Curious case of potatoes

How many hands are needed for the potato to be produced and reach the market in Bengal? The average production cost of one kg of potato is Rs5-5.50. When the potato, a compulsory item for a Bengali dish, leaves the grower directly for the local market, the rate the grower gets is Rs8-9 per kg. Otherwise usually, Rs8 is the rate at which the local trader or agent procures and sells the item to the wholesale traders or wholesale markets or the cold storages at Rs9-9.50 per kg. From the cold store the potato leaves for small traders in the state, other states, and the city markets at Rs20-22 per kg. Possibly when they reach other states, the rate goes even higher. 

West Bengal is one of the top growers of potatoes in the country. For last few years, with regularity, the potato price skyrockets just before autumn, even though more potatoes than what the state needs are produced and stored. The government usually remains blissful that there will be no crisis in supply, because the crop is in abundance and its price will not rise three months later. Is a cooperative the answer to the potato crisis? However, a cooperative cannot meet the expenditure of the enormous amount of electricity that a cold store needs. So, what is the way out? Who is the culprit? Are the cold store owners who form a vicious nexus with other market forces guilty? Does the answer lie in handing over the entire trade to retail giants?

Provisional figures suggest that in 2013 the total area under potato production was 386,610 hectares, which increased in 2014, to 400,000 hectares. In 2013 the total potato production in the state was 11,591,300 kgs, and the available figure up to July was 9,300,000 kgs. The reduced figure was partly due to a particular crop disease. In the last seven years the area under cultivation and the figures of production have — on the whole —  remained constant. But prices have increased regularly. According to National Horticulture Research and Development Foundation, in March 2013 the amount of potato reaching the market was 80,480 quintals, while in July it was 117,470. In March 2014, less quantity of potatoes reached the market, the corresponding figures being 72,140 and 46,240 quintals. On the other hand, the prices soared. In March 2013 the price per quintal of potatoes reaching the market was Rs531; it became Rs909 one year later. In July 2013 the price was Rs824, one year later it became Rs1,487. What explains the shortage in supply and the accompanying price rise?

Growers complain that besides the usual hazard of crop disease, the cost of production has increased in one year from Rs11,000 per bigha to Rs16,000 per bigha owing to the increased cost of inputs like seed, fertiliser, water for irrigation, insecticide, and rural wage. Even then this does not explain the unbelievable price rise. In Kolkata markets potatoes are sold at Rs22 per kg. 

July-August is the time when potatoes from West Bengal start moving to the potato-deficient states like Odisha, Karnataka, where prices soar to Rs35 kg. The potato leaves the cold store via the hands of the traders already at Rs15-20 per kg — often an increase of 75-80 per cent.

This year the government woke up late to the menace. It tried to rein soaring prices by prohibiting or severely restricting export to other states and fixing the price of potato in the local market at Rs14 per kg. The opposition parties were up in arms. They accused the government of stifling trade and local traders. Cold store owners said they were being unfairly targeted. Some traders were beaten up. Other states grumbled that West Bengal was restricting freedom of trade, and threatened that they could do the same by prohibiting the supply of commodities West Bengal needed. The state government relented, the administratively fixed price was respected more in violation, export to other states was allowed gradually and partially. The opposition held the entire matter as evidence of government bungling and inefficiency. 

Yet none of the opposition parties raised a finger against the cold store owners. There is, of course, one point, simple and evident. The number of cold stores in the state is highly inadequate compared to the demand.

Whereas the state annually produces about one crore tonnes of potato, the total capacity of the cold stores is nearly 70 lakh tonnes. In some cases the stores are at an inconvenient distance from the potato growing fields. In many cases the small growers sell their produce to big growers and big traders, in league with the cold store owners. The result is that while at each level of intermediaries the price of the commodity goes up by at least 20 per cent, both the small growers and the urban poor consumers find themselves at the receiving end of the vicious cycle. 

The government does not intervene properly and acts only at a late stage when the product is reaching the market. Majority of potato growers are small farmers with small average holdings of less than 2 hectares. They cannot get institutionalised loans; they are not supported to form cooperatives for cold storage; the panchayats do not venture into establishing and owning cold stores. Electricity remains costly like other inputs because the central government wants to end subsidies to the poor potato growers.

Who will tame the cold store owners and break the big grower-big trader-cold store owner nexus? The government, busy in fighting successive elections of one kind or another, cannot think of any out-of-the-box solution. Its developmental vision is predictable. The panchayats under its control cannot act audaciously. 

As a result, each year the price of an abundant crop will rise in a particular season, adding to inflation. Economists will be busy working out difficult calculations and predicting a climb down of prices once monsoon sets in. But who will tell them? They are too idiotic to understand why potato prices rise. One need not go to MIT to learn economics, one has only to go to the fields of say Burdwan, Nadia, and Hooghly to see how the small grower is deprived of the rewards of his toil and the urban poor fleeced.

The writer is Director, Kolkata Research Group