Sherpa Hossainy's Blog

Move on diverse use of potato

Posted in Agriculture, Bangladesh, Export and Import by Sherpa Hossainy on November 5, 2011

Published in The Independent on 3 November 2011

Read the article on Independent website

Digital print version

An agro processing company is set to resume its starch-making factory to use the huge stockpile of potatoes in cold storages in northern Bangladesh, a move to avert an alarming overstock situation to save farmers.

Flamingo Agro-tech Ltd will restart its operation from mid-November in Joypurhat district, the largest potato growing area in the country. The factory will require 220 tonnes of potato everyday, officials of the company said.

The $5.5 million (Tk 420 million) factory, which started in 2005, was forced to shut down a few months ago after operating for only two and a half months following a long break.

Flamingo Agro-Tech Ltd factory

“We always had to stop our operation from time to time because banks were unwilling to give us working capital and there was also lack of government subsidies on potato cultivation and exports,” said Abdul Kader Siddique, Flamingo’s managing director.

“The situation is so dire now that we have to come forward and save the farmers, even though the banks and government don’t understand the gravity of it; otherwise farmers will lose interest in potato cultivation,” he said.

A few months earlier, farmers started to store Diamond and Rosetta type potatoes in cold storages hoping to make more profit. But amid potato price-drop and diminishing  demand, farmers are left with a huge stockpile with few or no potential buyers.

There is an approximate stock of 70,000 tonnes of potatoes in all the 13 cold storages in Joypurhat, which have capacity to store 103,045 tonnes, cold storage owners said.
Production cost of every sack (84 kg) of Diamond and Lady Rosetta including storage charge is about Tk 1,000 but those  are sold at a maximum of Tk 600 per sack now because of the demand-drop, they said.

“Upon observing the market and considering the farmers’ condition, Flamingo decided to buy Rosetta and Diamond type potatoes from the farmers and resume production at the factory,” Siddique said.

The company has one starch-making and three potato flake factories in the country that demand over 2-3 lakh tonnes of potatoes every year, the official said.

Siddique said the government should have encouraged diversified use of potato long time ago and should have provided proper incentives.

“In China farmers get 10 per cent incentives only on cultivation, plus there is export incentive. Rather than giving us incentive, the government took down the existing 30 per cent incentive to 20 per cent,” he said.

Siddique said potato, other than consuming it as vegetable, has versatile uses in fast foods, noodles and pharmaceuticals and Bangladesh should bank on the rising demands of diverse use of potatoes.

“We export starch to Japan, South Korea, Vietnam and the Middle East. If the factory runs all year round we can earn around $6-7 million a year by exporting 12-14,000 tonnes of starch,” Siddique said.

A labourer working inside Flamingo Agro-Tech Ltd factory

“I’ve been going from door to door of various officials for the last 4-5 years, holding meetings with banks, government offices, but nothing happened,” lamented Siddique.

“We directly employ 300 persons and indirectly a couple of thousands, who will lose jobs if we are forced to shut down once and for all,” he said.

Siddique said despite all hindrances, Flamingo keeps running. “We know what it can bring to Bangladesh and the farmers. But our machines are sophisticated, they can’t be used intermittently like that for long,” he said.

Siddique also stressed production of high-quality potatoes like Diamond and Rosetta. “The market is now flooded with low quality Granola type. Companies must understand which one is industrial grade and which one will bring them profit and can be put to good use.”

Flamingo can only use Lady Rosetta type in their factories as only this variety complies with the industrial starch standard. Chips making factories also need Rosetta types because of the quality and the crispness they offer.

Siddique said to encourage farmers to cultivate potato, Flamingo is supplying quality seeds at fair prices and taking initiatives to cultivate high-quality variety of potato. Besides, the company is organising seminars for farmers jointly with Southpole Seed Ltd, another agro processing company, so that they do not get cheated while buying high quality seeds.

Md Nafisur Rahman, managing director of South Pole Seeds, said, “There are so many unused potatoes in the cold storage. They would’ve been consumed by now if there was diverse use of potatoes.”

Rahman said that he had visited China to import machines that can extract protein and fibre from the float water and pulp respectively – the items that are left as residue after starch production — and both have high export potential.

“We will go to China in December to get the machines so that we can extract protein and fibre from the residue that Flamingo will produce,” Rahman said.

“No one in Bangladesh knows how to use those residues. We are also trying to introduce it as fish and cattle food in Chalan Beel area,” he said. Rahman said private entrepreneurs are trying hard to promote diverse use of potato but government should step in urgently to encourage the farmers and provide cash incentives for exports.

“Chips making factories have just started operating in Bangladesh and there should be more processing industries. But every initiative is taken by the private entrepreneurs, why not government?” he said.

Machines inside Flamingo Agro-Tech Ltd factory

Liton Hossain, a farmer from Joypurhat who took part in Flamingo seminars, said, “Farmers were not really interested in farming potato because they incurred huge losses this year. But Flamingo has assured us that we don’t have to worry if we produce high quality potatoes.”

Hossain hopes to cultivate Lady Rosetta variety potato on 20 bighas of land next season.

Abdul Alim, another marginal farmer, said, “In previous seasons I sold every maund of Rosetta at Tk 400. I had put 45 sacks of potato in the cold storage to make more profit this year. Now I can’t even sell a kilo at Tk 6.” Alim said that he is happy that Flamingo is going to buy these potatoes; otherwise, he thinks, all those potatoes would have gotten wasted.

Mojibor Rahman, a wealthy farmer from Karimpur village, said, “I incurred a loss of Tk 700,000 this year. Last year was the same.” He said that as Flamingo Agro-tech restarts its factory, farmers will at least get “something” from now on.

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