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Bangladesh: Rising utilitiy costs impact on potato storage rates

An increase in the price of cold storage is going to cost farmers and seasonal stockists an additional Tk2 billion in 2012, triggering concerns amongst potato growers.

Officials of the Bangladesh Cold Storage Association said that the price increases in utilities is behind the price rise. 

In the first week of February, the BCSA raised potato storage charge by Tk 45 per sack (80 kg) to Tk 320 following a government price increase in power tariffs. There is another similar rise planned for this month.

The BCSA officials said nearly 3.6 million tonnes of potatoes are stored in the 390 cold storages of the country.

If the fare is raised further, the cost of the produce will also go up.

Kanak Kanti Roy, a farmer at Duhuli village in Nilphamari Sadar upazila, said that he stored 30 sacks (per sack 85 kg in the area) of 'granola' potatoes in his neighbouring Ankur Seed Cold Storage Ltd at a rate of Tk 275 per sack. "I stored potato in November following the massive price fall of my produce (Tk 160 to 180 per sack). Now the price is between Tk 400 and Tk 425 per sack while the cold storage fare has been increased to Tk 320".

However, Roy said that he incurred substantial loss this year as he sold out nearly 195 maunds (per maund 40 kg) of his produce at Tk 80 per maund against the production cost of Tk 200. Roy said many of the farmers left their ownership of potato stored in the cold storages as the market price of the produce was much lower than the cold storage charge. "I'll also have to renounce my claim of the produce if the cold storage price increased and the market price of potato remained low," he said.

The BCSA Chairman Md Jasim Uddin said that association had been lobbying the government in regards to the utility costs. "We have been demanding a 20 per cent incentive in electricity since 2007 as cold storage is an agro-based sector, but the government never responds," he said.

"The sector is also deprived of the facility of single digit bank interest rate (now 18 to 19 per cent) which is also forcing many cold storages to close down," he said.

Bangladesh Energy Regulatory Commission (BERC) raised electricity tariff for retail consumers up to 23.94 per cent in two phases in December 2011 and in February 2012 that has upped the cold storage maintenance cost substantially. BCSA officials said nearly 1.0 million tonnes of potato has been destroyed this year as the price witnessed a massive fall and many owners abandoned their produce. The Department of Agriculture Extension (DAE) has estimated that potato production was 8.38 million tonnes in 2010-11 season while the target has been fixed at 8.7 million tonnes in 2011-12 season.

Source: www.thefinancialexpress-bd.com/

Publication date: 3/5/2012


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