Why potato means bad news in Punjab now

A cycle of misery kicked off by demonetisation still haunts farmers as well as cold storage owners

By Rajeev Khanna
Published: Tuesday 08 January 2019
Representational image
Photo: Getty Images Photo: Getty Images

The potato bomb has exploded in the face of Punjab farmers once again—another year when they are unable to get remunerative prices for their produce. Farmers say that after spending Rs 7 to produce a kilogramme of the crop all they get is Rs 2.50 per kg for fresh potato meant for instant consumption. The situation is worse for cold storage owners who complain that they still have stock left from the last season. Retailers, however, are selling the tuber to consumers at Rs 10-30 a kg across the country.

What is the way for farmers?

Sources say at many places farmers have ploughed back potatoes into the field; many have dumped their produce along roads while some use it as cattle fodder. For the fourth straight year potato prices have crashed.

A key reason for the continuing plight of potato producers is the Narendra Modi government’s demonetisation drive, which kicked off on November 8, 2016—right before the potato harvest. Potato seeds could not be transported to other states due to the lack of cash to pay truckers and a cycle of misery kicked in for farmers in the potato belt of Hoshiarpur, Jalandhar, Amritsar and Moga districts and even Una in neighbouring Himachal Pradesh.

Avoiding cold storages

Punjab's harvest for fresh sales precedes those of Uttar Pradesh and Gujarat by around 20 days. Farmers are now trying to sell most of their produce for instant consumption, avoiding cold storages as they do not see viable returns in storing seed.

Normally, though, they stored almost three-quarters of their harvest: Punjab produces approximately 25 lakh tonne potatoes every year—18 lakh tonne for cold storage and 7 lakh tonnes for consumption.

The Doaba region, the best suited for potato production, reportedly supplies about 1.1 metric tonne potato seed to states like Uttar Pradesh, West Bengal, Bihar, Madhya Pradesh, Gujarat and other potato producing states. This meets about 63 per cent of the country’s requirement for the seed.

Problem cycle

 “How long can potato farmers continue like this?” asks Jaswinder Singh Sangha, a potato producer. “Loans are increasing; inability to payback the banks attract hefty penalties,” he points out and warns that farmers would be forced to hit the road in protest. “With no minimum support price for potato, its producers are doomed,” Sangha says.

“There is no investment in agriculture as there is no cash flow. Call it reserve money, black money or extra cash. Things were better before demonetization,” he complains.

“The trade was mainly through cash transactions and came to a standstill after demonetisation. It works on credit. Cold storage owners procure from farmers until February, looking forward to disposal by November—when they would get paid. But this is not happening,” Cold storage owner Gurinderjit Singh Nagra.

Transportation costs have risen steeply too. “One has to shell out Rs 500 to send a quintal of potato to Kolkata from Punjab,” Nagra says. He points out at other problems:

  • Production in other states have curbed demand for Punjab’s potato seeds
  • A rise in high-yielding varieties
  • A fall in domestic demand
  • Lack of export

“We need to export to places like Afghanistan, Central Asia and Russia,” Nagra says. “We cannot compete with countries like the Netherlands as their produce is of better quality, without high levels of pesticides and chemicals. Their government also provides freight relaxations for exports,” he adds.

Experts seek government intervention

“The agriculture department needs to educate farmers about potato varieties in demand,” says agriculture economics expert Gian Singh and cites the example of sugar-free potatoes. He also underscores the need to break cartelisation by big traders.

“There is no agriculture policy. The political class keeps harping on diversification of crops, but farmers are unable to meet even their production cost,” he says.

Some experts say procurement through government agencies for consumption of potatoes in mid-day meals can provide some succour.

Chief Minister Amarinder Singh last month stressed on the need to export potatoes to central Asian countries and said he has written to Prime Minister Narendra Modi to include potatoes along with sugar in the export list.

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