Reining in anarchic potato price

Price of potato like those of many other food items has soared to levels that cannot be rationally explained given the fairly good harvest and a lack of any visible supply-chain constraint. Since potato is one of the most demanded food items for all sections of the people, its abnormal price hike without any valid ground gives the impression that business syndicates have taken the consumers for a ride. The government, of late, has taken a move to collect information on potatoes' stock record from the private cold-storage facilities all over the country. A FE report says the commerce ministry has instructed the Bangladesh Cold-Storage Association to provide stock records for the last three years from 2021 to 2023. The purpose of such a move is understandably to find out whether sufficient quantities of potatoes have been released from the cold-storages to meet market demand. This may lend a picture if it is in short supply, in other words hoarding, that is causing the price spiral. What, however, remains to be assessed is that if it is a syndicated arrangement, as often alleged, to raise prices all over the country, stock-taking may end up as a self-limiting exercise. 

The price of potatoes has risen to Tk 45-55 per kilogram in Dhaka and other parts of the country in recent weeks. The current price is more than 61 per cent higher than a year ago and marks the highest level in four years since the August-October 2020, according to the Trading Corporation of Bangladesh (TCB). President of the cold-storage association has reportedly confirmed that traders who store potatoes in cold-storage facilities have significantly increased prices. He has been quoted in the FE report as saying that the gate price for cold-stored potatoes has now risen to Tk35, which he finds illogical considering that the season began with prices at Tk 16-18 per kilogram. Meanwhile, the rising price of potatoes has also driven up seed potato prices to Tk 70-90 per kilogram, which according to market experts may lead to a rise in production cost by Tk 2.0 per kilogram.

However, intriguing it may sound, it is true that there is no causal link between production and market price of potatoes. In August 2020, potato prices reached an all-time high of Tk 60-65 per kilogram. The agriculture ministry at that time claimed a record production of 10 million tonnes-a million tonne more than annual requirement of the country. The maximum demand for potatoes in the country is estimated at 8.5 million tonnes including 0.8 million tonnes for seeds. This year production has increased by 0.3 million tonnes to 10.4 million tonnes, according to Bangladesh Bureau of Statistics (BBS) data. Despite the increase in production, traders have raised prices nearly twofold in just four months.  

Reining in the potato price hike like those of many other kitchen market products appears to be too challenging once the trend starts rolling out. Common sense says that timely and efficient market monitoring and intervention by the authorities concerned can be a potential deterrent to artificial market crisis.