Most of cold storages struggling with financial crisis: Owners

Nearly 300 of the country's 400 cold storages are grappling with rising loans and defaults as well as operational costs, according to the Bangladesh Cold Storage Association (BCSA). 

At a press conference held today (8 February) at the BCSA office in Purana Paltan, cold storage owners expressed their concerns about the worsening financial conditions of the facilities and accused middlemen and vested groups of misleading the public regarding the rent of the facilities.

BCSA President Mostafa Azad Chowdhury Babu presented a written statement addressing the challenges faced by cold storage operators. 

He alleged, "Middlemen and vested groups have been misleading the public by claiming that the cold storage rent for potatoes has doubled compared to the previous year."

He clarified that last year's rent was Tk7 per kg, contrary to claims that it was Tk4, which he believes disrupted cold storage management.

The cold storage owners highlighted the sharp rise in operational costs, particularly in two key areas: bank loan instalments and electricity bills. Bank loan interest rates have increased by 15%, and electricity prices have risen significantly. Furthermore, additional costs such as loading, unloading, and staff salaries have also surged.

In response to concerns over storage rent, Mostafa explained that last year, a 50 kg sack was charged Tk350 at a rate of Tk7 per kg. However, some individuals stored 70-72 kg sacks but paid the same amount, effectively reducing the rent to approximately Tk5 per kg.

To prevent such irregularities, the association has taken steps to ensure fair practices this year, he added.

He stressed that these practices had deprived cold storage owners of rental income, as excess potatoes (15-22 kg) in the sacks reduced storage capacity by 20-25%. For instance, a cold storage facility with a 10,000-tonne capacity faced annual financial losses of Tk1.5 to 2 crore.

As a result, nearly 300 cold storage units in the country are struggling, with many now considered financially unviable. Several cold storage operators have even become defaulters.

The association initially set the potato storage rent for 2025 at Tk9.62 per kg, reflecting higher loan interest and operational costs. Addressing the rent increase, Mostafa confirmed that the rent for this year has been reasonably raised to Tk8 per kg, considering the rising operational costs.

He urged the Ministry of Commerce, the Ministry of Agriculture, and the Tariff Commission to verify the justification for this rent determination.

The association made five demands including a reduction of bank loan interest rates from 17% to 7% and diminishing electricity costs to Tk5 per unit to the government to lower potato storage rent.

Their demands also include removing VAT on cold storage expenses, abolishing source tax (TDS), and changing loan payments to annual instalments. 

Cold storage owners urged the government to declare the industry agro-based to help make storage costs more affordable for farmers.