Slumping potato prices hit farmers, but worse is yet to come

Farmers and cold storage owners pay the price of producing and storing bumper crops as wholesale prices dip by 39-50 per cent in December

By Kiran Pandey
Published: Wednesday 09 January 2019
Potato prices
Credit: Getty Images Credit: Getty Images

Hit by low wholesale prices, potato farmers in Uttar Pradesh and Punjab have not been able to recover even the production cost of the crop as market price of potatoes crashed by 39-50 per cent in December 2018, shows the latest report on the crop by the Department of Agriculture Cooperation and Farmers Welfare.

Around Rs 9-12 per kg is spent on potato farming, but, of this, Rs 6-8 per kg is production cost and Rs 3-4 per kg is spent on harvesting, packaging, cold storage and transportation. The report shows that while farmers in Punjab were forced to sell their crop for Rs 4 per kg, those in Uttar Pradesh sold potatoes at Rs 6.7 per kg last month. In November 2018, the wholesale price of potatoes was Rs 7 per kg in Punjab and Rs 11 per kg in Uttar Pradesh.

The average price of potatoes also crashed by nearly 33 per cent in the past five years (between 2012-13 and 2017-18). During this period, the dip was the most in October (115 per cent).

Cold storages in trouble

While farmers struggle to sell their new produce, they also have large amount of stocks lying in cold storages. As many as 660 cold storages in Punjab can store up to 21.55 lakh metric tonnes, but the production this year was more than 25.15 lakh metric tonnes. The low prices have made it unfeasible for them to pay for their potatoes in these storages and they prefer to leave them over there.  

The situation in Uttar Pradesh too is no different. Considering this, the cold storages have even extended the deadline for withdrawal of potatoes from their cold storages. For example, the owners of cold storages in Agra have extended the deadline for withdrawal of potatoes by a week. But farmers are not keen on taking back their potatoes owing to the prevailing low wholesale prices.

Large crisis looms

On an average, each cold store has 10,000-15,000 bags (50,000- 75,000 kg) of potato and potato seeds stored. With just 40 per cent of the potato crop harvested so far, the situation is expected to worsen. Potato seeds, which form nearly 60 per cent of the total produce in Punjab, will be harvested in March and kept in cold stores to supply to other states during the year.

But declining demand for potato seeds from states like West Bengal and Uttar Pradesh will further add to the woes of potato farmers in Punjab.  These states now produce enough for their needs and may not prefer to buy from Punjab.  They also find the cost of the seeds too high and prohibitive.

No stabilisation

The last few years have witnessed a surplus production of potatoes in Punjab that have not been promptly transported to other states. As a result, potato growers have been forced to sell their crop at throwaway rates.

In August 2018, Punjab government had announced formation of a price stabilisation fund, the purpose of which was to intervene in case of steep fall in prices of the produce and ensure that state farmers get minimum support price (MSP). But not much has happened on this front.

The state has been recording surplus potato production since the last few years and could have helped the growers by facilitating transportation of their growth to other states like Andhra Pradesh and Rajasthan that have high demand. But this has not been done.

The government has ambitious plans of doubling farmer’s income, but without doubling the sales of agricultural produce, it is extremely difficult to increase a income. Within this context, a parliamentary committee has critically analysed and given detailed recommendations in the larger interest of our farmers.

The agriculture ministry in the ongoing parliament session on January 4, 2019, acknowledged that the supply-demand imbalance has led to distress sale and lower remuneration to potato farmers. But mere acknowledgement is not sufficient and our farmers need urgent and effective actions on the ground.   

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