Even as official data show food inflation at 5-6%, elevated levels compared with the subdued prices of most other items, farmers are barely realising remunerative prices for their produce, another reason why rural consumption demand is dismally low. Potato farmers in Uttar Pradesh, for example, are selling the vegetable at a fifth of the price a year ago, thanks to a glut caused by excess production and unseasonal rains.
Meet Kripal Singh, a farmer who has grown potato in his 10-acre land in a village in Agra district. With an investment of around Rs 1 lakh per acre that included the expenses incurred for seed, water, fertiliser and labour charges, the potato yield had been around 100 quintals per acre.
But given the wholesale price of potato is currently between R200 and R300 a quintal, Singh is clueless about how to recover his investment. Around this time last year, potato prices in Agra were ruling in the range of R1,200-1,500 a quintal.
Although the impact of recent unseasonal rains on food prices has been much less than feared, food inflation has persisted at elevated levels in both the wholesale and consumer price indices — 5.73% and 5.11%, respectively — for April. Considering that the farm ministry has forecast a 5% drop in grain production in the current crop year through June, the prospects are dim for farmers in several regions, although a favourable base might produce lower food inflation figures in the coming months.
Because of the unseasonal rains and hailstorms immediately before the harvesting in March, farmers had no option but to bring in a substantial part of their produce to the market, causing the price crash. “At present, there is a glut and we are doubtful whether the prices would see an increase sharp enough to stem our losses even in the coming months,” Singh told FE. He and many other farmers in the Uttar Pradesh’s potato-growing regions have put roughly 80% of their produce in cold storage units, anticipating a higher price in the future.
Mohan Singh, another farmer from the same village Kripal Singh hails from, had grown potato in 40 acres. But he is not sure whether he would take up cultivation of vegetables next year. He said the cost of production had gone up this year, adding that the increase in potato output resulted in a sharp fall in prices. He could not sell a major part of his produce in an oversupplied market, causing it to rot.
Scores of such farmers in Uttar Pradesh, the biggest producer of the key tuber, have been hit hard because of bumper production and unseasonal rains impacting the quality of their produce. At present, 500-odd cold storages across Agra region are stocked to their fullest capacity. “The prices are at best expected to be stable and are unlikely to rise sharply in the next six months of so,” said Rustom Singh, a potato farmer and trader.
Meanwhile, the National Horticulture Board’s first advance estimate has forecast potato output at 42.17 million tonnes this year compared with 41.55 mt last year. The wholesale potato price at the Azadpur wholesale vegetable market near the capital has crashed from R2,425 per quintal prevailing in October 2014 to R440 a quintal at present.
The retail price in Delhi and other currently rule at R10-15 a kg against R20-25 a year ago.
According to trade sources, market prices in West Bengal, the second largest potato producer after UP, have also sharply fallen as well because of a bumper harvest. In June last year, the government for the first time imposed a minimum export price (MEP) on potato — $450 per tonne — in a bid to curb rising prices, while only a small quantity was allowed to be exported. Subsequently, in February, 2015, the MEP was removed. Although exports are marginal compared with overall domestic production, fresh potatoes are shipped to countries like Sri Lanka, UAE, Mauritius, Nepal, Singapore, Maldives and Kuwait.