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Cold storage syndication blamed for record potato price hike

REZAUL KARIM AND YASIR WARDAD | November 07, 2023 00:00:00

A recent study by the commerce ministry has found a syndicate of cold-storage owners responsible for the record hike in potato prices this year.

However, a top cold-storage businessman denied any involvement in price manipulation. He claimed the government data on potato production was not accurate and pointed the finger at a severe data mismatch for the volatile market.

The study recommends that the Trading Corporation of Bangladesh (TCB) sell potatoes in the open market after releasing preserved produce from cold storage at government-fixed prices, with the involvement of the local administration.

The price of stored potato varieties has reached an all-time high of Tk 60-70 per kg in Bangladesh this year, surpassing the previous record of Tk 55-65 in 2020, according to the TCB and the Department of Agricultural Marketing (DAM).

The commerce ministry study was conducted between October 21 and 26 in potato hubs such as Rangpur, Dinajpur, Bogura and Jaypurhat. Two commerce ministry teams visited 21 cold storages in these districts.

The study, released on November 05, found that the faulty system of slips or cards given to potato preservers by cold storage owners is the key way to confuse government regulators about ownership of the produce.

"The teams found that farmers or traders who preserve potatoes are given a slip or card without the use of a National ID or other documents," the study said. "If a farmer sells their product, the new owner does not need to register their name or any identification in the cold storage."

This makes it difficult to trace the original owner of the potatoes and allows cold storage owners or traders to easily evade regulators, according to the study.

The teams found that 90 per cent of the potatoes at the time of the study were owned by cold storage owners or traders.

The report said that potatoes were being sold at Tk 38-40 per kg from the storages, against the government-fixed rate of Tk 26-27 per kg.

Cold storage authorities and those directly involved in the cold storage business were reluctant to provide accurate information.

The team also found that potatoes had been collected from farmers at Tk 10-12 per kg, while cold storage charges and demurrage costs amounted to Tk 2.00, meaning that the maximum cost of a potato should be Tk 17.00 per kg.

Traders could easily make a profit of Tk 10 per kg by selling potatoes at Tk 27 per kg, according to a report by the commerce ministry.

The report recommends that potatoes be released from all cold storage facilities at a government-fixed rate of Tk 27 per kg, with the involvement of the local administration.

"The TCB should get priority to buy potatoes at Tk 27 per kg and sell them at Tk 36 per kg; this way, the organisation would not need any subsidy," the report recommends.

Amid rising prices in the domestic market, the government last week approved potato imports. Despite claiming a surplus production of 2.0 million tonnes, the agriculture ministry given the import permit.

The Plant Quarantine Wing of the Department of Agriculture Extension has so far approved 161 entities to import 0.11 million tonnes of the tube.

A Plant Quarantine Wing official said some 1,700 tonnes of potatoes could be imported from India through different land ports.

Ranajit Saha, a trader at Rayer Bazar-Beribadh in Dhaka, said they have been sourcing potatoes from Munshiganj at Tk 46-48 per kg for the past week.

He said the small volume of imports has had no impact on prices so far, as the imported potatoes were being sold in the bordering districts.

Agriculture Minister Muhammad Abdur Razzaque said cold storage owners and their allied traders hoarded potatoes and raised prices "at their sweet will". He said the government approved imports to rein in prices.

Bangladesh Cold Storage Association (BCSA) President Mostafa Azad Babu denied the allegation of any kind of syndicate of cold storage owners behind the hike in potato prices.

He said storage owners had hardly stored 4.0 per cent of potatoes, which they had revealed to the commerce ministry, the agriculture ministry and law enforcement agencies much earlier.

He said that the agriculture ministry's data, which earlier said that production was 11 million tonnes, was far from reality. The agriculture ministry itself had said that 2.5 million tonnes of potatoes were stored in the country's cold storages in March-April.

The agriculture ministry's data showed that with production of 11 million tonnes and exporters sending 32,000 tonnes, farmers and traders should have over 8.0 million tonnes of potatoes.

However, the Cold Storage Association demanded a production of 8.5 million tonnes of potato in the financial year 2022-23, against the agriculture ministry's data of 11 million tonnes.

"November is the crucial month for cold storage owners and traders, who try to clear out the cold storage to prepare for next season's trade," he said.

He urged the agriculture ministry to provide authentic production data in time, which would minimise problems.

The TCB recorded a 30-40 per cent hike in potato prices in a week and the current price is 109 per cent higher than last year's.

Meanwhile, the first shipment of eggs from India has arrived in the country, reports UNB.

The price of an egg, including duty, is Tk 7.23. This egg entered Bangladesh through the Benapole land port in Jessore in a truck on Sunday.

The government issued import permits for 10 million pieces of eggs. In the first shipment, one private trader imported 61,950 pieces of eggs.

After being processed at the land port, the truck left the Benapole land port around 10 pm Sunday night.

According to Benapole Land Port Authority and Clearing and Forwarding (C&F) agent sources, Dhaka's BDS Corporation imported 61950 pieces of eggs in an Indian cargo truck as its first shipment after the Ministry of Commerce gave permission to import eggs.

The import price of an egg is estimated to be Tk 5.43, on which a duty of Tk 1.8 per egg is charged.

Director (Traffic) of Benapole land port Rezaul Karim said that the first consignment of eggs arrived from India in a truck Sunday evening. The eggs left the port around 10 pm when they were transferred from the Indian truck to the Bangladeshi truck.

Syed Mahidul Haque, representative of C&F agent ME Enterprises of the egg importer, said transport costs will be added to this, he said.

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