Govt to provide Tk260cr subsidy to potato growers

Highlights

• Decision to buy 50,000 tonnes of potatoes cancelled
• The current budget for FY26 allocates Tk150cr for farmers 
• Another Tk110cr in subsidies will go to them directly 
• Agri ministry writes to finance ministry seeking additional allocation
• Govt has the list of 20,32,363 potato farmers across the country

The agriculture ministry has decided to provide an additional Tk110 crore in subsidies to protect the interests of potato growers. The government has cancelled its earlier decision to purchase 50,000 tonnes of potatoes, and instead the subsidy will be given directly to 20,32,000 potato farmers. 

The current budget for FY2025-26 allocates Tk150 crore for potato farmers, and with the additional subsidy the total amount will rise to Tk260 crore.

The decision was taken on 6 November at a meeting at the agriculture ministry on reviewing the country's potato market situation.

According to ministry sources, subsidies for potato seed and fertiliser will come from the main budget allocation. The extra Tk110 crore will be transferred to farmers' mobile financial accounts, calculated on irrigation and labour costs per acre of potato cultivation.

In July and August, potato prices in the market dropped to Tk13-14 per kg, pushing growers towards losses. To prevent a further fall in prices or to offset farmers' losses, the government decided to buy 50,000 tonnes of potatoes and sell them at subsidised rates through the Trading Corporation of Bangladesh (TCB). 

The Economic Affairs Committee, at its 22nd meeting in August, approved the purchase. A ministry press release on 27 August said the recent market price had fallen below production cost, harming farmers, and announced that the government would procure potatoes at Tk22 per kg. The potatoes were supposed to be released to the market through TCB in October-November.

However, neither the agriculture ministry nor TCB could ensure that such procurement would benefit genuine farmers. 

At the 6 November meeting, TCB Chairman Brigadier General Mohammad Faisal Azad said it is difficult to identify which cold storages in which districts hold potatoes belonging to actual farmers. As a result, government procurement could negatively affect the market and society.

He also said that if potatoes are bought from cold storages at Tk22 per kg and sold from trucks, the cost would rise to Tk32 per kg. Selling these at Tk10 per kg would require Tk22 in subsidy per kg. 

On this basis, Tk110 crore would be needed to buy and sell 50,000 tonnes of potatoes. The TCB chair proposed giving the Tk110 crore directly to farmers instead of procuring potatoes, saying this would benefit them more.

Officials present at the meeting supported the TCB chairman's proposal. Agriculture Secretary Mohammad Emdad Ullah Mian and Commerce Secretary Mahbubur Rahman also endorsed it and cancelled the procurement decision.

The commerce secretary said at the meeting that if the money can be sent directly to potato farmers, genuine growers will benefit instead of middlemen. Therefore, offsetting their losses through subsidies is better than buying and selling potatoes.

Following this, Agriculture Secretary Mohammad Emdad Ullah Mian instructed the Department of Agricultural Extension (DAE) to prepare a database of genuine potato growers. Based on this instruction, DAE has prepared and submitted a nationwide farmer list to the agriculture ministry.

The committee formed under the agriculture secretary to review potato prices and recommend actions has also approved the cash support proposal. The committee includes the finance secretary, commerce secretary and food secretary.

A senior DAE official, requesting anonymity, said the list includes mobile numbers of 20,32,363 potato farmers across the country. It also specifies which mobile financial service account each number is linked to, as well as the acreage under each farmer's cultivation.

A senior official at the agriculture ministry said the existing budget incentive provides subsidised potato seed and fertiliser. This year, cash will also be provided. The cash incentive will be based on irrigation and labour costs per acre.

He said, "The agriculture ministry has sent a letter to the finance ministry seeking subsidy funds. Once the finance ministry releases the funds, they will be transferred to farmers' mobile accounts."

According to ministry data, annual national demand for potatoes for household consumption and for producing chips and other potato-based foods is 104 lakh tonnes. In FY2024–25, the country produced 115 lakh tonnes.

This year, production costs varied between Tk14 and Tk17 per kg depending on region. Cold storage rent ranged between Tk6 and Tk6.30 per kg, and transport to cold storage cost Tk1–2 per kg. Altogether, total production and storage costs amounted to Tk20–25 per kg.

However, due to excess production, market prices were very low this year. In July and August, potatoes sold for Tk13–14 per kg. The agriculture ministry now fears farmers may be discouraged from planting potatoes next season.

According to DAE sources, as of 31 October, cold storages across the country held 6.83 lakh tonnes of table potatoes and 8.27 lakh tonnes of seed potatoes. Farmers also have some potatoes stored at home. New potatoes will start arriving in the market in full scale by February.