Farming is the mainstay of the Bangladesh economy

Agriculture accounts for around 30% of the country's total economic output.

A reminder of the vulnerability of the industry came the day of the announcement, when a tornado ripped through farming villages in the north.

Population is increasing rapidly, but with decreasing amounts of arable land the government needs the farming sector to become more efficient.

Finance Secretary Zakir Ahmed Khan said the subsidies would help offset the higher costs of irrigation and seeds.

To maintain economic growth in Bangladesh the country relies heavily on agriculture.

"We have no option but to increase crop production," Mr Khan said, pointing out that better irrigation would help farmers grow more with the land available.

Severe environmental challenges exacerbate the problems Bangladeshi farmers face, such as monsoon rains which can leave hundreds of thousands homeless and farm land unusable.

Farming for growth

Economists report that to address widespread poverty, which affects more than half of its 130 million people, economic growth needs to be at least 7%.

River flooding is a common threat in Bangladesh.

Forecasts show growth is likely to miss this target in 2003-04, reaching only 5.5% - although that outstrips the average of 5% over the past decade.

Farmers recently welcomed a 2% cut in interest rates on farm loans to 8% and a waiver on interest owing to each farmer of 5,000 taka ($85; �48).

There will also be 50% subsidies from the government for growing seeds for high-yielding rice and various spices.

The Asian Development Bank has already put its weight behind the farming industry in Bangladesh.