Industry says impact on potato prices unlikely

Rising operational cost coupled with stagnant rentals for almost past three years have turned a number of cold storages in West Bengal cash-strapped.

According to Patit Paban De, member, West Bengal Cold Storage Association, operational costs have gone up by 40-50 per cent in the last two years. However, there has been no hike in rentals during this period.

“The last hike happened in February 2010 when rentals increased by Rs 14 a quintal. The hike took into account the rise in operational costs in 2009 over that in 2008,” De said.

The rental for storing potatoes in cold storages in Bengal stands at Rs 101 a quintal. There are close to 403 cold storages in the State, which together store about 60 lakh tonnes of potatoes depending on the production during a particular year.

The cost of electricity, diesel and labour has all gone up in the last three years. But the State Government is not allowing the industry to hike rentals. Most of the cold storages are, therefore, running at a cash loss.

“Last year nearly nine cold storages had to be closed down as they could not meet the expenses,” he said.

Cash-strapped cold storages plan to shut down their operations for one day on November 19 as a mark of their protest.

“Only in West Bengal and Tripura the rentals are controlled by the State Government while for all other States it is decided by the cold storage associations depending on the market condition,” he said.

The average rentals of cold storages in States such as Uttar Pradesh, Bihar and Gujarat stands at around Rs 150-180 a quintal. “Cold storage rentals in West Bengal should be revised to a minimum of Rs 150 in tune with the prevailing rent in other potato producing States,” he said.

Potato prices

Hike in rentals, whenever it comes into effect, will have its impact on potato prices. The cost of rentals paid to cold storage is built into the price of the tuber, which is borne by the end-consumer. However, the impact will be of very little consequence to a customer, De said.

“For instance, for a hike of Rs 20 a quintal in rentals the end-consumer might have to shell out an additional 20 paise on a kg of potatoes purchased,” he explained.

(This article was published on November 15, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.