Potato Agra and Tarkeshwar-A Survey 2015

INTRODUCTION

➢ Potato is the world’s fourth important food crop after wheat, rice and maize owing to its great yield potential and high

nutritive value.

➢ Potato production accounts for nearly half of the world’s annual output of all root and tuber crops.

➢ With and annual global production of about 300 million tonnes (MT), potato is an economically important staple crop in

both developed and developing countries.

INDIA SCENARIO

➢ India is ranked 2nd in potato production after China. However, potato productivity in India is merely 16-20 tonnes/ha vis-à-

vis that of European countries and USA (that is 30-40 tonnes/ha).

Country Potato Production 2013 (metric tonnes) % of World Total

1 China 95,941,500 m/t 25.4%

2 India 45,343,600 m/t 12.0%

3 Russian Federation 30,199,126 m/t 8.0%

4 Ukraine 22,258,600 m/t 5.9%

5 United States 19,843,919 m/t 5.2%

[http://faostat3.fao.org/browse/rankings/countries_by_commodity/EE]

➢ Potato is cultivated in India under highly diversified agro climatic conditions ranging from sea level to snowline. The

following three types of crops are raised every year:

1. Kharif crop: From July-August to October-November (12%)

2. Winter crop: From October-November to February-March (80%)

3. Summer crop: From March-April to July-August (8%)

➢ Potato is mainly a rabi crop and is grown in U.P, Punjab, Haryana, West Bengal, Madhya Pradesh, Bihar, Andhra Pradesh,

Tamil Nadu, Gujarat.

State wise breakup Potato Production 2013-2014 (‘000 tonnes)

1 Uttar Pradesh 15,013.26

2 West Bengal 12,000.00

3 Bihar 6536.00

4 Madhya Pradesh 2322.00

5 Gujarat 2300.00

6 Others 1128.5

Source: Horticulture division, Ministry of Agriculture

Potato Agra and Tarkeshwar-A Survey 2015

MAJOR TRADING CENTERS IN INDIA

The Major potato market (mandi) in UP are Agra, Aligarh, Hathras, Kanpur, Meerut, Badauin, Firozabad, and Farukhabad.

In WB, the centers are Hooghly, Burdwan, Midnapore (West) and Howrah. In other parts of the country, important places

are Indore in MP, Jalandhar in Punjab, Deesa in Gujarat and Hassan, Kolar in Karnataka, etc. Yield of potato in southern

part of India is not adequate. So different markets in Uttar Pradesh is the main exporter of fresh potato to South India.

Potato to eastern India is exported from markets of West Bengal(Tarakeshwar) mainly.

Potato Agra and Tarkeshwar-A Survey 2015

FACTORS INFLUENCING THE MARKET

Market is mostly influenced by the supply-demand scenario. The following are some of the factors directly affecting the

market.

➢ Variations in the domestic average production of potato based on yield and price realization.

➢ Crop development based on weather (particularly cold wave and heavy rains) in key growing regions during tuber

formation.

➢ Comparative price with other vegetables in the domestic market.

➢ Upcountry demand of potato from major cities and food processing industries.

➢ The potato price tends to firm up during the planting period and eases down during the harvesting period.

➢ Transportation charges also have profound impacts on the prices, since the price/ weight is quite low.

➢ Potato growers and traders hoard the commodity before selling in expectation of better prices. Potato can be kept in

cold storage without for 6-8 months.

At last but not least the socio-policital scenario of a country influences the market a great deal. It has been

recorded that in West Bengal during election procedure potato price shot up due to labour shortage in the cold storage. If

a war breaks out the commodity price will increase. Though these are not the usual factors. We have to highlight those

factors we can regulate to keep potato price in check.

COLD STORAGE

The farmer’s choice of cold storage depends on one or more of the following factors

● Distance from the cold store

● Performance record of the cold store

● Behavior of the cold store owner

● Social relations/obligations with the cold store owner

● Rent charged by the cold store

● Loan facility against the stored potatoes

● Canvassing(advertising) by the cold store owner

PRESENT CONDITION

A brief encounter with the very cooperative staff of Mallick Cold Storage, a large cold storage in tarakeshwar belt in Jamin Beria, Singur gave us some insight on what the real situation is. The cold store can accommodate a maximum of 14 lac tones of potatoes. The bumper crop of production in 2015 has led to the cold storage being sardine packed. Chronologically speaking: Mr. Shome, the cold store manager told us “In 2008 the bumper crop production lead to a huge dip in the price of potato. Adding to the woes of the farmers we had to dump truckloads of potato by the side of the highways. Even as a protest against the State Government some heaped the potatoes on the highways. The situation was messy. Government took no initiative as such except for some reneged promises.” He further added, “Another problem in these exigent circumstances as was 2008 is the ever decreasing no of cold storages. 100 odd cold stores have been shut down in this state in the past few years.” Because of this markets are flooded with excess potato supply and price dips

