Bonikbarta Exclusive

The annual demand of potatoes in the country is 8 million tons. Bangladesh witnessed a potato surplus in the last fiscal year (2023-24). The country had a satisfactory potato production of 10 million tons. The Department of Agricultural Extension statistics show that in the last fiscal year, the potato production in Bangladesh was at least 3 million tons more than the demand. According to the Department of Agriculture Marketing, it only costs BDT 10.51 per kg in potato production. Yet these potatoes are now sold at BDT 60 per kg in the capital's retail market.

Potato is one of the commodities experiencing significant price volatility in the country today. Fluctuations and instability in potato prices were evident throughout the last fiscal year (ending June 2024) as well. Govt allowed potato imports and this policy is still in effect. Yet the government is struggling to bring the market under control despite various measures. In addition, the retail price of potatoes is now about 20-25 taka more than in the same period last year.

Market analysts say fluctuations in potato prices tend to be unbelievably high. According to them, if information from the Ministry of Agriculture is correct, there should be a surplus of potatoes in the country even after accounting for 10-15 percent of waste after production. There are also no restrictions in place for imports, which should result in lower prices. However, the market situation paints a different scenario. In Karwan Bazar, the wholesale price of potatoes was BDT 54 per kg, while the retail price was BDT 60. 

Data from the Department of Agriculture Marketing shows the production cost of potatoes in the FY 2022-23 was BDT 10.51 per kg. While information on the previous year's cost is unavailable, experts believe it hasn't changed significantly. The average cost to produce potatoes per acre is slightly over BDT 114,000. This expenditure includes land prep, fertilizer, seeds, labor, irrigation, pesticides, land leasing, and loan interest. With an average yield of 10,892 kg per acre, the production cost per kg comes to BDT 10.27.

Food and agricultural market observers point to middlemen profiting the most, as much of the surplus value from potato production ends up in their pockets. Some analysts suspect a syndicate of cold storage owners and traders may be the major culprit behind the price hike. Others express their doubts about the production data provided by officials. This lack of accurate information significantly hinders overall market management, further exacerbating the unexpected surge in potato prices.

Former food secretary Abdul Latif Mondal told Bonik Barta, "There might be a syndicate between cold storage owners and traders. If production exceeds demand, where does the surplus potato go? This rather points to a failure in market management. We often see the same problem with eggs and onions as well. The government lacks control over market management. Otherwise, let the government officially answer why prices are increasing."

In terms of local production in the country, potato is second only to rice. Potato is seen as a major source of protein for the low-income group. Currently, Bangladesh ranks seventh in global potato production.

When asked about the reason behind the rise of potato prices despite the production exceeding the demand, Bangladesh Cold Storage Association President Mostafa Azad Chowdhury Babu told Bonik Barta, “Farmers have made a profit of more than BDT 20 per kg. About 70 percent of potatoes kept in our cold storage belong to farmers and traders. Farmers sold the potatoes for BDT 30 per kg. We charge BDT 10 per kg for storage. With a minimum profit of BDT 5, the potatoes have to be sold at BDT 45.”

This business leader won't agree with the information provided by officials about potato production. “This year the production could not have exceeded 8 million tons. The information provided by the government is incorrect. Many cold storages are lying empty due to low production.”

According to Department of Agriculture Extension (DAE) data, Bangladesh has an annual demand of 7.5 million to 8 million tons of potato. Against this demand, potato production in the FY 2022-23 was over 10 million tons. In this situation, even government officials don't find any logic in the soaring price of potatoes. 

Badal Chandra Biswas, Director General of the Department of Agriculture Extension (DAE), told Bonik Barta, “There is no congruity between the cost of production and the retail price of any produce in this country. Compared to last year, more potatoes are stocked in cold storage. There has been an increase in the use of potatoes in new restaurants. But raising prices too much is illogical. It is an issue of market management.”

Experts warn that the gap between production information and the actual supply picture is driving up potato prices in the market. They also point to irresponsible hoarding as a major factor behind the prevailing supply shortage.

Agricultural economist Dr. Jahangir Alam Khan told Bonik Barta, “Farmers do not get more than BDT 15-20 per kg. In this case, the retail price of potato should have been around BDT 25-30 per kg. However, if it exceeds BDT 35 then there has to be some manipulation taking place. Production is not sufficient either. Production data misleadingly affects the market. Traders and cold storage owners are running a syndicate. Hoarding is creating a supply shortage. As a result, the retail price is increased.”

Bangladesh has been a small-scale exporter of potatoes in recent years, with production exceeding local demand. However, exports faced a setback in FY 2015-16 due to a temporary Russian ban imposed in May 2015 to prevent the import of potatoes with harmful diseases. This caused a significant drop, from 91,000 tons exported to only 40,000 tons. Although Russia lifted the ban in March 2022 following Bangladesh's efforts to ensure potato safety, the situation has shifted, and the government is currently authorizing potato imports to meet domestic needs.

Former Minister of Planning and Agricultural Economist Dr. Shamsul Alam believes that syndicates or hoarding are not to blame for the current potato market situation. He told Bonik Barta, "It is not possible to control the potato market through syndicates. There are more than 450 cold storages in the country, and not everyone sells at once. Therefore, there is no other reason behind the price hike other than production shortfall. We used to export potatoes, but now many farmers are turning to maize cultivation as it is much more profitable. Farmers are naturally influenced by the price of their produce. It is illogical to blame everything on the practice of hoarding, which is an important strategy for marketing and selling goods."