Potato dearer on lower yield, higher demand

Written by Sandip Das | New Delhi | Updated: Jun 21 2012, 02:11am hrs
After plummeting to a record low at the start of the year, potato prices have risen sharply in the last two months, thanks to a rise in consumption and lower production this year.

Traders and processors say farmers have started to get 'good' returns due to the prevailing prices this year, while last year, due to bumper production, prices at the wholesale market dropped to as low as R2 per kg forcing farmers go for distress sale.

At present, retail prices of potato are prevailing at around R16-18 a kg in most of the metros against R6-7 per kg in January.

According to an official estimate, potato production in the country in 2012 is estimated at 34 million tonne, which is about 10% less than the previous year's production of 37.5 million tonne. Uttar Pradesh and West Bengal produce close to 60% of the country's total production.

At present, there is a fine balance between demand and supply of potato in the country, Sachid Madan, director, Technico Agri Sciences, an ITC subsidiary which produces high-yielding potato seeds, told FE. However, Madan said due to huge rise in prices of vegetables in the current summer season, consumers' preference has gradually shifted to potato, and this may push prices further.

Meanwhile, potato prices fell by R5.80 to R1,150 per quintal in futures trade on Tuesday as speculators offloaded their positions mainly due to lower demand in the spot market. Increase in supplies in the physical market from key producing regions has also put pressure on potato futures prices.

At the Multi Commodity Exchange (MCX), potato for delivery in July declined by R5.80, or 0.5%, to R1,150 per quintal. Similarly, the potato for delivery in the August contract traded lower by 90 paise, or 0.07%, to R1,230 per quintal.

This year our realisation from potato farming has been higher as last year many farmers had to sell their produce below the cost price, Rustom Singh, a farmer from Agra, who has taken up potato cultivation in 200 acres, said.

The country's WPI rose to 7.55% in May compared to 7.23% in the previous month, as per the government data released last week. The rise in inflation has been mainly attributed to 68% rise potato prices.

Besides Uttar Pradesh and West Bengal, other key potato producing states include Punjab, Uttarakhand, Karnataka and Maharashtra. More than 60% of the potato crop is raised in the Rabi season, which would be harvested in April and May.

It is estimated that 61.47% of potato production is used for table purpose, 21% as seed, 0.5% processed and only about 0.03% are exported. Close to 17% are lost in post harvest handling, marketing and storage.