Potato Agra and Tarkeshwar-A Survey 2015

way too down. “Sometimes farmers even don't empty their cold store share just because the price they would get in the markets won't even suffice the cold store rent.” And during these periods the cold store rents even get increased to some amount. When questioned about 2009 and 2014 he filled in with some real situations, “In 2009 crop production failed heavily due to late blight disease. Suppose potatoes in a definite area got infected with this fungus and the farmer doesn't have the money for anti-fungal spread so this will spread to the adjoining fields. Thus crops in a huge locality get wasted. The cold store was almost empty that season.” According to him the basic problem in our country is with the farmers, they are not educated. They are not armed with the recent technology end even if they are they don't know the proper use of it. Then the second problem which he feels was in that particular area every farmer produces potato as if it's a tradition. He also suggested that the farmers should cultivate different crops, maybe it's going to involve more investment and manpower but government should take the initiative. And then coming to the point of dealing with the excess potato, why not start some potato processing units! “We can't send potatoes very far because the potatoes are stored in 1.5-2.5 °C and now they are loaded into trucks at around 35 °C. But we can send frozen potato products or processed potato easily maybe overseas if possible, there are definitely some solutions. Records say that some talks of setting up vodka units popped up but it remained only an idea.” We also talked to some farmers there. Mr Binoy Das is a small scale farmer in the Singoor area. He has 20 bags of potato

in some cold storage. And he raised a very serious issue here. “I have to take out 10 bags of potato. But i won't get my

potato out until the bags in front of my bags get cleared out.” When the normal notice period is 2-4 days it sometimes

takes more for small scale farmers. Another problem the small scale farmers face is the bullying middlemen. They have to

hand their potatoes to the middlemen at a much less cost than they can get at the market sometimes. "Most of us, the

small scale farmers in the countryside, go to the dadandaars(the one who lends money) when they need money just to

avoid red tape involved in getting bank loans. They have to reimburse the daadandaar with either money or potato (loan

return). And the amount they pay back is very much higher than they actually owe to the daadandar. The profit is less for

the farmers and they suffer the most, the small scale farmers.", says Mr Bittu Das, another such small scale farmer.

There are many such problems that are discussed in the next section of this report.

UTILIZATION PATTERN OF COLD STORES

A majority of the surveyed farmers(70%)used cold stores for storing ware and seed potato. All large and semi-medium

holders used cold storage, while some semi-medium holders(9%)did not. All the large, and a majority of medium and semi

medium holders stored ware and seed potatoes, whereas only a small proportion of small holders(28%) did so. The

proportion of farmers using cold stores for storing only seed potato was more in the case of small holders(71%),followed

by 27% of the semi medium holders.

PROBLEMS FACED BY THE FARMERS IN COLD STORING POTATOES

The central cold storage order of 1980 regulates the cold storage industry in India, except in Uttar Pradesh, West Bengal,

Punjab,and Haryana. These four states have their own acts or orders for cold stores. In Uttar Pradesh, the state

government enforced the Uttar Pradesh cold storage Regulation Act of 1976. This act makes wide provisions covering

fixing of cold storage rentals; payment of compensation to users in the event of loss, spoilage or rotting of stored

commodities; settling of grievances by users; loan availability against stored commodities, etc.

Potato Agra and Tarkeshwar-A Survey 2015

Cold storage rentals are fixed annually by the state government and owners are obliged to change the fixed fee under

insurance of receipts. The cold storage Regulation Act of 1976 has a specific provision under section 24 to the effect that

hires of the cold storage space will be compensated for loss, spoilage, rotting, etc., of stored commodities under certain

conditions. Sampled farmers were aware of legal remedy for indemnification, but it was reported that their grievances

were not redressed because of collusion between law enforcers and cold store owners.

The survey revealed that many difficulties and types of malpractice are encountered by farmers in storing potatoes in

cold stores. Malpractice may be attributed to (1) weak bargaining power on the part of the farmers who are not properly

organized, (2) indifference and collusion by the authorities, and (3) organized trade interests of cold stone owners.

