Home ›› 12 Feb 2022 ›› Front
Maksud Sheikh bought potato produced last year from a merchant, with each 50kg sack costing him Tk 250, to feed his cattle.
“A cow eats 10kg of potato a day which costs Tk 50, much cheaper than other animal feed. I feed my cattle potato two or three days a week,” he told The Business Post.
The cold storage owners sold each sack for Tk 150 to the merchants.
Maksud was collecting potatoes stored in Anam Cold Storage Limited at Ichapura under Sirajdikhan upazila of Munshiganj. Of the country’s 400 cold storages, 74 are located in the district.
Munshiganj produced 1.4 million tonnes of potato while the country produced 10.9 million tonnes in 2021.
“The majority of cold storages have unsold stock abandoned by farmers. The cheap potato is consumed by people and used as animal feed,” said Md Shohidul Islam, the manager of Anam Cold Storage.
Samrat Cold Storage has 17,000 sacks of unsold potato.
“The potato has became wastage and we are selling a kg for Tk 1. Farmers are buying from us to feed their cattle,” Md Rakibul Hossain Khan, Samrat Cold Storage Limited manager, told The Business Post.
It is a popular animal feed in Munshiganj, he said.
The storage manager claimed that the cold storage owners are losing a considerable sum of money that was given to farmers as loans. On the other hand, most farmers abandoned their produce in cold storages as prices nosedived.
“The cold storages suffered a loss of Tk 4 crore,” Rakibul claimed.
Cold storage owners lose money
Around 80 per cent of farmers take loans at 10 per cent interest from cold storage owners. But there’s a catch: they have to keep their produce in their cold storages after harvesting.
Cold Storage owners provide loans of Tk 200-300 for every sack of potato. Farmers have to pay Tk 200 more for storing each bag of potato for a season.
But the price of each 50kg sack has fallen to Tk 150. A farmer has to pay at least Tk 420 for getting a bag of potato out of the cold storage but he can sell it for only Tk 150 – a Tk 270 loss. So, farmers are abandoning potato at cold storages instead of releasing their produce.
Cold storage owners are left with no option but to sell potato at whatever price possible to minimise their losses.
Rakibul said that they had a 2 lakh sack storage capacity. “We provided loans to farmers and merchants for 1.8 lakh sacks. But farmers are not releasing potato,” he said.
“There is an unwritten rule in this sector that if a farmer fails to pay the loan, he can surrender the stored potato to the cold storage. In this case, farmers will receive nothing and on the other hand, cold storage owners will not get back the loan and rent,” he explained.
“We have paid Tk 1.30 crore in electricity bill for the season,” he added.
So far, farmers have abandoned 17,000 sacks of potato in the storage, while Anam Cold Storage has 4,500 sacks and Dholessory Cold Storage in Tongibari has 9,700 sacks. Almost all the cold storage had unsold potatoes.
The situation is similar in other parts of the country.
“In Rajshahi, around 50 per cent of advanced money has not been recovered from farmers,” Fazlur Rahman, Director of Bangladesh Cold Storage Association (BCSA), told The Business Post.
Fazlur, who owns five cold storages in Rajshahi, said they do not incur losses every year. “The farmers and cold storage owners can earn profit if the price of per kg potato remains around Tk 20, just above the production cost Tk 18,” he said. “Cold storage owners get the loan back with storage rent if farmers sell each sack potato at above Tk 420.”
He said he had given around Tk 6 crore in loan.
Last year, Rajshahi farmers produced 1.43 million tonnes of potato.
Farmers losing everything
It cost Sirajdikhan farmer Mosaraf Hossain around Tk 20 lakh to cultivate potato on 14 acres. He stored 4,500 maund in cold storage but lost interest to release his produce due to low market price.
“A 50kg sack’s rent for a season is Tk 200. Currently, each sack sells for Tk 150-170. I will lose Tk 250-270 per sack if I take them out. So, I decided to abandon them,” Mosaraf told The Business Post.
Numerous farmers like Mosaraf are losing their production costs.
“It costs around Tk 18-20 to produce a kg potato. Another Tk 2 is needed to take it to market. But the price never crossed Tk 15. How can I sell potato for a price lower than the production cost?” asked farmer Monir Hossain, who kept his potato in cold storage throughout the year.
Loan situation unclear
Cold storage owners are turning to various commercial banks after Bangladesh Krishi Bank stopped giving them loans since 2008 due to the increase of bad loans in this sector.
Mohammad Mainul Islam, Deputy General Manager and Head of Credit Department of Krishi Bank, said they were providing loans to potato farmers.
He could not immediately provide the amount of bad loans in the sector.
BCSA Secretary Mozammel Hoque Choudhury said they have no data on loans taken by their members from commercial banks.
“We are trying to reschedule the loans. We are uniting cold storage owners,” BCSA President Mosharaf Hossain said.
