from the concerned authority (though this step does not often occur in practice); obtain a Duplicate Carbon Receipt (DCR) regarding the land at the Upazila land office (~BDT 250); and obtain other documents relating to the property. These steps may require speed money up to BDT 1,000. Note that because the land described in the case study exceeds the maximum limit of holding land, permission will be required from the concerned Office of Assistant District Commissioner of Land (Revenue).

5-10 400 Multiple land offices

B. Access to Property Registration Index (0-7)

Score: 4

Comments

4 Registration of deed of sale and payment of stamp duty

Before formal registration, a Contract for Sale is created and executed between the Seller and Buyer (locally known as “Baina-nama”). To give legal effect to a Baina-nama, it has to be registered. When a Baina-nama is registered, then the formal Deed of Sale is submitted to the concerned Office of Sub-register under the Ministry of Law in the applicable Upazila for final registration within 30 days after execution of the Baina-nama. The deed must be prepared in a government-prescribed form. After registration, the Office of Sub-register will issue the Buyer a receipt to collect the new title deed. It takes 2-3 years to obtain a new title. The Buyer can get a certified copy of the title deed in the meantime, while waiting for the official document.

2-5 3% of consideration for stamp duty

Sub-registry office

5 Payment of taxes and fees

The 2% registration fee is payable to the bank in favor of the sub-registry office and the receipt is to be presented at the moment of applying for registration.

1-2 1% for local government tax, 2% for government registration fee

Bank designated by sub-registry office

6 Submit application to local land office

After completing registration, Buyer has to submit an application to the local Land Office to claim title/ownership of land and submit a copy of the deed for record correction and mutation in his/her own name, presenting the receipts of payment for registration fees. The application also includes a schedule of the property and a copy of the Parcha. The land office then sends a proposal letter for mutation to the land office at the Union level.

45 5,000

Office of Assistant Commissioner of Land

7 Pay land tax at Union land office

Buyer pays land tax and collects a rent receipt certificate, which is taken back to the land office at the Upazila.

2-3 BDT 25 per acre of agricultural land

Union Land office

8 Mutation in Buyer’s name

After receiving the rent receipt certificate, the land office will mutate the name, open a book, give the Buyer a holding number without which Buyer cannot pay local land tax, and provide a duplicate carbon receipt.

2-3 Included in Procedure 6

Office of Assistant Commissioner of Land

Total 8 procedures 157-278 days USD $2,235

1. Is real property registration possible in every state/province?

Yes There are no barriers for registration except specific reasons, i.e. government property.

2. Can real property registration be accomplished via an automated, online process?

No Manual process.

3. Is information and documentation about the process of real property registration available on the Internet?

No There is limited information available.

4. Are real property registration steps and timeframes clear? Yes If there is a registered contract (“baina”), then the property has to be registered within 30 days of execution (Sec 17A, Reg. Act, 1908)

5. Are real property registration steps the same regardless of property size?

Yes

6. Are real property registration steps the same regardless of the nationality of ownership?

Yes When the purchaser is of different nationality, permission is required from the proper authority, i.e. Ministry of Land.

7. Is quality of data in the land registry reliable, with few cases of dual or fake titles?

No Data is not reliable.

C. Leasing Rural Land Index (0-9) Responses Based on Titled Land

Question Index Score: 7

Comments

1. Do formal domestically-owned entities (i.e.

corporations, partnerships, cooperatives, sole proprietorships) have a legal right to lease land?

Yes Constitutional and statutory right.

2. Do formal entities have a de facto right to lease land? Yes Subject to prior consent of the entity’s partner or partners, and if the activity is covered by the objective of the corporation or cooperative.

3. Is approval required from a governor or similarly high-level ministerial official to enter into a lease for land?

Yes For freehold property, no approval is required. For leasehold or any authoritative property holder prior approval required from original lessor or proper authority.

4. What is the statutory maximum duration, if any, for a lease of land?

No statutory maximum

A Government lease has a maximum of 99 years.