1. Farmers experience unavailability of cold storage space, particularly in the years when production is good. This

situation arises sometimes due to fictitious bookings and holding of space for thousands of bags for businessman who

are regular customers of cold stores. Most surveyed farmers reported that they face problems with getting the cold

storage space they need; this average was made up of 71% of small holders, 82% of semi-medium holders, 71%

medium holders, and nearly 50% of the large holders.

2. Many cold store owners charge rent higher than that fixed by the government. More small and medium farmers are

over charged than large holders. The palledars(loading /unloading laborers) need to be tipped for loading and

unloading potato bags, particularly during rush times.

3. Compensation is rarely given for damage or rotting caused by the cold store operation. Only 35% of farmers reported

that compensation is partly paid, 48% said that no compensation is given for losses and 17% didn't answer this

question. Forty-four percent of large holders reported that they are paid compensation, while farmers in the semi-

medium and medium categories receive much less compensation.

4. Other types of malpractice frequently cited were collusion between cold store owners and traders, exchanging good

quality seed potato with other low grade potato and procrastination in allowing withdrawal of potato stocks

deposited in the cold stores. More than one-third of the farmers reported that good seed potatoes are exchanged for

poor quality potatoes; this was experienced most often by small holders and least often by large holders. This

suggests that the larger holders have more influence on cold store owners than the small farmers.

5. Sometimes, particularly during September and October when majority of farmers take potatoes out of cold storage, 4-

5 days have to be spend in this operation. On average 26% of the farmers surveyed have difficulty removing potatoes

when they want them. In the case of small holders whose potatoes are in the corner of the store, he has to wait until

the potatoes in front of them are taken out. This is probably why 29% of small holders faced this difficulty against only

11% of large holders. On average only 37% of the surveyed farmers could take their potatoes out without giving

notice, while the average notice given was 2.4 days. The average notice given by small holders was 2.6 days, against

1.9 by large holders. Some farmers consider the notice period to be too long. However though the majority of farmers

didn't consider the notice long, they mentioned that they faced difficulty and wasted time visiting the cold store

several times to take delivery. These delays also affect profits as prices may fall by the time delivery of stored

potatoes is taken.

6. The cold store owners try to convince the farmers, particularly those having less than one truckload, to sell their

produce to the farias on the cold stores premises. Cold store owners thereby get a commission. Owners have also

developed links with traders from different markets. In the case of farmers who want to take potatoes to the market,

Potato Agra and Tarkeshwar-A Survey 2015

cold store owners give them a bill(locally called bilty) in the name of the trader/agent/wholesaler of the cold store

owner's choice. The store owner then gets a commission because the farmer has to sell the potatoes to that

trader/agent only. Payment to farmers for potatoes sold at cold stores to farias or beoparis is delayed for months;

sometimes for more than six months after the sale.

COLD STORAGE STRIKE In West Bengal in the year 2012 (Source:http://www.thehindubusinessline.com/industry-

and-economy/agri-biz/bengal-hikes-potato-cold-storage-rentals-by-rs-19quintal/article4677242.ece)

Owners of all 425 potato cold storage in West Bengal went on a one-day strike on 19th of November, demanding hike in storage charges, the West Bengal Cold Storage Association said here.

“Electricity tariff and operational costs have gone up by 50 per cent in the past two years while rental charges have not revised since February 2010,” said Patit Paban De, a spokesman of the Association.

The owners of the cold storages are demanded that the rental be raised from between Rs 101 and Rs 109 to Rs 150 per quintal.

“The cost of labour and fuel has also gone up in the past two years. Unable to bear the expenses, around 10 cold storage units have already closed down and a few more will not be in a position to be functional by the end of next month,” he said.

In the end, the State Government approved a rental hike of only Rs. 19 a quintal on storage of potatoes.

FOCUS OF THIS REPORT

Our main focus throughout this paper will be on the two major Potato markets of India: Agra and Takeshwar. We

tried to determine the causes of these undesirable fluctuations in potato price and to find out a solution to this.

The data have been collected from the two of the commodities exchange of India: Multi Commodity Exchange

(MCX) and National Commodity and Derivatives Exchange (NCDEX).

