More cultivation, huge surplus lead to potato price collapse

High prices of potatoes in 2022-2023 encouraged farmers around the country to increase cultivation of potatoes in 2024-2025 season. This led to the highest production in history.

11.5 million tonnes of potatoes were produced in the last harvesting season, far more that the annual demand of 8 million tonnes. This has resulted in a massive fall in the potato price, according to sources in the field.

The farmers in the major potato-growing region of the north fear that a significant portion of the potatoes produced in the previous season might not be sold. Some farmers sold their produce at less than Tk 10 per kg, far less than production cost.

Many farmers who have stocked their produce in cold storage may not reclaim their potatoes as they are unlikely to recover the cost of production, let alone the cost of cold storage.

The price of potatoes received by farmers in Rangpur region was Tk 12-13 per kg in the first week of September. The production cost of potatoes was estimated at Tk 16-17 per kg, and cold storage costs an additional Tk 6 per kg. So, a farmer's total cost is Tk 23-24 per kg.

"Producing each kg of potato at a cost of Tk 16-18, I managed to sell 400 bags (each containing 60 kg) for Tk 12-13 per kg immediately after harvesting. Some 750 bags are in a cold storage but I could not find space for storing another 550 bags because of bumper production, and I was compelled to sell at Tk 7 per kg," said farmer Golam Mostafa (48) of Babu Khan area in Rangpur Sadar. In late 2024, he sold potato at a rate of Tk 70 to Tk 140 when demand was higher than supply.

He then leased land and planted potatoes on 22 acres, expecting the high price to continue. He harvested 3700 bags of potato in the last season. For storing potatoes he has to spend around Tk 6 per kg, and the current market price suggests he would not be able to recover the production cost. His total loss may stand at about  Tk 2.2 lakh.

Kawsar Alam (38), a farmer of Tepa Madhupur in Kawnia upazila, who cultivated potato on 26 acres of land, said farmers would not be able to repay the money they owe to shopkeepers for purchases of fertilizer and pesticides. He says that as a result, many farmers will not plant potatoes in the coming season, and potato cultivation will fall. He said that unless the government assists farmers in paying the money owe for cold storage, farmers will not be able to pay, and the owners of cold storage facilities will also face losses.

Majedul Islam (40), manager of Kishan Himagar in Rangpur Sadar, said the cold storages were full of potatoes, and they could not accept potatoes from many farmers because of massive production. "We stored 153,000 bags of potato but could not receive another 30,000 bags.  We apprehend the stocks of potatoes may not be finished before the next season begins," he observed.

President of Bangladesh Cold Storage Association Mostafa Azad Chowdhury Babu told this author that only 800,000 tonnes of 3.5 million tonnes kept in 339 cold storages have been sold. "The government announcement of fixing minimum price at Tk 22 a kg has backfired." The farmers are not reclaiming potatoes from storages, as they are hoping for the higher price announced by the government. The traders are buying potatoes from the stocks which farmers have kept at home, which are being sold at a lower price, which must be sold before they spoil.  He says that the market price depends on demand and supply, and if the government dictates a maximum or minimum price it does not work. He also says that as there are thousands of players, he does not think anyone can manipulate the price. He suggested that to increase the demand for potatoes, the government should distribute potatoes to people who receive rations, just as it does with wheat flour (atta).

Asrar Chowdhury, professor of Economics at Jahangirnagar University, explained that the price of potatoes and other agricultural commodities today depends on decisions made in the previous planting season.  

Last year, the price of potatoes was high because the supply was not enough.  So farmers planted more acres with potatoes, expecting the high price to continue this year. Because thousands of farmers made the same decision, far more potatoes were produced. This has led to the excess production and a fall in the price of potatoes this year. As there are more stocks, those owning stocks are forced to sell at a lower price.

Prof Asrar says, the low price of potatoes this year will discourage many farmers from planting potatoes, which will probably result in a higher price next year. If that happens, the government might decide to import potatoes next year. He said that governments often respond to a surplus or a shortage by trying to dictate the price, but this often does not work.