There is no specific provision for individual entities regarding the time period of a lease. It is advisable not to enter into any lease more than 99 years and customary practice in Bangladesh is to not exceed 99 years.

5. What is the statutory maximum amount of land, if any, that a formal entity can acquire?

hectares (60 bigha)

The maximum amount of land an entity can acquire depends on type of property (i.e. residential, commercial) and type of public body. For agricultural lands, the maximum is 60 bighas (1 decimal= 0.4046 hectares; 33 decimals = 1 bigha). Reference Section 4 of the Land Reforms Ordinance, 1984.

6. Are there often statutory restrictions on the right to produce on the land based on the leaseholder’s own preferences that impede the leaseholder’s ability to undertake agricultural production?

No There is no statutory restriction - as per law, in agricultural land (under land classification as “agricultural”) one can produce any agricultural product. However, there may be environment and other social issues to be considered.

7. Are there often statutory restrictions on the leaseholder’s ability to subdivide, sublease or rent the land?

No If nothing is mentioned in the lease agreement, then the lease holder is free to subdivide or sublease or rent. It is advisable that every lease include terms for sublease in the agreement.

When you lease out a land from any government authority it you must obtain approval from that authority.

8. Can a long-term (50+ years) leasehold interest in land be transferred to another formal entity?

Yes Again it depends on the terms and conditions of lease agreement.

a. Without lessor approval? No Lessor shall be fully informed the reason. In terms of government land, prior approval is mandatory.

9. Can a long-term (50+ years) leasehold interest in land be registered and recorded in a manner that protects such registered interests?

Yes Formal registration and mutation conduction take place. For a long term lease, registration of the lease is mandatorily required to protect the interest on the land leased.

10. Does the legal framework allow long-term leaseholders (50+ years) to obtain mortgages on land?

Yes If there is no dispute related with that land.

a. Do such mortgages occur in practice? Yes In urban areas this is normal practice. For agricultural leases it seems difficult to mortgage the land.

Access to Finance Access to finance is one of the largest obstacles faced by agribusinesses everywhere. Agribusinesses, particularly farms, often have few assets beyond their land and movables such as farm equipment, crops in the field, and inventory. A secured transactions framework – the focus of this topic – allows agribusinesses to unlock the value of their assets, particularly movable assets, to obtain a loan.

Building blocks of a secured transactions system such as a movables collateral registry or warehouse receipts system facilitate access to finance for the agricultural sector.

Indicators:

A. Types of agricultural collateral allowed by the legal and regulatory framework and accepted by financial institutions in practice.

B. Quality of existing collateral registries for movable collateral.

C. Strength of legal framework for warehouse receipts systems.

A. Agricultural Collateral Index (0-10). Index Score: 8

B. Movables Collateral Registry Index (0-11)

Question Index Score: 4 Comments

1. What type of registry exists for registering movable collateral? Please specify the name of the movable

Multiple registries for different types of assets or

No specific movables collateral registry exists. Land (mortgages), hypothecation for fixtures, and general charges for movables are registered with the

Type of Collateral Allowed by Law

Comments

1. Farm equipment Yes Movable property can be encumbered through a fixed charge. Typically only tractors and vehicles are accepted.

2. Crop in field Yes Crops not typically considered movables and most banks do not accept as collateral except ag-oriented banks such as Krishi Bank. For sole proprietors (which are not registered entities), hypothecation is used where borrower maintains ownership over pledged collateral through contractual agreement between parties.

3. Crop in warehouse No Crops not typically considered movables. No law in place. Currently only available through BADC-funded pilot of warehouse receipts system.

4. Livestock No Livestock not typically considered movables. Not done in practice due to issues with managing collateral.

5. Inventory Yes Allowed under a general floating charge for registered companies.

6. Patented plant variety No

7. Futures contract No

8. Accounts receivable Yes Allowed under a general floating charge for registered companies.

9. Buy/sell agreements Yes Allowed under a general floating charge for registered companies, though doesn’t happen in practice.