From the spot price data for Agra and Tarakeshwar potato market, we can see that in 2008, 2010 and in 2015

potato price was absurdly low in contrary to the soaring potato price in 2009 and in 2014. Year-wise analysis

shows that in 2008 West Bengal saw bumper crop, 8 million ton , an increase of nearly 60% over 2007

production of nearly 5 ton , whereas, in Uttar Pradesh the total production was 14 million ton against the

average production of 10 million ton. This bumper crop and rise in storage costs coupled with the suspension of

futures trading, crushed potato prices in the country.The Agra region in Uttar Pradesh cultivates more than 30

percent of the country’s total potato yield. But Agra and its neighbourhood areas had around 200 cold storages

which were not sufficient for storing this huge production. The additional crop ended up in the market under

distress. Although the government had announced that it would export some quantities to Bangladesh and

Mauritius, the idea came a cropper since Bangladesh too had recorded a surplus production. All these factors

combinatorially brought down potato price at Rs 40 per 20 kg, the lowest potato price after 5-6 years of stable

potato market.

Potato Agra and Tarkeshwar-A Survey 2015

POTATO AGRA Futures and Spot Plot

[Fig 1]

Fig.1 above shows the Futures Rate (per Kg) and the Spot Price (per 100 Kg) in Potato Agra market (MCX) from 9th of

March-06 to 9th of July-14.

Potato Agra and Tarkeshwar-A Survey 2015

POTATO Tarkeshwar Futures and Spot Plot

[Fig 2]

Fig.2 above shows the Futures Rate (per Kg) and the Spot Price (per 100 Kg) in Potato Tarkeshwar market (MCX) from

9th of September-06 to 5th Nov-12

Potato Agra and Tarkeshwar-A Survey 2015

REASONS FOR THE 2009 HIKE IN PRICE OF POTATO

2009 witnessed a completely different market situation. Potato production in 2009 dipped 30%with respect to the previous year(2008) resulting in 22,00,000 ton less than normal in West Bengal only. Though the main reason was assumed to be late blight disease but experts said that aside from it, the yield of potato crop had suffered from adverse effects caused by a medicine named [Dithane] M45 cultivated by a Punjab based agro firm to combat fungal infection in the potatoes. Agriculture department officials claimed that this anti-fungal medicine lessened the basic yield of potatoes. This inadequate potato supply resulted in hike in potato price.

[Fig 3]

a) Article from Business standards.

Potato production may dip 30% (Article published on Kolkata February 12, 2009 in www.business standards.com)

Potato production in West Bengal is likely to be 30 per cent less than the previous year on account of late blight disease.

Potato Agra and Tarkeshwar-A Survey 2015

Naren De, West Bengal agriculture minister said at a seminar organised by the Confederation of Indian Industry (CII) that potato production this year would be 22,00,000 ton less than normal. This comes after a record potato production of around 80,00,000 ton last year, an increase of nearly 60 per cent over the previous year's production of 50,00000 ton, in the state.

In 2007, when potato production was 50,00000 ton, late blight disease had damaged potato crop spread over 85 per cent of the cultivable area. However, in the subsequent year, a bumper crop led to a large distress sale by the farmers and the state government had to intervene by providing certain subsidy, which helped traders more than farmers.

Short winter and high dependence on imported seeds have often been attributed to potato crop failure in the state. This year only 35 per cent of potato seeds had been imported from Punjab. About 45,00,000 ton of potato in West Bengal is consumed in the state. The balance is usually transported to Orissa, Assam and Andhra Pradesh. The total capacity of the 370-odd cold storages meant for storage of potato only in West Bengal is around 53,00,000 ton.

b) Article from Indian Express.

Potato prices go north: Article Published in Indian Express on Wednesday May 20, 2009

The retail price of potato has increased by almost hundred per cent in the last two months in Kolkata. In March the price hovered around Rs 8 to 10 per kg, now it is touching Rs 15. While the price at cold storages is Rs 1,100 a quintal, in retail market it reaches up to Rs 1,500.

"During elections, thousands of workers in 400 cold storages across Bengal went to their native places to vote. Last week there was a dearth of labourers for loading and unloading potatoes that pushed the prices," said Sanatan Santra, general secretary, Aloo Byabsayee Samiti.

"It could be an artificial crisis because from the wholesale market to the retailer, prices should not go up more than Rs 2 per kg," said Santra. He, however, added that in summers, when there are a few vegetables, demand for potatoes usually shoots up.

M Tebriwala, former president of West Bengal Cold Storage Owners Association and a wholeseller, said wholesale market in Tarakeshwar was expecting the hike as the potato production has been less in 2009 compared to last year.

"In March 2008, the production was close to 90 lakh quintals. Due to unfavourable winter in 2008, the harvest in March 2009 was about 55 lakh quintals," said Tebriwala.

