Potato price collapse: How to protect farmers?

The market price of potatoes has plummeted drastically. Depending on the quality, potatoes are selling for just 15 to 20 taka per kilogram. Farmers at the farm level are receiving only 10 to 12 taka per kilogram, even though the production cost is significantly higher. According to the Department of Agricultural Marketing, the production cost this year is 14 taka per kilogram. Farmers from different regions report that their cost ranges between 18 to 20 taka per kilogram. Adding a minimal profit margin, the farmgate price should be no less than 22 taka per kilogram. However, the current selling price is nearly half of that, leading to a severe financial crisis for potato farmers across the country. They have been protesting, submitting memorandums to the government, and even dumping potatoes on the streets to draw public attention to their plight.

Potatoes are the third most important food crop in Bangladesh, mainly consumed as a vegetable in rural areas. Around 20 years ago, the country produced 1.44 million tons of potatoes from just 130,000 hectares of land. Today, production has reached nearly 11 million tons, with the cultivated area expanding to about 455,000 hectares. Over the past two decades, potato production has grown at an average annual rate of about 7 percent. The expansion of cultivated land and the increase in yield per hectare have both contributed to this rapid growth. Domestic demand has also risen, fueled by advancements in potato processing, cold storage, diversified use, and the expansion of export markets—all of which have encouraged farmers to grow more potatoes.

According to official data, last year (2023–24), potato production was reported at 10.4 million tons. However, many experts believe this figure was exaggerated, with actual production likely between 8.5 to 9 million tons. Consequently, the supply was lower, and due to adverse weather conditions and floods reducing the production of other vegetables, vegetable prices soared, pulling potato prices up as well. Even importing potatoes could not curb the price hike. At one point, potatoes sold for 70–80 taka per kilogram, motivating farmers to expand cultivation this year. Favorable weather conditions also led to a good harvest.

The Department of Agricultural Extension reports that this year, potatoes were grown on 524,000 hectares of land—a 15 percent increase compared to the previous year and 12 percent above the target. Total production is expected to reach 12 to 12.5 million tons. Domestic demand, including for seeds, wastage, and exports, stands at around 9 million tons, leaving a surplus of 3 to 3.5 million tons. This surplus has resulted in a sharp price decline during the production season. Limited storage capacity, combined with farmers' need to cover production costs and repay loans, has forced them to sell potatoes at extremely low prices.

The country’s cold storage facilities are already nearly full, with marginal and small farmers securing only a tiny share. Many farmers are unable to obtain the necessary slips or permits to store potatoes. Those who have managed to secure storage access must wait for long, uncertain periods outside warehouses with their potato sacks. Moreover, cold storage owners have increased rental charges—raising storage costs from 4–5 taka to 8 taka per kilogram. After farmers' protests, the Department of Agricultural Marketing intervened and capped the rate at 7.75 taka per kilogram. Nevertheless, farmers remain dissatisfied, as transport and labor costs add further burdens, making storage even less viable. Consequently, many farmers are selling their produce at farmgate prices far below production costs.

Potatoes, being perishable, are often stored by traders and some farmers in cold storages, hoping for better future prices. Bangladesh currently has about 400 cold storages with a total capacity of roughly 5 million tons. Traditional farm-level storage methods account for a small additional amount, but overall, the country’s total storage capacity is about 6 million tons—half of this year's production. This supply-demand imbalance has led to a price crash, leaving farmers in despair. If the situation persists, it could discourage potato cultivation next year, resulting in reduced supply and higher prices, ultimately harming consumers.

To protect farmers, the government could take several measures. It could procure 1 to 1.2 million tons of potatoes at subsidized prices during the production season and store them in cold storages for release into the open market when prices rise. This would help stabilize prices. Additionally, at least 30 percent of cold storage space could be reserved for small and marginal farmers. The government could also subsidize cold storage fees for small farmers by 2 taka per kilogram.

