Potato farmers in Bengal in the doldrums as prices crash

Potato prices in West Bengal has plummeted by more than 50 per cent in the last two months. The price crash has put farmers in a tight spot as they have kept a majority of the stock in cold storages expecting prices to firm up on the back of lower production this year.

The wholesale price of the tuber (common Jyoti variety) is ruling at ₹460-480 a quintal, over 54 per cent lower than ₹1,050 a quintal in the first week of May. The prices were ruling at around ₹700 a quintal in the same period last year. A farmer typically spends around ₹500 to grow one quintal of potatoes.

Potato output

West Bengal produced around 90-95 lakh tonnes of potato this year, as against around 100 lakh tonne in 2018. Close to 65 lakh tonnes of potato were stored in the 400-odd cold storages spread across the State this year. Of this (65 lakh tonne), around 70 per cent or close to 46 lakh tonne of potatoes belong to farmers.

“The prices were ruling firm till June-end and the release from cold storages was going on in full swing. However, the higher production of the tuber in Uttar Pradesh impacted our prices,” Patit Pavan De, past President of West Bengal Cold Storage Association, told BusinessLine .

UP has produced more than 145 lakh tonne of potatoes this year and a large quantity of their produce is finding its way to markets neighbouring Bengal. Usually, Bengal potatoes are exported to Assam, Bihar and Odisha and some southern markets.

“The UP government has given a transport subsidy to push their potatoes into other markets. This is affecting some of our markets,” a potato trader said on conditions of anonymity.

The poor demand coupled with the drop in prices has impacted the offloading of stock from cold storages. As on July 15, only around 26 per cent of potatoes were offloaded, as against around 28-29 per cent in normal years.

Following the price crash in 2018, farmers and traders did not come forward to offload stock from cold storages. Prices, which were ruling at around ₹800-900 a quintal in March-April 2018, crashed to as low as ₹150-200 a quintal by end-November and early December last year.

Cold storages, which usually close down by end-November for routine maintenance work, were thus flush with stock even till early February this year.

Request for restructuring

The West Bengal Cold Storage Association has urged the Reserve Bank of India to permit one-time restructuring of loans extended to cold storages, which have been affected by the price crash of tuber and subsequent delays in repayment by farmers for the past two years.

As per prevalent practice, farmers and traders offer their stock at the cold storages during loading period against an advance, which is usually arranged by store houses as a refinance loan through cash-credit advance.

Following the price crash in 2018, the people who had stored potatoes did not come to offload their stock and store houses had to bear the loss as realizable value of the stock available with them could hardly compensate the cost of operation. The recovery of the advance paid as refinance loan was also a remote possibility.

The store units had to face almost similar situation in 2017 and a major portion of the refinance loan became non-performing asset (NPA) due to the accumulated loss, De said.

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