Another factor is the less area dedicated for potato farming this year. Sukumar Samanta, president of Singur Ratanpur Aloo Baybsai Samiti, said, "This year in Hooghly, potato was cultivated on 5,000 hectares less area as compared to the last year."

"Price has indeed gone up in the last few days. Due to the excessive heat there was a shortage of other vegetables in the market and the demand for potatoes shot up. I have called a meeting with the secretaries to discuss the issue on Wednesday," said Agricultural Marketing Minister Mortaza Hossain.

REASONS FOR THE FALL THE IN PRICE OF POTATO IN 2010:

2010 witnessed bumper crop. Potato cultivation area increased by 2% resulting in total 15% increase in production. Potato price fell (see Fig.4) significantly to Rs 5-6 per kg in retail, which was nearly as high as Rs 20-24 per kg in West Bengal because in 2009.

Potato Agra and Tarkeshwar-A Survey 2015

[Fig 4]

a) Evidence from The Economics Times article.

Punjab farmers advised to sell potato harvest in March (Article published in Economics Times on Jan 28, 2010)

CHANDIGARH: With the arrival of potato crop in Punjab, a study released by Punjab Agriculture Univeristy (PAU) Ludhiana has advised farmers to sell their potato harvest in the month of March when the prices are expected to touch Rs 575-610 per quintal.

However, traders and companies predict a bumper crop across the country and prices to further slash. "There has been a 2% increase in planting across the country and we expect the crop size to increase by 15%. The table potato prices will touch Rs 3.50 to Rs 4 per kg by the end of February,"said Mr Sachid Madan, director at Technico Agri Sciences, a subsidiary of the cigarette to hotel major ITC Limited.

In West Bengal which is the second largest producer of the commodity, potato prices have crashed to Rs 5-6 per kg in retail, which until recently had been ruling at as high as Rs 20-24 per kg in the state.

West Bengal, agriculture director, GC Burman, informed that the prevailing weather condition were favorable for the crop which was sown on over 3.60 lakh hectares.

"If everything goes well for the next 2-3 weeks, the state is sure to have once again a bumper potato harvest this year. In that case, the supply would be in excess of demand at 50 lakh tonne, which is expected to soften its price," said Mr Burman. Currently the early varieties of Pukhraj and Jyoti were arriving in the market.

In Ludhiana the study was relased by Agricultural Market Intelligence Centre (AMIC), Department of Economics & Sociology, PAU, which analysed the crop prospects and potato prices during 1999-2009 in Jalandhar market of Punjab.

Potato Agra and Tarkeshwar-A Survey 2015

In Punjab area sown under potato varied between 60-90 thousand hectares and the production ranged between 11-17 million tones with a yield range of 16-20 tonnes per hectare.

According to Dr J S Sidhu, Principal Investigator in the Agricultural Market Intelligence Centre (AMIC), Department of Economics & Sociology, PAU farmers have to take a decision whether to sell potato immediately on harvest or keep it held/stored for some time to get better prices.

"The area under potato is expected to increase in UP, West Bengal, Punjab, Haryana, Rajasthan, MP and Andhra Pradesh and to decrease in Gujarat and Maharashtra. The crop conditions in all the potato growing states are quite good and free from pests and diseases at this stage of the crop and the overall production is expected to be little more as compared to last year," he said.

In Punjab the prices of potato remained low during December to February and started rising afterwards reaching maximum during the months of October and November. The price variability between peak and lean season depended upon the area planted and the yield which further depends upon the climatic conditions and the incidence of diseases particularly the late blight in the major potato producing states, remarked Dr Sidhu.

REASONS FOR THE 2014 HIKE IN PRICE OF POTATO All these years we noticed that potato price was dancing in accordance with the supply-demand scenario. As production increased, shortage of cold storages and lack of facilities of exporting fresh vegetable to other countries increased potato supply in the local markets resulting in diminishing potato price. And less supply resulted in high price. In 2014 the price of potatoes went up (Fig.5). But this was not due to the less production of potatoes. 2014 situation was somehow different.

[Fig 5]

Potato Agra and Tarkeshwar-A Survey 2015

A) Tomato, potato prices continue to skyrocket ( Article published in Economics Times on Jul 28, 2014) KOLKATA/PUNE: Potato prices are rising, while tomato has briefly touched Rs 100 a kg in some neighbourhoodmarkets in north India because of a supply glitch. Tomato supplies have suffered following heavy rains in the north. Meanwhile, potatoes are being exported to Pakistan and the country's second-biggest producer, West Bengal is contemplating restrictions on allowing traders to supply the tuber to other states. Potato prices have risen to Rs 40 - 45 in Bangalore.