10. Land and water rights

Yes Land only, not water rights. Land is taken as a mortgage and is the preferred and primary means of collateral.

collateral registry(s). security interests concerned Office of Sub-Registrar. Charges from sole proprietorships, which are not registered companies, are not registered.

Mortgage deeds, general charges and hypothecation to Registrar of Joint Stock Companies (RJSC) for loans to LLCs and other registered companies. Mortgages also to Office of Assistant Commissioner of Land for registering land.

Offices of Sub-Registrar for RJSC and Office of Assistant Commissioner of Land are located in every upazila (about 500 branches). The RJSC has four branches in the country. Office of Assistant Commissioner of Land is at the district level.

2. Can security rights for a broad range of tangible and intangible movables (i.e.

equipment, crops, livestock, accounts receivable, inventory, futures, etc.) be registered in the movable collateral registry?

Yes In theory, general charges cover a broad range of movables. Livestock and crop are not typically considered movables.

3. Can security rights for all types of debtors, including sole proprietors, be registered in the movable collateral registry?

No Collateral from sole proprietors not registered.

4. Does the movable collateral registry have a centralized database that consolidates information on all types of security interests (charges, chattel mortgages, etc.) and all types of debtors from registry branches across all geographic regions of the country?

Yes The Office of Sub-Registrar has Upazila-level offices but is centralized at the national level. Country-wide information is searchable only from the national-level office.

5. Does the movable collateral registry operate a fully electronic database system (as opposed to paper-based)?

No Physical files.

6. Can registration and searching in the movable collateral registry be performed online?

No

7. Is data from the movable collateral registry reliable?

No Physical files are not all up to date.

8. Is real-time information from the movable collateral registry widely accessible to the general public without any restrictions, including by those located in commercial centers outside of the capital?

No

9. Can registration in the movable collateral registry be performed within a reasonably rapid time frame and with flat, reasonable fees?

Yes Registration takes 2-3 days and charges are reasonable. Registration costs depend on the value of the land or other collateral.

10. Can a search of the movable collateral registry be performed within a reasonably rapid time frame and with flat, reasonable fees (i.e. free or less than

US$5)?

No Searching takes 2-3 days (depends on how old the company is) and charges are reasonable. Cannot search all four RJSC branches from one location, so may need to search in multiple locations.

11. Does the secured lending system provide for priority based on order of filing?

C. Warehouse Receipts System Index

Score: 0

Comments

1. Are there any laws or regulations pertaining to warehouse receipts systems currently in force?

No

2. Do such laws or regulations specify an entity tasked with registration, licensing, and oversight of warehouses?

2.a. Is such entity private or public?

3. Does the legal and regulatory framework provide clearly established criteria for registering a warehouse, such as specifications for the physical facility and equipment (ex. silos, cleaners, fumigators)?

4. Does the legal and regulatory framework require warehouse operators to be licensed and establish clear requirements for obtaining an operator license?

5. Does the legal and regulatory framework provide for commodity standards and grading systems?

5.a. Are such commodity standards and grading systems enforced effectively?

6. Are there established procedures and standards for handling the commodities in warehouse storage?

7. Does the legal and regulatory framework provide for regular inspections by the regulating entity or licensed third-party inspectors?

8. Does the legal and regulatory framework provide for consequences/penalties for non-compliance of the handling of commodities in storage?

9. Does the legal and regulatory framework clearly specify who bears the risk of loss, destruction, spoilage or damage?

10. Does the legal and regulatory framework specifically recognize warehouse receipts as a document of title and a security instrument that is negotiable, transferable, and subject to encumbrance?

11. Are warehouse receipts registered in a centralized registry with an electronic database that is easily accessible to the general public?

12. In case of liquidation or bankruptcy, does the legal and regulatory framework clearly specify that commodities stored in the warehouse are immune from the reach of warehouse operators’ creditors?

13. Under the legal and regulatory framework, which of the following items are warehouse receipts required to contain?

13.a. Name and address of licensed warehouse operator

13.b. Designation and grade of warehouse 13.c. License number of warehouse

13.d. Name and address of depositor 13.e. Relationship between warehouse operator and depositor if not a strictly disinterested custodianship

13.f. Description and quality of goods 13.g. Whether goods are insured or not

13.h. Net weight of goods

13.i. Other: [ ]

14. Does the legal and regulatory framework provide for a specific forum to resolve disputes relating to warehouse receipts systems?

