Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The Bangladesh Cold Storage Association (BCSA) on Saturday demanded a cut in interest rates on bank loan and electricity bills to reduce costs for potato storage in the cold storage facilities.
It also demanded the facilities to be recognised as an agro-based industry to uphold the interest of potato farmers.
The trade body placed the demands at a press conference at the association office in the capital.
In a written statement, BCSA President Mostafa Azad Chowdhury Babu argued that the market prices of potatoes remained high in 2024 due to lower production than demand.
As a result, he said, farmers have cultivated potatoes extensively in 2025, leading to an estimated 40 per cent increase in production compared to the previous year.
New potatoes have already started flooding the market, and cold storage facilities will begin storing those by the end of February, he added.
Mr Babu said the interest rate on bank loans for cold storage operations has significantly increased, reaching around 15 per cent. If payments are not made on time, an additional 2.0 per cent penalty is imposed, raising the effective rate to 17 per cent.
Besides, the costs for electricity, loading-unloading, packaging, wages (including government-mandated minimum wages, bonuses, and other allowances), insurance, ammonia gas, lubricants, spare parts, and maintenance have also surged.
Considering these rising costs, the storage fee for potatoes in cold storage for 2025 has been calculated at Tk 9.62 per kg.
However, after financial analysis in the association's executive committee meeting on November 23, 2024, the storage charge was set at Tk 8.0 per kg, keeping in mind the financial capacity of farmers and traders.
The press conference was told that as per a 2017 High Court directive, potatoes should be stored in maximum 50 kg bags.
The storage fee set by the association in 2024 was Tk 7.0 per kg, meaning the cost for a 50 kg bag was Tk 350.
However, potato traders continued to pay Tk 350 per bag even when using 70-72 kg bags, resulting in cold storage owners losing rental income on 15-22 kg of potatoes per bag.
This practice has reduced the effective storage capacity of cold storage facilities by 20-25 per cent, the BCSA claims. As a result, an average 10,000-tonne cold storage suffers financial losses worth Tk 15-20 million.
Consequently, nearly 300 out of the country's total 405 cold storage facilities are struggling to repay bank loans and meet operational expenses, with many turning into financially distressed entities or even defaulting on their loans, he said.
Babu further explained that if the interest on a bank loan for a 10,000-tonne cold storage facility is converted into a per-kg cost, it amounts to Tk 5.86 per kg.
Meanwhile, with electricity expenses of Tk 1.10 per kg, the total preservation cost reaches Tk 6.96 per kg-this is the primary cost required for loan repayments (principal and interest) and electricity bills.
If cold storage facilities fail to pay electricity bills on time, the power supply is disconnected, causing stored potatoes to rot, leading to significant financial losses for both storage owners and traders, he said.
The association emphasised that to keep potato storage charges at a reasonable level for farmers, the government must recognise the cold storage sector as an agro-based industry and take measures, including reducing bank loan interest rates from 17 per cent (including penalties) to a maximum of 7.0 per cent and lowering electricity tariffs from the current Tk 13.62 per unit (peak hours) and Tk 9.62 per unit (off-peak hours) to Tk 5.0 per unit.
Other demands included withdrawal of vat on cold storage services, removal of tax deducted at source (TDS) on cold storage operations, shifting from quarterly loan repayments to annual installments to ease financial pressure on the storage owners.
However, thanks to this bumper harvest, potato prices have plummeted, with retail rates at Tk 8.0- Tk 12 a kg in rural areas and Tk 15-25 a kg in urban markets. Farmers hardly could realise the production costs now.
The BCSA's decision to raise storage rents from Tk 4.5-5.0 a kg to Tk 8.0 a kg has sparked concerns among farmers and traders.
While the official storage fees for a 50 kg bag has now been set at Tk 400, farmers and traders anticipate a 70-80 per cent rise in costs depending on the region.
But BCSA president Babu assured that even with increased storage rents, off-season potato prices will not exceed Tk 40 a kg in 2025. "If prices rise beyond this, you could hold me accountable," he added.