Helping potato farmers manage distress

Potato farmers in West Bengal are in dire straits. This is an expected outcome observed every alternate year. Farmers are unable to stock their produce in cold storage as hardly any utilisation space is available.

Nor are they able to market their produce at a mark-up price that can cover cultivation costs. This has led to a deadlock and the State government is trying hard to provide relief.

While the State Agricultural Marketing Department and West Bengal Traders’ Association are negotiating an acceptable price and freight subsidy, this might be enough for smallholders.

Processing industries need to lend their hand in a big way to absorb excess stocks and export processed products.

Agricultural Marketing Infrastructure, Grading and Standardisation (AMIGS) scheme can be handy for such efforts.

India ranks fourth in the area and third in the production of potatoes. Russia and China continue to dominate potato trade. SAARC countries often seek Indian potatoes of various grades.

India has 7-8 agro-economic zones of potato and the Central Potato Research Institute, Shimla, is a dedicated institute for potato research and extension. Production in 2014-15 is expected to be 30 million tonnes (mt) and per capita availability is 65-70 kg per year (FAO estimate).

Bengal holds a key position in area of cultivation and production of potatoes. It contributes about 25 per cent to the production with Uttar Pradesh accounting for a major share. Bihar, Assam also have their prominence in potato production.

According to official sources, Bengal has a record stock of about 11 mt that includes production in current season and carryover stocks. Last year, potato prices surged to an average of ₹30-35 a kg as demand outstripped supply.

However, since early this year wholesale and retail prices have dipped to ₹4-5 and ₹11-12 , respectively. Accuracy in estimating demand at the start of the potato season is a key to effective production and price forecast.

Potato marks its presence in both unorganised and organised sectors. Processing units need potatoes round the year as consumers require potatoes in the form of cooked food or snack products. Business-to-business (B2B) and business-to-consumer (B2C) marketing has been evident in potato value chain. It comprises farmers, dealers/traders, processors and exporters. Fritolay or Pepsico’s Sabritas, ITC Food, Keventer Agro, Parle, among others are a few prominent processors. They procure potatoes either through collection centres or by contract farming arrangement.

Major States for procurement include Uttar Pradesh, Bengal, Madhya Pradesh, and Gujarat. Processing units have adjunct pre-cooling centre/cold storage or often they outsource services to third parties. A few varieties are Kufri Jyoti, Lauker, Badshah, Kufri Sundari and Kufri Chandramukhi are traded in spot/physical and forward/futures markets.

Several small and medium enterprises also process potatoes. They have emerged as key regional or local players. Export markets are regulated as sanitary and phyto-santiary measures are imposed.

Bengal needs to avail the benefits of Central Assistance Scheme to set up processing units. Mega Food Park in Jangipur of Murshidabad can take up this given a robust public-private partnership.

Apart from offering a minimum support price, the State should introduce income stabilisation fund for smallholders like the way Kerala and Karnataka have done for spices and plantation crops.

Bengal may take the help of AMIGS scheme refinanced by Nabard, in association with National Co-operative Development Corporation. The Centre for Management in Agriculture of IIM-Ahmedabad and National Institute of Agricultural Marketing can provide consulting services concerning market intelligence, project finance and implementation of the project. Agricultural Marketing Advisor can empanel the officials of Directorate of Marketing Inspection to conduct project monitoring and evaluation.

Small Farmers’ Agribusiness Consortium or SFAC can promote potato producer companies in consultation with not-for-profit organisations or resource institutions and stress on capacity building of member-producers and link them to the value chain. A liquid potato forward/future market can be set up for the basis (delivery) centre of Turkeshwar of Hoogly designing a special contract for producer companies/co-operatives for a reliable price discovery and an effective hedging against price risk. The new commodity regulator might encourage national exchanges to offer a broad-based yet an effective contract in potatoes.

The writer is a Post-Doctoral Fellow of the Centre for Management in Agriculture, IIM-Ahmedabad. Views are personal.