Trading Agricultural Goods Trade is a key component of economic growth and regional food security. However, specific regulatory controls unique to the agriculture sector such as SPS inspections, trade licensing, and export controls, can restrict trade. These requirements are often driven less by the interests of the agricultural sector than by political or social concerns. Fewer requirements, improved coordination between government agencies, reduced inspection and wait times, and better physical infrastructure and electronic systems all contribute to a fast and reliable trade system.

Indicators:

A. Time, cost, and documents to export a widely-traded agricultural commodity.

B. Index on legal framework for phytosanitary certificates for export.

C. Time, cost, and documents to import hybrid seed.

D. Index on trade facilitation measures

Product Jute, aromatic rice, coconut, frozen vegetables, frozen fish and shrimp

Export Consignment

Consignment is exported in a standard, non-refrigerated 40-foot container.

Value US$20,000 Point of Exit Chittagong Port Product Hybrid Rice Seed Import Consignment

Seed is transported in a standard 40-foot container, packed in 20kg sacks.

Value US$20,000 Point of Entry Chittagong Port Company Private LLC, majority domestically-owned, with 40 employees

Carrier Logistics or freight forwarding company providing point-to-point

A. Exporting an Agricultural Commodity

Documents to Export Commodity Time

Cost (USD)

Licenses and Documents Preparation 18 $153 Customs Clearance and Inspection 1 $ 200 TOTAL 19 days $ 353

Documents to Export Commodity Letter of Credit

GSP

Phytosanitary Certificate Fumigation Certificate Certificate of Origin Commercial Invoice EXP Form Packing List Bill of Lading TOTAL: 9 documents

B. Importing Hybrid Seed

Procedures to Import Hybrid Seed Time

(days) Cost (USD)

Licenses and Documents Preparation 19 $114

Customs Clearance and Inspection 10 $400

TOTAL 29 days $514

Documents to Import Hybrid Seed Pro forma Invoice

Import Permit

Letter of Credit

Phytosanitary Certificate Certificate of Origin

Bill of Lading Commercial Invoice Packing List Certificate of Conformity TOTAL: 9 documents

C. Trade Facilitation Index (0-7)

Score: 1.5

Comments

1. Can the documents required to import/export agricultural goods be submitted in advance of the consignment’s arrival at Customs?

All documents

Provisions in Bangladesh Customs law allow: (a) submission of manifest prior to the arrival of conveyance/ goods, and (b) lodging and processing of Customs declaration (e.g. bill of entry) documentation prior to the arrival of the goods.

The only condition for allowing advance lodgment of the declaration is that the vessel or the aircraft by which the goods have been shipped for importation into Bangladesh is to arrive within thirty days from the date of such presentation.

ASYCUDA++ is in place in Bangladesh and can provide for pre-arrival treatment. With the current introduction of ASYCUDA World Bangladesh hopes to facilitate a full pre-arrival regime.

2. Can the documents required to import/export agricultural goods be submitted electronically?

Some documents

ASYCUDA World has recently been introduced in Chittagong Custom House, which handles the bulk of international trade in Bangladesh. Scanned copies of documents can be sent electronically at Chittagong Custom House as attachments to Bills of Entry/Bills of Export.

All other customs stations currently use ASYCUDA++, and therefore, only Bills of Entry/ Bills of Export can be submitted electronically. Other documents need to be submitted manually. There is an aggressive ASYCUDA World roll out plan and the new system may be in place by 2017.

3. Do Customs and other agencies utilize a risk management system to screen goods for physical inspection?

No There is currently no single, standard risk management system in place. Risk management systems exist in Bangladesh and are implemented by different Customs stations. However, Bangladesh Customs has not yet established any elaborate procedure that could ensure introduction of a common risk management system across the country. In the case of other agencies, the use of risk management is not evident. This is so, because sanitary and health inspections are specific to particular categories, such as food products, and therefore, are applicable to all imported consignments of such categories.

a. If YES, is the risk management system electronic?

