Agri Business

Bumper crop sends potato prices crashing in Bengal

Abhishek Law Kolkata | Updated on January 12, 2018 Published on February 13, 2017

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Higher stocks, rise in supplies from UP and Punjab also pull down prices

The price of potato has seen a near 40 per cent year-on-year decline in Bengal mostly because of a bumper crop.

Increased flow of stock from Uttar Pradesh and Punjab has also led to weak demand from neighbouring consumer States such as Odisha, further contributing to the decline in prices.

Production is expected to be nearly 22 per cent higher than last year at 110,000 lakh tonnes (90 lakh tonnes last year), according to trade sources. The Agriculture Ministry, in its first advance estimates for 2016-17, has pegged the output in West Bengal at 84.27 lakh tonnes (see Table).

The price of the early variety of tuber is trading at around ₹150 per 50-kg at the cold storage levels, while at the farm level, it is even lower at around ₹130-140, sources told BusinessLine.

Last year, prices varied between ₹250 and ₹300 for the early variety of tuber. Later, around February 2016, prices fell to around ₹160.

“At present, cold storage owners have more than 150 lakh kg of potato stock with them. With increased flow from Punjab and UP and existence of old stock in local markets, the price of the early variety (of potato) has fallen,” a cold storage owner said on condition of anonymity.

Hoarding, demonetisation

According to trade sources, cold storages have been hoarding stocks since last December anticipating higher prices (this season) as well as increased demand from neighbouring States.

It was expected that demonetisation would adversely impact sowing, leading to lower production and, in turn, higher prices.

Some of the traders, sources say, even procured tuber from other potato producing States and stocked them at the cold storages.

Excess supply

However, the calculations went awry mostly on account of excess supply this season. Firstly, there was a bumper crop in Uttar Pradesh and Punjab. The excess stock flowed into Odisha and other traditional markets catered by West Bengal. Thus there was a supply-demand mismatch.

The situation was further aggravated by a favourable winter in West Bengal that saw increased production of the early variety of tuber. This, coupled with existing stocks, has now pulled-down prices.

Published on February 13, 2017
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