Potato prices skyrocket as production slumps

Infographic: TBS

Just a couple of years ago, farmers in the northern region were struggling to sell their potatoes due to low prices. Now the situation has flipped entirely, with potato prices surpassing even those of coarse and medium-quality rice.

The Ministry of Agriculture attributes the price hike to a significant potato production deficit. This shortfall has made it difficult to control the market, even with potato imports. Current potato stocks are only expected to last until September, leaving a significant gap before the next harvest.

Potatoes are currently selling at Tk60-65 per kg, slightly down from the recent high of Tk70. Businessmen and regulatory bodies fear the situation could worsen in the coming months.

Bangladesh previously had a stable year-round potato supply through cold storage facilities and robust production exceeding demand. The country even had export ambitions. However, those plans seem pretty distant now.

Import delays and production shortfall

Despite government approval, potato imports are lagging far behind expectations. Only 97,220 tonnes have been imported since October 2023, against the approved quota of 5,83,711 tonnes.

The monthly demand for potatoes is estimated at around 6 lakh tonnes. High potato prices in India, a major source of imports, are blamed for the sluggish import pace.

Heavy rainfall caused by cyclones Michaung and Midhili earlier this year is another factor contributing to the production shortfall.

Excessive rain damaged potato seeds in Munshiganj, the country's leading potato-producing district, leading many farmers to harvest immature potatoes early to capitalise on higher prices. This ultimately reduced the overall yield.

Cold storage owners claim potato production this year did not exceed 70 lakh tonnes, which falls short of the estimated demand of 90 lakh tonnes for table potatoes.

The Department of Agricultural Extension, however, maintains that production is over 1 crore tonnes. This discrepancy adds to the confusion surrounding the situation.

Traders cite excessive rainfall, along with government incentives for other crops like maize and mustard, as reasons for the decline in potato cultivation. They believe farmers may have shifted to these crops, a trend not reflected in official statistics.

Govt response and market concerns

Mostofa Azad Chowdhury Babu, president of the Cold Storage Association, told The Business Standard, "This year's potato production fell short of demand, leaving 20% of storage capacity unfilled. Imports are also not happening because potato prices are high in India as well."

He added that potatoes are currently stored in cold storages at Tk25-35 per kg, up from Tk11-12 previously. Most of the potatoes have been kept by the farmers themselves, and they are being sold at Tk45-46 per kg at the storage gates, fetching good prices for farmers.

However, he expressed concern that the market may become even more volatile towards September-October.

On 12 June, the Ministry of Agriculture forwarded meeting minutes to the Ministry of Food, Commerce, Fisheries, and Livestock, highlighting a drop in potato production. The Business Standard obtained a copy of these minutes. 

The meeting, which included these four ministries, took place on 27 May. During discussions, there was agreement that removing the entire 33% import duty on potatoes could speed up imports and storage, potentially stabilising the market.

However, despite these deliberations, the Ministry of Commerce has not put forth any proposals to lift the duty, even over a month after the meeting.

On 27 June, Commerce Secretary Md Selim Uddin told The Business Standard that he was unaware of any actions taken to reduce the import duty.

Meanwhile, during the inter-ministerial meeting, Agriculture Secretary Wahida Akter attributed the rise in potato prices to this year's production shortfall. She noted that the current potato stocks in cold storages and with farmers would only suffice to meet demand until September.

"Additional potato imports may be necessary to meet this year's demand," she stressed.

Uncertain future and contrasting past

With Bangladesh's new potato season not starting until February, consumers must wait until then for prices to potentially lower. Early varieties are available in December and January but come at a higher cost.

During the inter-ministerial meeting, State Minister for Commerce Ahasanul Islam Titu expressed concern over soaring potato prices and urged swift removal of import duties. He also flagged discrepancies in production data from the Ministry of Agriculture.

Despite extensive discussions, the government has yet to take decisive action to reduce import duties or effectively regulate the market.

Last September, when potato production costs peaked at Tk11, the Ministry of Commerce capped prices at Tk35-36 per kg. This year, production costs vary regionally, reaching up to Tk19.

A source at the Ministry of Commerce said that while talks included waiving import duties and building large reserves, no concrete actions were taken.

Previously, potato prices in India were lower, but they have since risen to Rs35 per kg. Factoring in a 33% import duty, potatoes would enter the Bangladeshi market at approximately Tk70 per kg, the source added.

According to the Department of Agricultural Extension, potato production was 1.04 crore tonnes in 2022-23, slightly up from 1.01 crore tonnes in 2020-21. Preliminary estimates for 2023-24 suggested a production of 1.01 crore tonnes, potentially adjusted to 97-98 lakh tonnes in the final report.

Badal Chandra Biswas, Director General of the Department of Agricultural Extension, downplays concerns, saying "There is no crisis in potato production. It's all about management. If we can manage it properly, there will be no problem in the market."

Despite Bangladesh's history of exporting 28,000 tonnes, 80,440 tonnes, 64,780 tonnes, and 54,330 tonnes of potatoes in 2022-23, 2021-22, 2020-21, and 2019-20 respectively, the country now paradoxically imports potatoes to meet domestic demand.