Moreover, the government should similarly purchase and store at least 10 percent of the production of other crops like onions, chilies, and tomatoes at fair prices. These crops, too, have suffered price collapses at the farmgate level. For instance, the production cost of onions is 38 taka per kilogram, but farmers are selling them at 25–30 taka; green chilies cost 35 taka per kilogram to produce but sell for a maximum of 30 taka; tomatoes that cost 10–12 taka per kilogram are selling for just 7–8 taka. Once the production season ends, prices are likely to rise sharply, empowering middlemen syndicates. To protect both farmers and consumers, stronger government intervention is needed. In India, the government procures and stores 23 different agricultural commodities, while in Bangladesh, only paddy, rice, and wheat are actively procured.

One of the most effective ways to address the current potato price collapse is to increase exports. Bangladesh has been exporting potatoes for about a decade, but the volume remains small. In 2010–11, Bangladesh exported 39,539 tons of fresh potatoes. In 2011–12, it dropped to 18,862 tons. In 2022–23, exports totaled 28,572 tons, and last year only 12,000 tons. This year, exports have already surpassed 30,000 tons. Despite a 10 percent cash subsidy on potato exports, the total exported volume is less than half a percent of Bangladesh's total production.

Bangladeshi potatoes are currently exported to Singapore, Malaysia, Russia, Nepal, Sri Lanka, and several other countries. There is great potential to expand exports to the Middle East, Africa, and European Union countries. Bangladesh now contributes 2.7 percent of global potato production, but its share in global exports is negligible. Globally, the potato starch and flakes market is valued at around USD 20 million and is growing by 10 percent annually. Bangladesh must aim to capture a significant share of this market, which will require the development of local processing industries.

Bangladesh already has a comparative advantage in exporting raw potatoes. The country's granola and ester varieties are competitive in international markets. Thanks to research, newer exportable varieties are being introduced into the production system, offering strong prospects for future growth.

To boost exports, farmers must produce high-quality potatoes. Currently, about 40 improved varieties are cultivated at the farm level in Bangladesh. High-yield varieties are used on more than 80 percent of the cultivated land, but only 10 percent of the seeds are certified. The remaining 90 percent are uncertified. Farmers also lack proper knowledge in farm management, input usage, disease prevention, and pest control. Appropriate training is needed to address these gaps. Moreover, better processing, packaging, and storage infrastructure must be developed. Bangladesh loses 1–1.5 million tons of potatoes annually due to spoilage and pest damage. Reducing these losses and strictly enforcing quality control standards for exports are essential. Above all, the government must ensure access to loans and targeted subsidies for production, marketing, processing, storage, and export activities.

Potatoes are a popular food worldwide. In countries like New Zealand and the Netherlands, potatoes are a staple. However, in Bangladesh, potatoes are primarily seen as a vegetable rather than a main food item. Potatoes are notably absent from the official statistics on food grain production, consumption, and distribution. Traditionally, potatoes have been consumed mashed or cooked with fish and meat in Bangladeshi households. Potato fries and potato curry are popular, and recently, the use of potatoes in biryani has increased. In upscale hotels, boiled potatoes and chips are regularly served, and children love potato chips. Yet, potatoes have not been widely accepted as a staple food in the country. Items like roasted potatoes, boiled potatoes, and potato chips are still waiting to become popular alternatives to rice.

Encouraging greater consumption of potatoes is necessary, especially given the rising global prices of rice and wheat. To popularize potatoes, the government could organize potato fairs at the union and village levels, train women in potato-based cooking, and mandate the inclusion of potato dishes in all hotels and restaurants. This would increase domestic consumption and encourage farmers to produce more.

Historically, potatoes were used as animal feed. Native to Peru, potatoes spread to Spain in 1570, and by 1600, to Italy, France, the Netherlands, England, Ireland, Switzerland, and Germany. In 1975, England’s Ministry of Agriculture published a booklet titled “Love Potatoes, Use Potatoes,” promoting potato consumption. Following World War II, potatoes and sweet potatoes played vital roles in addressing global food shortages.

Sweet potatoes, in particular, became crucial for their versatility—edible raw, roasted, or boiled—and their ability to grow with minimal care in almost any soil. Potatoes yield more and offer higher profits compared to many other crops. They provide valuable starch and important nutrients. For all these reasons, potatoes are steadily gaining popularity in Bangladesh. Production is increasing, but a stable policy framework and financial support for farmers are essential for sustainable growth.

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