Multiple agencies on ground, yet none forecasts agricultural demand or supply

Highlights:

• Potato overproduction caused a major price crash for farmers.
• Poor coordination among agencies leaves markets unstable and unprotected.
• No mechanism guides timely import-export decisions based on demand.
• Farmers suffered losses as production costs exceeded market prices.
• Experts urge creating a dedicated price commission for policy guidance.
• Commission could stabilise markets and protect farmers and consumers fairly.

Farmers cultivated potatoes on about 10% more land than the official target last season, driving output nearly 25 lakh tonnes beyond national demand and triggering an early-season price slump.

The crash was inevitable, yet the several government agencies responsible for market oversight neither forecast supply and demand nor formulate policies for agricultural commodities.

Experts said overlapping responsibility and weak coordination mean farmers and consumers gain little from these bodies. Poor coordination means they are rarely enforced, with each institution shifting responsibility to another.

There is also no institutional mechanism to recommend when to import or export specific products based on production and demand, or how to protect farmers' prices while safeguarding consumer interests.

They suggested forming a dedicated price commission to prevent such gaps. It would study demand and production, analyse national and international markets, and make timely recommendations.

Agricultural economist Jahangir Alam Khan told TBS that timely planning could have stabilised the market. Bangladesh usually decides to import when prices rise abnormally, but by the time imports arrive, prices seldom return to earlier levels.

"Conversely, when production is high and prices fall, the government takes virtually no action," he said. "Bangladesh needs a mechanism that recommends import and export volumes, tariff structures and timing based on production and demand, as is common in many countries." 

Infograph: TBS

Cost of poor planning

Interviews with growers and market monitoring show potato production costs this year ranged from Tk14-17 per kg, yet they sold for just Tk8-12. Those storing potatoes in cold facilities spent an additional Tk8-10 per kg, pushing total costs to Tk24-27, while cold-storage prices fell to Tk7-10.

Government and private estimates put annual domestic potato demand at around 90 lakh tonnes. According to Bangladesh Bureau of Statistics, 115.73 lakh tonnes were produced on 4.94 lakh hectares last fiscal year, up from 1.06 crore tonnes on 4.56 lakh hectares the previous year. 

Despite this surplus, no protective measures were taken for farmers. Late in August, the government announced plans to procure 50,000 tonnes, but the purchase never materialised. The announcement prompted many farmers to delay releasing stocks, worsening the market slump.

Meanwhile, despite falling international prices, rice in Bangladesh has risen steadily since August last year. Prices eased slightly after imports resumed in November 2024 but soon climbed again, leaving consumers paying Tk5-15 more per kg – a rise unprecedented in recent memory. 

Bangladesh typically imports a portion of rice each year to stabilise supply. However, no imports occurred in FY24, depleting government stocks to just 6.5 lakh tonnes by November. Even with record production and subsequent imports, prices remained high.

"Standard practice requires a minimum 15-day stock in government warehouses – around 12.5 lakh tonnes," said Jahangir Alam Khan. "When stocks fall below this, millers raise prices at the gate, closely monitoring supply themselves." 

He added that rice stocks come from imports and paddy procurement. No FY24 imports steadily reduced reserves, prompting mills to raise prices.

"Similarly, policy and planning gaps left potato and onion markets unstable throughout 2024. Domestic shortages persisted, and delays in timely imports forced consumers to pay higher prices all year," the expert noted.

Need for price commission

Multiple agencies and teams are tasked with monitoring essential commodity markets. On the policy side, these include the Department of Agricultural Extension, Department of Agricultural Marketing, Food Planning and Monitoring Unit (FPMU), Directorate of Food, the Commerce Ministry's Monitoring Unit, the National Consumer Rights Protection Directorate, and the Competition Commission. 

Jahangir Alam said that in many countries, specialised agencies study production and demand to advise governments on policy. "But who does this in Bangladesh? One agency shifts responsibility to another." 

He added, "A dedicated price commission would prevent such gaps. It would study demand and production, analyse national and international markets, and make timely recommendations. This would not be a regulatory authority but a body of senior researchers, academics, and experts."

Besides, the price commission could recommend fair price ranges based on actual production costs. "Currently, government-set prices are often based on private-sector cost estimates. A commission would establish minimum and maximum reasonable prices through independent research, ensuring security for both farmers and consumers."

Former agriculture secretary Anwar Faruq echoed this view, noting that countries including India and Pakistan have functioning Price or Agricultural Commissions. 

India, Pakistan, Sri Lanka, the European Union, the US, and the UK all maintain dedicated agencies to forecast demand and production and guide policy accordingly. Their core role is to stabilise market prices and safeguard the interests of both producers and consumers.

Vital roles for price commission

Nurul Alam Masud, secretary general of Food Security Network-KHANI, which has long advocated for an agricultural price commission, said forming an independent commission is crucial. 

"It would analyse production costs, supply-demand trends, and international market patterns to recommend season-based minimum and maximum reasonable prices to the government," he explained.

He suggested the government could initially form an advisory or pilot commission including farmer representatives, officials from the agriculture and commerce ministries, wholesalers, financial institutions, researchers, and civil society members.

He added that if the government also provides advance price support for small farmers, establishes direct procurement centres, expands cold storage and processing facilities, implements crop insurance, introduces a digital farmer registry, and promotes cooperative marketing, farmers would get fair prices, consumer costs would be contained, and national food security strengthened.

AHM Shafiquzzaman, president of the Consumers Association of Bangladesh (CAB) and Director General of the National Consumer Rights Protection Directorate, told TBS that while multiple agencies oversee markets, coordination is lacking. Small farmers cannot access bank loans and often rely on middlemen. 

"In the case of rice, many take advance payments from large millers or corporate buyers, forcing them to sell crops at predetermined prices. Millers then hoard stock and raise prices during the season," he added.

He further said these gaps must be addressed, and a price commission could play a vital role in ensuring security for both farmers and consumers.

When asked why the government has not procured potatoes, Food Secretary Md Masudul Hasan said the matter falls under the commerce ministry, not his own. On forming a commission to regulate prices, he added the idea is under discussion and the government will consider it. 

Attempts to obtain comments from the Director General of the Department of Agricultural Marketing were unsuccessful.