Agri Business

Potato prices likely to stay subdued over the next few months

Subramani Ra Mancombu Chennai | Updated on May 05, 2021

Ample stocks available, offloading of the spud begins from cold storages

Potato prices are likely to rule subdued over the next few months, though they have increased by ₹100 a quintal since a month ago as offloading of stocks in warehouses has just begun.

“Cold storages in Bengal have just opened after the elections to the State Assembly ended. So far, potatoes were coming directly from the farmers’ fields. Storages were shut due to non-availability of labour,” said Patit Paban De, potato cold storage operator and former president of West Bengal Cold Storage Association (WBCSA).

Potato cold storages may run out of space soon

Currently, modal prices of the spud (rate at which most trades take place) are ranging from ₹850 in various terminal markets in Uttar Pradesh’s Agra district to ₹1,250-1,270 in Bengal agricultural markets.

“Wholesale prices of potatoes are ruling at ₹10 a kg in places such as Gujarat, while in retail outlets they cost double,” said Ashish Guru, Senior Vice-President, Federation of Cold Storage Association of India (FCSAI).

“In Indore, markets have been closed for a month now. But potatoes are available at ₹13-13.50 a kg and those kept in the cold storages are available at ₹15-15.50 a kg,” said Ajay Agarwal, a trader from Indore in Madhya Pradesh.

Potatoes in Madhya Pradesh are usually priced higher as they are used for chips, wafers and processing. “Stocks are full in warehouses in Madhya Pradesh as the production is good,” he said.

Bengal’s potato output seen up by 16% on higher area, favourable weather

Paban De said that only 30 per cent of the cold storages were open in Bengal now and the rest would open in a week’s time. “But we expect demand to be good this year as there is talk of a shutdown to control the Covid pandemic,” he said.

The second wave of Covid, currently on across the country, has resulted in some States announcing shutdowns and various other curbs to tackle the pandemic’s spread.

States such as Maharashtra, Delhi, Karnataka and Tamil Nadu have come up with their own plans of curbing the movement of people to control Covid.

“Many people are buying more potatoes in preparation for the shutdown. It has also resulted in prices rising,” Paban De said.

However, FSCAI’s Guru said such additional buying was not being witnessed in the western parts of the country. “People seem to be buying hand-to-mouth in Gujarat just to meet immediate needs,” he said.

Also, the curbs this time to tackle Covid are not as stringent as last year when transportation across the country had come to a halt.

“There is no problem with transportation this time. This has resulted in people not resorting to any panic purchase of potato,” Guru said.

In addition, this time around people were buying more citrus fruits such as lemon, oranges besides tender coconut, musk melon and watermelon, he said.

Guru’s statements are in line with the price trend for potatoes that was witnessed last year. During the same time last year, the spud’s prices were ruling above ₹1,300 a quintal.

“People buy more potatoes during lockdown since they consume more vegetables while at home. It happened last year and could happen this year too,” said WBSCA’s Paban De.

Last year, it resulted in higher consumption even as production was lower, pushing up prices to record levels in retail outlets. During November last year, the spud’s prices ruled between ₹2,750 and ₹2,900 a quintal in major agricultural markets across the country, while they ruled near ₹50 a kg in retail outlets.

Record production

According to the Ministry of Consumer Affairs, prices of potato are currently ruling at ₹19 a kg at retail outlets in Delhi and ₹21 in Mumbai.

A major reason for prices ruling lower this year is that potato production during the current season (July 2020-June 2021) has been estimated at a record 53.11 million tonnes (mt) compared with 48.56 mt a year ago.

According to the Ministry of Agriculture and Farmers’ Welfare, production is seen at a record high in view of the area under cultivation of the spud increasing to 2.25 million hectares (mh) from 2.05 mh a year ago.

During 2019-20, production was lower as the crop was affected by unseasonal rains in the growing areas of States such as Maharashtra and Madhya Pradesh, while farmers also did not show interest in view of low prices then.

“The crop is good and stocks are high in cold storages as production in all States improved,” said FSCAI’s President Mahendra Swarup.

“This year, we don’t expect to make high profit as farmers might lock in their produce for a longer period .Potatoes are everywhere. Scope for prices to move up like last year is limited,” he said.

Guru said that arrivals till now have been from farmers who had stored on their farms. “This will end in a week and then only we can expect the stocks to come out fully from storages,” he said.

“But we expect prices to remain subdued since ample stocks are available,” he said.

WBSCA’s Paban De said farmers could have paid at least ₹500 per quintal to store the spud in cold storages, including loading and unloading charges.

“They will have to get at least ₹1,300 a quintal for graded varieties like Jyoti to recover their costs. Otherwise, they will find it tough even to pay interest for the loans they had availed of,” he said.

In view of higher production, potato farmers had opted to store their produce in cold storages. By mid-March this year, almost all cold storages in Bengal were filled to capacity as farmers hoped to get better prices later.

“We are currently not witnessing any sharp rise in prices,” said Indore trader Agrawal.

Published on May 05, 2021

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