N/A

4. Does Customs use audit-based controls to reduce the frequency of cargo inspections for trusted traders?

No Currently there is no system of Post Clearance Audit (PCA)-based clearance controls. An authorized economic operator system has not yet been introduced in Bangladesh. In the absence of an efficient PCA system, the link between PCA and risk management is yet to be established in

D. Index on Phytosanitary Certificates for Export (0-9)

Bangladesh.

5. Are all required physical inspections of goods

(by Customs and any other relevant agencies) carried out at the same place and time?

No For agricultural goods, Customs does not require any physical inspection and will only rarely carry out such inspections. Other agencies, such as Plant Quarantine Department (for quarantine testing) and Bangladesh Atomic Energy Commission (for Radiation testing) collect samples from all relevant consignments of agricultural goods. These agencies can only collect samples after obtaining permission from Customs and do not do their inspections and sample collection at the same time; however, the sample collection is carried out at the same location.

6. Are consignments of imported seed allowed to enter Bangladesh (and remain in storage) while samples undergo laboratory analysis?

No Goods are released only after quarantine testing, which is conducted after the importation. During testing the goods are held in a secure Customs area. The Department of Agricultural Extension’s Plant Quarantine Department tests germination rates of samples from each imported seed shipment. Germination tests reportedly take 3-7 days depending on the type of seed and germination conditions.

Question Index Score: 4

Comments

1. Is Bangladesh a signatory of the International Plant Protection Convention (IPPC)?

Yes https://www.ippc.int/ countries/Bangladesh

2. Does the National Plant Protection Organization (NPPO) follow international guidelines (ISPM 7 and 12) on the issuance of phytosanitary certificates and requirements for phytosanitary management?

Yes Per Bangladesh Plant Protection Act, 2011 (not available online). New regulations are currently being drafted. The current rules are still in force: Destructive Insect and Pest Rules, 1966 (Amended 1989).

3. Does the NPPO provide information to exporters on destination country phytosanitary requirements? (e.g. import document requirements, list of quarantine pests)

No Requested from the Plant Protection Wing, Department of Agricultural Extension (DAE).

4. Does the NPPO provide information on obtaining a phytosanitary certificate for export (e.g. documents and fee schedules for sample collection, testing, and issuing the certificate)?

No As per the official fee schedule. Fees vary for different commodities.

5. Can exporters request a phytosanitary certificate on the internet?

No

6. Can exporters make an electronic payment for phytosanitary export certification?

No

7. Can inspection to obtain a phytosanitary certificate for export be conducted at:

a. The exporter’s warehouse or storage facility?

Yes

b. Bonded warehouses? Yes However, food and agri-products are not typically stored in local bonded warehouses.

c. All points of exit from Bangladesh (including land, air, and sea ports)?

Yes Two seaports (Chittagong, Mongla), three airports (Dhaka International Airport, Chittagong, and Sylhet), and the National Board of Revenue (Customs) maintains land ports with India, Myanmar, and Nepal.

8. Does the NPPO notify exporters of the reason(s) for rejecting an application for a phytosanitary certificate?

Yes Exporters are notified accordingly.

9. Does the NPPO enter into mutual equivalence agreements with main trade partners when phtyosanitary measures are demonstrated to achieve an equivalent level of protection?

No

Enabling Contract Farming Contract farming can integrate smallholder farmers into the value chain, guarantee markets and prices for farmers, and improve farmer access to mechanization and inputs. However, the contract farming system poses risks to both farmers and buyers. The Enabling Contract Farming topic measures key legal components that facilitate contract farming and mitigate the risks. For example, effective public grades and standards enable arms-length transactions and standardize trade, while dispute resolution mechanisms allow agribusinesses to resolve conflicts in a timely and affordable manner.

