Cold storage sector seeks higher fees, 20pc power rebate to avert crisis

Bangladesh's cold storage industry has warned that it is facing a deepening financial crisis, with operators struggling to absorb soaring electricity costs, rising interest rates and mounting operational expenses, prompting an urgent appeal to the government for higher potato storage charges and targeted financial support.

The Bangladesh Cold Storage Association (BCSA) on Saturday urged the government to revise the officially fixed potato storage rent, arguing that the current rate no longer reflects the industry's sharply increased operating costs and is pushing many operators towards severe financial distress.

Speaking at a press conference at the association's office in Dhaka, BCSA President Mostafa Azad Chowdhury Babu said private cold storage facilities have been operating at substantial losses after electricity tariffs were increased by 18 per cent from June 1 this year, while labour costs, loading and unloading charges, sack replacement, maintenance and staff salaries have all risen significantly.

"The existing government-fixed storage charge is no longer economically viable. Unless the pricing structure is revised and policy support is extended, many cold storage facilities will struggle to survive," he warned.

According to the association, the Department of Agricultural Marketing, with government approval, fixed the potato storage charge at Tk 6.75 per kilogram. However, a delay in clearing potatoes from warehouses left around 200,000 tonnes of potatoes in storage beyond schedule, preventing operators from collecting additional retention charges and causing substantial financial losses.

BCSA said the cash-flow crisis has severely affected operators' ability to repay bank loans.

Presenting a financial analysis of a 10,000-tonne cold storage facility, the association said loan principal and interest alone account for Tk 5.86 per kg, while electricity costs have climbed to Tk 1.25 per kg, taking the basic operating cost to Tk 7.11 per kg.

After adding employee salaries, ammonia gas, lubricants, maintenance and other overheads, together with a reasonable profit margin, the total storage cost reaches Tk 9.52 per kg�"well above the government-approved rent of Tk 6.75 per kg.

"This pricing gap makes it impossible for operators to meet bank repayments and electricity bills," the BCSA chief said.

He also criticised the existing banking repayment system, noting that Bangladesh Bank requires loan instalments every three months despite cold storage being a seasonal business.

Potato preservation begins in March, while unloading generally starts only in July or August, leaving operators without sufficient liquidity to meet quarterly repayments. Failure to do so results in a two percentage point penalty, pushing borrowing costs from 14.5 per cent to 16.5 per cent, which the association said is driving the sector towards collapse.

Describing potatoes as the country's second-largest cash crop after rice, Chowdhury said Bangladesh continues to produce far more potatoes than domestic demand.

According to Ministry of Agriculture data, potato production reached 11.5 million tonnes in 2025 against domestic demand of around 9 million tonnes, creating a surplus of 2.5 million tonnes. Around 3.4 million tonnes were stored in 301 cold storage facilities that year.

Updated ministry figures show production stood at 11.2 million tonnes in 2026, leaving a surplus of roughly 2.2 million tonnes, with approximately 3.4 million tonnes again preserved in cold storage facilities nationwide.

Despite the abundant harvest, farmers are incurring heavy losses.

The association said Asterix potatoes are currently selling at Tk 16-17 per kg at cold storage gates, while Diamond potatoes are trading at around Tk 16 per kg. However, farmers' production costs range between Tk 16 and Tk 17 per kg, leaving many growers losing as much as Tk 7 per kg.

Retail prices, meanwhile, rise to Tk 22-25 per kg in local markets and Tk 30-35 per kg by the time potatoes reach consumers in Dhaka.

To stabilise the industry, the BCSA urged the government to introduce a package of immediate support measures.

Its key proposals include a 20 per cent rebate on electricity bills�"or the withdrawal of the latest tariff increase�"a Tk 6,000-8,000 crore low-interest refinance fund through Bangladesh Bank offering loans at 4-5 per cent, raising the cash incentive on potato exports from the current level to 30 per cent, and replacing quarterly loan repayments with annual or biannual schedules suited to the seasonal nature of the business.

The association also called for direct financial support to potato farmers affected by depressed prices and the introduction of a farmer registration system using Farmer Cards to improve policy implementation.

BCSA further urged Bangladesh Bank to classify cold storage as an agriculture-based industry, arguing that such recognition would enable the sector to access concessional financing and strengthen one of the country's most critical agricultural supply chains.