The government has set the price of potatoes to supply the kitchen item at a lower cost to the consumers. But it is not possible to control the market by fixing prices in the free market economy. It would be better for the government to find out any other effective means to control the price.
It is not a right approach to blame the cold storage owners and traders for the spiralling of prices instead of finding the root cause of potato price hike. Fixing prices or punishing traders risks damage in the supply chain in the long term.
Currently, 40 per cent of the potatoes stored at cold storages is of the farmers and remaining 60 per cent is of the hoarders and wholesalers. Fifteen per cent of the amount of farmers’ potatoes is the seeds. If a trader sells potatoes at the price the government has set at the cold storage level, he will be deprived of making Tk 500 more profit per sack. The traders cannot accept that. That is why the farmers and wholesalers have almost stopped selling potatoes. We cannot force them to sell the potatoes if they do not do so.
The government set the price of potatoes in the same way in 2020 but could not control the market that time either. The government has talked about auctioning the potatoes stored at cold storages. But it is the hoarders and wholesalers who would buy the potatoes from the auction.
The government is also speaking about importing potatoes. Maybe the price will come down due to import but there is risk of traders’ incurring loss for that. In that case they might quit the business, and if the farmers also decrease production, this will create a crisis in supply. The price will remain under control if the government buys potatoes and releases it in the market gradually at the beginning of the season. But that too is not possible until the next season.
As a result, the ongoing crisis will not be resolved by trading blame and glaring at the traders. The government should have taken the current steps in July, which could have kept the prices under control.
In this situation, the government will have to adopt practical methods. We have lists of traders who have stored potatoes at cold storages. It would be better to control the prices by discussion with potato traders through local administration and people’s representatives. I do not see any other better alternative than this.
* Mostofa Azad Chowdhury is the current president of Bangladesh Cold Storage Limited
** The opinion was published in the print and online edition of Prothom Alo and has been rewritten in English by Shameem Reza