Government steps to tackle potato market

The price of potatoes has risen significantly. Currently, limited quantities of early-season new potatoes are entering the market. Potatoes are also being imported from abroad. Yet, their prices remain high. In the retail markets of Dhaka, good-quality Granola potatoes are selling at 70 Taka per kilogram. Diamond variety, egg-shaped potatoes are priced at 75 Taka per kilogram. The Cardinal variety, reddish potatoes, are being sold at 80 Taka per kilogram. New potatoes are priced at 100 Taka per kilogram. Just a month and a half ago, the price of potatoes was around 50-60 Taka per kilogram. The harvest season ended about 9 months ago, and now it is winter. While the prices of various vegetables have decreased, potato prices remain high. The required amount of potatoes is not being released from cold storage. The peak production season for potatoes is still about a month away. Therefore, a supply shortage is being felt in the market, leading to high consumer prices. There are also business manipulations at play. The government does not have a reserve of potatoes, nor do they have cold storage. As a result, the government is unable to intervene in the market. In this situation, it is difficult to reduce the price of goods by merely talking and inspecting the market.

Potatoes are the third major vegetable in Bangladesh. Twenty years ago, the total production of potatoes in Bangladesh was 1.44 million tons, cultivated on just 1.3 lakh hectares of land. Currently, in the 2023-24 period, potato production has risen to nearly 10.6 million tons, with the area under cultivation reaching approximately 1,126 acres. Over the past 20 years, potato production has increased by an average of nearly 7 per cent per year. This rapid increase in total production has been driven by an expansion in the area under cultivation and higher yields per hectare. Alongside this, the domestic demand for potatoes has also risen.

The growth of the potato market value has been influenced by advances in processing, frozen storage, diversification in use, and the expansion of export markets. Additionally, the rising costs of agricultural inputs have increased potato production costs. The increase in the prices of oil and electricity has led to higher storage and transportation costs for potatoes.

For other staple crops such as rice and wheat, a support price is set during the harvest season, and the government purchases 5-6 per cent of the crops at that price. This helps create some stability in the market during the production season. Later, when prices rise, food grains are sold at a relatively lower price from government reserves. However, there is no such government intervention in the case of potatoes. At the start of the season, the price is low, but it increases later, and the government has no control over this price rise.

This year, due to higher potato prices, cultivation is expanding, and production will increase. To stabilize the market and ensure a steady supply of potatoes, it is necessary for the government to collect and store 5-7 lakh tons of potatoes. Since potatoes are perishable, traders often store them in cold storage in anticipation of higher future prices. Currently, there are nearly 400 cold storage facilities in Bangladesh, with a combined capacity of about 6 million tons. Farmers also use traditional methods to store some potatoes and seeds, but these methods are not optimal, so the amount of traditional storage is limited. According to government data, this year’s potato production has reached 10.6 million tons.

Traders have claimed that the reported potato production figures are exaggerated and inflated. They argue that this year’s production is lower than the target, with the total production estimated to be between 8.5 to 9 million tons. Taking the average of these two figures, the actual production is likely to be around 9.5 to 10 million tons. Bangladesh's internal demand, including seed, waste, and export, requires about 8 to 8.5 million tons of potatoes, meaning there is a surplus of nearly 1.5 million tons.

Currently, the total potato stock in cold storage and traditional storage by farmers is around five lakh tons. Despite this, the supply of potatoes at the consumer level has decreased significantly, and the price has risen drastically, which is highly unreasonable. Traders and cold storage owners are suspected of manipulating the market. A syndicate is believed to be active in this regard, and government intervention in the potato market could have prevented such manipulations. However, due to the absence of government measures for potato storage and stockpiling, market intervention has not been possible.

It is estimated that the production cost of potatoes per kilogram is around 11 Taka. The average price at the farmer level is about 15 Taka per kilogram. When storage fees, wastage, transportation, and marketing costs are added, the wholesale price could reach around 25 Taka per kilogram. At the retail level, the price should be 30-35 Taka per kilogram. Imported potatoes should not exceed 35 Taka per kilogram, yet the current retail price of potatoes at 70-75 Taka per kilogram is highly abnormal. This is the highest price in the last five years. In 2020, potato prices also surged unexpectedly, and a survey conducted by the Bangladesh Agricultural Research Council under my supervision revealed that the price hike at that time was due to unethical practices by traders and slow release of potatoes from cold storage. This year, a similar situation has occurred. As usual, there is a surplus of potato production, and the country’s internal stock is also in good condition, with imports continuing. However, the price increase in the market is due to the manipulation by traders.

For nearly a decade, Bangladesh has been exporting potatoes abroad, but the volume has not been significant. In the 2010-11 fiscal year, Bangladesh exported 39,539 tons of fresh potatoes. In 2011-12, the amount was 18,862 tons. By the 2022-23 fiscal year, exports had decreased to 28,572 tons, and in the 2023-24 period, exports further dropped to 12,352 tons. In contrast, Bangladesh imported 98,000 tons of potatoes. To ensure an adequate supply and control prices in the domestic market, potatoes are being imported this year as well, with permission granted to import 161,000 tons. Bangladesh, once known as an exporter of potatoes, has now become a net importer. To encourage imports, the import duty on potatoes has been reduced from 25 per cent to 15 per cent, and the regulatory duty of 3 per cent has been waived. Despite these measures, the price of potatoes in the domestic market is still higher than that of rice.

