Production glut, price slump leave potato growers in huge losses

Infographics: TBS

Potato farmers and stockists across Bangladesh are facing devastating financial losses this season due to plummeting market prices.

Experts attribute the price plunge to production exceeding targets, a limited export market, and poor market mismanagement.

The crisis is starkly illustrated by the plight of Abdul Halim, a farmer from the Kundarhat area under Nandigram upazila of Bogura, who cultivated potatoes on 26 bighas of land. He chose to store his entire harvest in a cold storage unit at the beginning of the season when market prices were low.

Halim's total investment was Tk28 per kg of potato. This included a production cost of Tk18 per kg, plus an additional Tk10 per kg for cold storage rent, labour, transport, sack costs, and tax. However, as the season ends, potatoes are being sold at the cold storage gate for a meagre Tk9-10 per kg.

"I managed to sell at Tk18 per kg at the beginning of June," Halim told TBS. "But towards the end, I had to sell at Tk9-10. The price was higher even at the very start of the season. Those who are selling now are losing at least Tk18-20 per kg, and even then, there are no buyers."

For Halim, this has resulted in a crippling loss of Tk15 lakh. "I have been cultivating potatoes for 12 years. I have never faced such a loss. I won't be able to cultivate potatoes on this much land next year. I have lost all my money this year," he lamented.

Mounting losses and unsold stock

The widespread disappointment affects almost all potato farmers and stockists. Even those who sold at the season's start incurred losses of Tk4-10 per kg, while those who held stock have suffered major financial blows.

Data from the Department of Agricultural Extension shows that approximately 1.3 crore tonnes of potatoes were produced this season from 5.24 lakh hectares of land against the government-set target for 4.67 lakh hectares.

The Department of Agricultural Marketing reported that the cost to produce one kg of potato this year was Tk14-17.

While potatoes are currently selling for Tk20 per kg in Dhaka's retail markets and Tk12 per kg wholesale in Karwan Bazar, prices at cold storage units across the country range from Tk8-10 per kg. Inferior quality potatoes are even being sold for as low as Tk4-6 per kg, with many struggling to find buyers even at these distressed prices.

The emotional toll of the crisis was evident at the Khondokar Seed Cold Storage in Bogura on Monday morning, where a businessman from Gaibandha was seen weeping as he exited the facility. 

The cold storage's managing director, Md Shahadat Hossain Saju, later confirmed that the businessman had stored Tk20 lakh worth of potatoes, only to find their current market value was just Tk1.80 lakh, as most of the stock had become unfit for consumption and was only suitable for feeding to cattle.

Saju also cited the example of Bishnu Mali, a businessman from Joypurhat, who borrowed Tk22 lakh to store 7,000 sacks of potatoes and is now unreachable. "If businessmen or farmers don't collect their potatoes from the cold storage, how will the cold storage rent come in?" he asked.

According to the Bangladesh Cold Storage Association, the country's demand for potatoes is about 90 lakh tonnes, and cold storage capacity stands at 45 lakh tonnes. As of last Monday, about 20 lakh tonnes of potatoes remained in 340 cold storage units, comprising 11 lakh tonnes of table potatoes and 9,00,000 tonnes of seed potatoes.

Cold storage operators in Bogura, Joypurhat, and Rangpur report that while typically around 70% of stock is sold by this time of year, this year less than 40% has been sold. Abdur Rashid, manager of Agro Art Industry and Cold Storage Limited in Sherpur upazila of Bogura, said, "Farmers are not coming to collect their potatoes from the cold storage due to the lack of price. Up to 70% of the potatoes are still unsold."

Government response criticised

Agricultural economist Jahangir Alam Khan views the entire potato price collapse as a management failure on the part of the government.

He told TBS, "It was evident right from the start of the season this year that potato production would be high. Naturally, if production is high, farmers won't get a good price. For this reason, the government should have procured 10-12 lakh tonnes of potatoes at the beginning. 

"We had been advocating for this from the start. Instead, we saw the government announce a plan to procure only 50,000 tonnes towards the end. This is simply too little."

Jahangir continued, "Another point is that only 60,000-65,000 tonnes have been exported. Given the scale of overproduction, the government failed to boost exports accordingly. Had the government been concerned about this issue from the outset, this problem would not have arisen."

The agriculture ministry had set a minimum price of Tk22 per kg at the cold storage gate on 27 August to address the price collapse and announced plans to purchase 50,000 tonnes of potatoes for storage and subsequent sale in October-November.

However, the ministry has not taken any initiative to enforce the minimum price, nor has the government purchased any potatoes from farmers or traders to date. Moreover, the government's announcement ironically discouraged farmers from withdrawing their stock, hoping for the announced purchase, which contributed to a further price slump.

Farmer Abdul Halim expressed his deep dissatisfaction: "The government spoke of buying 50,000 tonnes of potatoes but hasn't bought a single sack. This only confused the farmers, who held onto their potatoes."

The Bangladesh Cold Storage Association has now demanded incentives for the affected potato growers. The association's president, Mostafa Azad Chowdhury Babu, stressed that the planting season is fast approaching and that if the promised incentives for damaged potato growers are not provided by October, they will be of no benefit. 

He warned that the current losses leave farmers without the means to secure the necessary fertilisers, pesticides, and fungicides for the next cultivation cycle.