Why potato price surging despite surplus production

The price of potatoes has been rising in the country for a month now despite two government agencies claiming more than 1 crore tonnes of production this year, which is higher than the yearly demand.

But the Bangladesh Cold Storage Association has claimed that there is a data mismatch about the quantity of this year's potato production by two government agencies and that the production has been less.

According to the Department of Agricultural Extension (DAE), around 1.12 crore tonnes of potatoes were produced this year but the Bangladesh Bureau of Statistics (BBS) said the production is 1.04 crore tonnes.

The Cold Storage Association at a press conference yesterday (10 September) claimed that only 85 lakh tonnes of potatoes have been produced this year.

Association's President Mostafa Azad Chowdhury Babu said the annual demand for potatoes in the country is around 90 lakh tonnes and some cold storage owners and traders are creating instability in the potato market by taking advantage of the low production.

Visiting several kitchen markets in the capital on Sunday, potatoes were seen selling for Tk50-55 per kg. A month ago, the price stood at Tk36-40.

According to the Trading Corporation of Bangladesh (TCB), the price per kg was Tk25-30 at the same time last year.

In July, the Department of Agriculture Marketing told the Ministry of Agriculture in a report that there is no justification for the price of potatoes to be more than Tk32 a kg at the retail level and a group of traders are manipulating the market.

At Sunday's press conference, Cold Storage Association President Mostafa Azad said, "The DAE said 1.12 crore tonnes of potatoes have been produced this year, while the demand is 90 lakh tonnes. Then there should be a surplus of 22 lakh tonnes of potatoes. But 20% of storage space in cold storage facilities remains empty this year.

"If there was higher production, why are the freezers empty? According to our information, not more than 85 lakh tonnes of potatoes were produced this year."

The association also said farmers and potato traders have suffered losses in the past few years. Failing to get fair prices, many farmers have increased cultivation of mustard, wheat and maize due to a rise in prices of wheat, edible oil, and maize due to the Ukraine-Russia war. That is why potato production has decreased this year.

Compared to 2022, potatoes stored in cold storage decreased by 1.07 lakh tonnes to 24.92 lakh tonnes in 2023, said the association.

The Department of Agriculture Marketing, however, said 2.16 lakh tonnes less potatoes have been stored in cold storage this year.

According to the association, the potato harvest is fully completed in March and the country's needs are met till June with the potatoes that the farmers have. After this, cold-storage potatoes start coming to the market. But, due to low production this year, cold storages started releasing potatoes from the second week of May. That is why the amount stored in the first week of September is less than other years.

Mostafa Azad said, "This year, the production cost of potatoes per kg was Tk12-13 and the rent of cold storage was Tk5-6. With that, the price stands at Tk18-20 a kg at the cold storage gate depending on the quality. But at the end of May, the price of potato per kg in the cold storage shed was Tk26-27, which now stands at Tk34-36. It is not desirable at all."

The potato preservers think that the stock of potatoes is low. That is why they are increasing the price. Action should be taken against them, he said.

The Cold Storage Association chief also said if the Ministry of Commerce buys at least 10 lakh tonnes at the market price through TCB and stores them in different cold storages of the country, then it will be possible to deal with this kind of instability in the market. 

However, with the amount of potatoes that are still in storage, there will not be a crisis till next December and new potatoes will start coming to the market from the second week of December, Mustafa Azad added.

According to the association, 40% of potatoes stored in cold stores are seed potatoes, 55% food potatoes and 4% industrial potatoes. Around 55% of this food potato is stored by potato traders and farmers, whereas the amount of food potato stored by cold storage owners is not more than 1%.