DEMAND, SUPPLY AND REASONS FOR PRICE HIKE OF POTATO IN BANGLADESH

Demand, Supply and Reasons for Price Hike

Abstract

The objective of the study is to find out the factors behind the supply, demand and thereby prices of potato and explore the existence of syndicate in the market. The study is mainly based on secondary data. Additionally, some qualitative data were collected through FGD and KII from Bogura, Rangpur and Munshiganj areas. The area, production and yield of potato grew by 4.58%, 6.61% and 1.95%, respectively per annum since independence. The production of HYV potato rose sharply, while local one rose at a slower pace. Potato production exhibits high fluctuation with roughly three years’ cycle, which sharply decreased in the recent past. The nominal prices of potato witnessed upward trend, while real prices experienced downward trend since independence. There exists wide seasonal price variation of potato with the lowest price in March and the highest in December. Potato market seemingly integrated as prices at all levels move together. The rising trend of potato prices seems to be halted after re-fixing prices by DAM. Real prices displayed wide price variation as volatility index stands at 73.16%. The total surplus of potatoes in 2020 stands at 3.40 lakh MT which is much lower than the previous years. The profit earned by the potato growers was estimated at around Tk. 1.1 million /ha. The estimated DRC implies that Bangladesh had comparative advantage in potato production for export promotion. In 2020, 73% capacity of 392 cold storages in operation is utilized. It is concluded that main cause of the price hike was the artificial crisis created by some profit seeking traders rather than the low production and higher consumption of potato in the country. Fixation of price, regular market monitoring and taking legal action to the artificial crisis creators may be the way of avoiding unexpected price hike of potato in the country.