In most years, a large quantity of new potatoes enters the market towards the end of December, but this year, both production and supply have been lower. The delay in potato cultivation was caused by excessive rainfall in October. Subsequently, there was a shortage of seeds. Bangladesh requires about 7.5 lakh tons of potato seeds, of which the Bangladesh Agricultural Development Corporation (BADC) provides 37,000 tons, and private traders supply 50,000 tons. The remaining seeds are stored by farmers. Due to the increased price of potatoes, many seed potatoes were sold as food potatoes, leading to a seed shortage. In some cases, seed potatoes were sold for as much as 100 Taka per kilogram in the market. Additionally, the cost of chemical fertilizers has risen, further increasing production costs for farmers. As a result, potato prices are expected to be high during the peak production season, with retail prices potentially reaching 35-40 Taka per kilogram.

Currently, nearly 40 improved varieties of potatoes are being cultivated by farmers in Bangladesh. High-yielding potato seed varieties have expanded to over 80 per cent of the cultivated area, but the use of certified seeds by farmers remains low, at just 10 per cent. The remaining 90 per cent of seeds used are non-certified.

There is a lack of proper knowledge among farmers regarding good farm management, the correct use of resources, disease prevention, and pest control. To address this, farmers need suitable training. Additionally, improvements are required in processing, packaging, and storage infrastructure. Every year, around 1 to 1.5 million tons of potatoes in Bangladesh are wasted due to spoilage, diseases, or pest attacks. This wastage must be reduced to lower potato prices.

Potatoes are a popular food worldwide. In countries like New Zealand and the Netherlands, potatoes are a staple food. However, in Bangladesh, potatoes are often not included in the main diet of people. Even official statistics on food production, consumption, and distribution in the country typically do not include data on potatoes. Here, potatoes are primarily recognized as a vegetable. Historically, people have consumed potatoes as a side dish with rice or with meat and vegetable curries. Furthermore, fried potatoes and aloo dum (spiced potatoes) are enjoyed by many. Recently, potatoes have seen increased usage in biryani. In high-end restaurants, boiled potatoes and potato chips are regularly served. Potato chips, in particular, are a favorite snack among children and teenagers.

There is a lack of proper knowledge among farmers regarding good farm management, the correct use of resources, disease prevention, and pest control. To address this, farmers need suitable training. Additionally, improvements are required in processing, packaging, and storage infrastructure. Every year, around 1 to 1.5 million tons of potatoes in Bangladesh are lost due to spoilage, diseases, or pest attacks. This wastage must be reduced to lower potato prices.

Potatoes are a popular food worldwide. In countries like New Zealand and the Netherlands, potatoes are a staple food. However, in Bangladesh, potatoes are often not included in the main diet of people. Even official statistics on food production, consumption, and distribution in the country typically do not include data on potatoes. Here, potatoes are primarily recognized as a vegetable. Historically, people have consumed potatoes as a side dish with rice or with meat and vegetable curries. Furthermore, fried potatoes and aloo dum (spiced potatoes) are enjoyed by many. Recently, potatoes have seen increased usage in biryani. In high-end restaurants, boiled potatoes and potato chips are regularly served. Potato chips, in particular, are a favorite snack among children and teenagers.

However, as a staple food, potatoes have not been widely adopted in Bangladesh. Potatoes are mostly consumed as a side dish. The use of potatoes as an alternative to rice, such as in the form of roasted potatoes, boiled potatoes, or potato chips, is still not popular among the general public. Encouraging this change is important. It is necessary to make people aware of the nutritional value of potatoes and promote their various uses as a food item. To achieve this, potato festivals should be organized in every union and village, where women from each neighborhood should be invited to learn about the diverse uses of potatoes in cooking. This could help in promoting potatoes as a more central part of the Bangladeshi diet.

Historically, potatoes were used as animal feed. Their origin is in Peru. In 1570, they spread to Spain. By 1600, potato cultivation had expanded to Italy, France, the Netherlands, England, Ireland, Switzerland, Germany, and other countries around the world. In 1975, the UK’s Ministry of Agriculture published a booklet titled "Love Potatoes, Increase Potato Usage." After World War II, in response to global food shortages, the importance of potatoes as a food source grew. Both Fingerling potatoes and sweet potatoes played a significant role in addressing post-war food crises, with sweet potatoes having a particularly notable role. They can be eaten roasted, boiled, or even raw. Potatoes can be grown in any soil with minimal care. They yield more than any other crop and provide higher profits. Potatoes also supply starch and are rich in nutrients. For these reasons, potatoes are gradually becoming more popular in Bangladesh. Their demand is increasing, as is the area of cultivation and production, leading to greater profits. To ensure this trend continues, sustainable production and storage policies should be in place. At least 5-7 per cent of the total potato production should be stored by the government, which will help stabilize supply and prices.

Dr. Jahangir Alam: Agro Economist, Former Director General of the Bangladesh Livestock Research Institute, and Former Vice Chancellor of the University of Global Village.