Indicators:

A. Index on legal framework for contract farming.

B. Index on system for establishing public grades and standards for a widely-traded staple crop.

C. Index on access to expedited or alternative mechanisms to the formal court system to resolve contract disputes.

A. Legal Framework for Contract Farming (0-7)

Score: 7 Comments

1. Does the legal framework provide the freedom of contract to all parties that may seek to engage in contract farming, including cooperatives, farmers associations, agribusinesses, and women?

Yes Section 11, Contracts Act (1872). The Land Reform Ordinance (1984) deals specifically with contract farming.

There is also a prescribed contract for entering into contract farming, see Schedule 2 (CHA) of the Land Reform Rules (1984).

2. Are there legal impediments to entering into tripartite contractual arrangements, for example between banks, farmers, and buyers?

No There are no specific provisions on tripartite arrangements in the relevant laws.

3. Are the parties to a contract freely allowed to establish prices for payment?

No Under the Land Reform Ordinance (1984), the parties to a contract farming agreement share the produce.

Section 12 states:

1) The produce of any barga land shall be divided in the following manner, namely:

a) One-third shall be received by the owner of the land;

b) One-third shall be received by the bargadar for their labor;

c) One-third shall be received by the owner or the bargadar or by both in proportion to the cost of cultivation, other than the cost of l

4. Does the legal framework recognize force majeure (i.e. unpredictable events such as natural disasters or pest outbreaks that are beyond the parties’ control) and its use as a reason for non-performance?

Yes/No There is no such provision in the Land Reforms Ordinance (1984). The Contract Act (1872), Section 56 however stipulates that in cases of frustration of contract, the contract will become void. This may not occur commonly in practice, however.

5. Does the legal framework recognize the right of recovery of damages in the case of breach of contract and equitable remedies such as specific performance and injunctions?

Yes Equitable remedies are available under the Specific Relief Act (1877) and damages for breach of contract is provided under Sections 73, 74 and 75 of the Contract Act (1872).

6. Are duress/coercion, misrepresentation, or fraud recognized as legal defenses that can be used to void contracts?

Yes Section 19 of Contract Act (1872) stipulates that when consent to an agreement is caused by coercion, fraud, or misrepresentation, the contract is voidable at the option of the party whose consent was obtained initially.

7. Does the legal framework allow for expedited sale of seized goods or expedited legal proceedings for enforcement of contracts where perishable goods are involved?

Yes Under Order 39, Rule 6 of the Code of Civil Procedure, the court may, upon application by either party to the suit, order interim sale of moveable property which is subject to speedy and natural decay.

B. Grades and Standards Index (0-12) This index is scored for rice.

Question Index Score: 8

Comments

1. Does the legal framework provide a clear institutional mandate and authority for the development and management of public grades and standards?

Yes There are some options, like the Bangladesh Standards and Testing Institute (BSTI), the Ministry of Industry, and mobile courts.

2. Are grades and standards used to classify or describe the commodity listed above? (e.g. based on quantifiable attributes such as shape, size, weight, color, taste, texture, odor, uniformity, moisture content)

Yes Bangladesh Standard Specification for Grades on Milled Rice, 1981.

3. Are grades and standards for quality attributes consistent with guidelines issued by international standards-setting bodies (e.g. Codex Alimentarius, ISO UNECE), where appropriate?

Yes BSTI has adopted 153 Codex standards for food testing and Bangladesh has adopted 40 Codex standards as the national standard. Bangladesh has also adopted HACCP standards for domestic food processing and export industries.

4. Does a regulatory agency conduct regular inspections to ensure the commodity listed above is consistently and correctly graded/classified?

No BSTI and the Department of Agricultural Extension (DOAE) make surprise inspections and test samples in the BSTI lab.

5. Does the legal framework provide a clear institutional mandate and authority for the development and management of grades and standards pertaining to contamination and chemical residues? (e.g. Standards Authority, Min. of Agriculture)

Yes Pure Food Ordinance, 1959. Authority: National Food Safety Advisory Council established under Section 4A of the Pure Food Ordinance, 1959.

6. Are there mandatory standards for microbial contamination and chemical residue for the commodity listed above?

No…