Potato prices may dip as Bengal plans stock cut

By Sutanuka Ghosal & Madhvi Sally, ET Bureau

3rd Sept, 2010, 12.24AM IST

KOLKATA & CHANDIGARH: Potato prices may drop as the West Bengal government is all set to offload 1 million tonne (mt) in the market by next week to rapidly cut excess stocks. Output in India’s second largest potato growing state doubled this year to touch almost 10 mt. But branded snack companies such as ITC and Pepsi will see no dip in raw material costs as the prices of the specialised varieties they buy remain steady.

Talking to ET, Mr Mortaza Hossain, West Bengal’s minister of agricultural marketing, said: “We have decided to offload the potato that we had asked consumer cooperatives under the West Bengal State Consumers Cooperative Federation (Confed) to procure. The offloading will begin from next week. We are currently working on the model that we will use to offload these potatoes.”

West Bengal finance minister Asim Dasgupta said: “These potatoes will be sold in two phases. The first phase will kick off from September 9 and will continue till the first week of October. In the first phase, we will offload 5 lakh tonne. Of this 5 lakh tonne, 1 lakh tonne will be sold through public distribution system at a price lower than the market price by Re 1 per kg. The rest 4 lakh tonne will be sold through a tendering process.” The second phase will begin after the Pujas and will continue till the first week of December. “The modalities of selling potatoes in the second phase has not yet been decided,” he added.

Confed had procured 1 mt from farmers at Rs 3.50 per kg. Prices in retail markets are currently ruling at Rs 5-12 a kg. Prices of varieties used in snacks such as Chipsona, Atlantic and Lady Rosetta are ruling at Rs 8-9 a kg, said Nischint Bhatia, executive vice-president at PepsiCo India.

Potato is India’s top vegetable crop, with an annual output of 35 mt that contributes the lion’s share to the total annual vegetable production of 100 million tonne. Table potato prices are politically sensitive for the government that monitors them closely as it is an Indian household favourite across incomes.

“A sentiment dip for a short term may happen. In the long term, prices will remain stable before the new crop hits the market from Punjab, West Bengal and Bihar,” said Sachid Madan, director at Technico Agri Sciences, a subsidiary of the cigarettes-to-hotel major ITC Limited. “Prices are bound to increase by Rs 2-3 in October-November when new processing variety crop comes from South and Central India.

However, with Punjab crop coming in from November, end prices will touch Rs 8-9 a kg,” he said.

The company procures close to 1.5 lakh tonne potato annually. In the previous year, processing varieties prices had touched at Rs 16 a kg.

In Bengal, consumers at the retail end get two kinds of potatoes — Chandramukhi and Jyoti. In the wholesale market, Chandramukhi potatoes are available at Rs 600-625 per quintal whereas Jyoti is available at Rs 500 per quintal. The retail consumer gets Jyoti potatoes at Rs 6 a kg whereas the Chandramukhi variety is available at Rs 8-9 per kg.

Sowing has already begun in Una district of Himachal Pradesh and Hoshiarpur district of Punjab where Pukhraj and Chandramukhi varieties are being planted. Across India, sowing will begin after paddy is harvested in October. “The Una and Hoshiarpur crop will come into the market by November and we expect prices to fall with a huge stock in the country,” said Naininder Singh Dhillon, an expert in potato marketing and farming in Punjab.

On Thursday, the MCX September contract was ruling at Rs 425.70, October at Rs 453.10 and March 2011 at Rs 468.10.