The collapse of potato prices has worsened the ratio of unproductive loans to Rajshahi Krishi Unnayan Bank (Rakub), which has lent much to potato growers and chamber owners cold.
The bank was supposed to reduce its default borrowing of Tk 400 crore in one year according to the terms agreed with the Bank of Bangladesh. In reality, it has grown to about Tk 224 crore.
At the end of June, Rakub's total default loans were 1,200 crores of Tk, up 23.02% over the previous year, according to BB data.
"The significant rise in defaulting loans was due only to the massive fall in potato prices on the wholesale market," said Dr. Muin Uddin, Rakub's Managing Director. .
Subsequently, potato growers and cold room operators suffered enormous losses and defaulted on Rakub.
Short-term loans were granted at the beginning of the year and were to be made in June-July, according to Muin Uddin
But small businessmen could not repay the money because the wholesale price of potatoes dropped to about 4 tk per kilo in July compared to 6-7 tk in January-February.
"Curiously, the price of potato on the retail market is still high at Tk 20, which is almost the same as last year," said Muin Uddin, calling on the government to investigate on the big difference in price. ]
He added that Rakub 's default loans would decrease by the end of the year as the small business owners concerned would benefit from an extension of the loan rescheduling facility.
Qamrul Hussain Chowdhury, Vice President of the Bangladesh Cold Storage Association (BCSA), blamed the rise in production for the collapse of prices on the wholesale market.
This year, the production of potatoes has been of a tons crore against an expected consumption of 80-85 tons lakh.
Chowdhury said that the retail price of the potato is very low compared to the price of rice, which is Tk 70-80 a kg. Rice is the first staple crop in Bangladesh and potato the second.
It costs 16 Tk to store a kg of potato in the cold store while the wholesale price oscillates between 6.39 Tk and 8.13 Tk, he said.
This year, potato growers will have losses of 7,000 crores Tk to 8,000 crores Tk, according to Chowdhury.
Subsequently, he urged the government to provide support to farmers. "Otherwise they will lose the financial capacity to produce the crop next year," he added.
According to the BCSA, between 15 and 20 million tons of potatoes will remain unsold by the end of the year. Farmers and traders have preserved 53 million tonnes of tubers in cold storage this year, up 32 percent from one year to the next. To date, only 10% of the tuber has been marketed.