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Economics of Potato Processing in Bangladesh

A. S. M. A. Huq
Principal Scientific Officer
Planning and Evaluation Division, Bangladesh Agricultural Research Council, Dhaka

R. Begum
Assistant Professor
Department of Agricultural Economics and Rural Sociology, Sher-E-Bangla Agricultural University, Dhaka

M. A. Awal
Scientific Officer
Agricultural Economics Division, Regional Agricultural Research Station, Bangladesh Agricultural Research Institute, Rahmatpur, Barisal

Abstract/ Executive Summary:

Present study attempts to estimate cost and return, and to examine the problems and prospects of potato processing in Bangladesh. Processing of potato at cottage industry level was found profitable. For processing 100 kg of raw potato to chips and by selling these chips they earned Tk 429 as net return or profit. Expansion of these cottage industries would be very helpful for more utilization of potato during harvest period. Frozen french fries factory runs on a weak position and at a lower rate of utilization capacity. Benefit Cost Ratio (BCR) of the factory is l.03 at 12 per cent discount factor, which indicate factory is profitable at marginal level. Net Present Worth (NPW) is Tk 10,97,333 at 12 per cent discount factor, which is positive. Internal Rate of Return (IRR) is 17 per cent. Value of BCR, NPW and IRR indicate that factory is profitable though it can utilize only 7.5 per cent of its maximum capacity. Establishment of export oriented potato flakes industries are necessary to encourage potato grower for more production.

Keywords: Economics, Potato processing, Cottage industry

Location: Bangladesh Agricultural Research Council, Dhaka

Start Date: 00-01-2002

End Date: 00-12-2002

Program Area: Socio-economic and Policy

Non-commodity: Profitability

Objectives:

To estimate cost and return, and to assess the problems and prospects of potato processing in Bangladesh.

Methodology:

To understand the potato processing industry, chips producer at cottage industry level and one French fry factory (the only French fry factory in the country) were selected for the present study. The information was collected, analysed and presented in tabular forms. The reference period for the survey is 2002 (January to December). To determine the benefit cost ratio (BCR), net present worth (NPW) and internal rate of return (IRR) the following formula were used. BCR = (Present worth of gross benefits) / (Present worth of gross cost). NPW = (Present worth of gross benefit - (Present worth of gross cost).

Source of Information: J. agric. educ. technol. 8(1 &2): 17-22, December 2005; ISSN 1729-097X

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Processing of potato at cottage industry level is found profitable. Expansion of these cottage industries would be helpful for the utilization of potato at harvest period and home stored potato. Short term training programme on chips processing technique and wide publicity is needed throughout the country for further growth of such industry. Frozen french fries factory runs on a weak position and at a lower rate of utilization capacity. To increase its utilization capacity wide publicity through mass media like television is needed and it is also essential to expand its overseas market. Export oriented industries like potato flakes industries are required for encouraging farmers to grow more potatoes.

Knowledge Management: Journal