Traders in Uttar Pradesh, the major supplier to the south are exporting potatoes to Pakistan, where prices have touched Rs 70 a kg.Last week, the Economic Coordination Committee of the Cabinet in Pakistan extended the date for duty-free import of potatoes till November 15,and approved import of another 100,000 metric tonnes of potatoes to arrest skyrocketing prices.

KR Krishna, a leading wholesaler of vegetables from Yeshwanthpur, Bangalore said the region receives potatoes from Uttar Pradesh, West Bengal and Madhya Pradesh. "At the wholesale level price of potatoes is hovering around Rs 23 -25 per kg. And at the retail level prices have shot up toRs 40 -45 in Bangalore. In Chennai, price is around Rs 35 -40 per kg and so is it in Hyderabad. Prices will cool off hopefully once potato starts arriving from Hassan from second week of August-."Prices are also rising in Gujarat, Narendra Modi's native state. In Ahmadabad the wholesale price of good quality potato which was priced at Rs 16 per kg earlier is now selling at Rs 21. At the retail end price is hovering around Rs 30 per kg. In Delhi and NCR, price of potato is hovering around Rs 30 per kg.

Pakistan's announcement last week on duty free import has enthused traders in Uttar Pradesh, the largest producer of the tuber. Last week, the price at the wholesale-level was Rs 16 per kg. Now it is Rs 18 per kg and traders indicate that prices may go up further."I am sending 17 tonnes of potatoes per day according to the requirement of Pakistani buyers. I am getting good prices from Pakistan which is equivalent to the minimum export price (MEP) set by the government," said an Agrabased trader who did not want to be named.India has set an MEP of $450 tonne for potatoes. Even Sri Lanka is showing interest to buy Indian potatoes, said Patit Paban De, a leading potato trader from West Bengal. R P Gupta, director, National Horticultural Research and Development said, "Fresh potatoes which are arriving from hilly areas of Himachal Pradesh and Uttarakhand are now pricey. But potato prices will stabilize from September onwards."

India had produced 46.3 million tonnes of potato last year. While prices of potatoes have shot up in most parts of India, West Bengal chief minister Mamata Banerjee is mulling to stop intra-state movement of the tuber to arrest prices in her own state. In last one week wholesale price has gone up 7% in Bengal which has moved up prices at retail level. "If prices go up further then we will stop movement of potatoes from our state. CM has called a meeting on July 28 to review the situation and take a final call," said Arup Roy, state agri marketing minister. The state has 34 lakh tonnes of potatoes in cold storages.

Adding up to the woes of Indian farmers is the nuisance of the middlemen in Indian agriculture.A law that dates back more than 50 years forces millions of other farmers to sell produce in regulated markets where middlemen take a hefty cut, boosting the cost of fruit and vegetables sold from handcarts and corner shops depriving both the farmers and the customers of a fair price. While the middlemen are buying potatoes for Rs. 1-1.5 per kg in 2008 , customers are shelling out Rs 7-10. Research shows that the total margin of middlemen in the entire chain adds up to 75 percent, ramping up costs for consumers.The law aims to protect farmers from exploitation by rich landlords, and requires all produce to be sold through regulated markets in most of the 29 states.

Even big retailers, such as Reliance Industries (RELI.NS), Wal-Mart Stores Inc (WMT.N), Shoppers' Stop (SHOP.NS) and Britain's Tesco Plc (TSCO.L), can only buy through wholesale markets governed by the Act.

Modi's food and finance ministers pushed states to let fruit and vegetable farmers sell to anyone they want, ending a practice that governs more than 7,000 wholesale markets. Excluding fruit and vegetables from the APMC Act would cut prices by at least 5 percent because direct selling would cut out middlemen's commissions and wholesale market fees.

Now stamping middlemen is no panacea. Despite adequate availability sometimes there is an increase in prices of potatoes because of hoarding. So to tackle price hike the government brought onions and potatoes under the Essential Commodities Act, 1955, for one year to curb hoarding. The decision taken by the cabinet committee on economic affairs (CCEA) imposed limits on the quantity of onions and potatoes that individuals and wholesale traders could stockpile. The government fixed minimum export prices for onions and potatoes to discourage exports and increase local supply.

Potato Agra and Tarkeshwar-A Survey 2015

Despite all these efforts to even up potato price a bumper crop, coupled with weak demand from other States, led to a free-fall in potatoes prices in West Bengal. Potato production in the State is touched 110 lakh tonnes (lt), a 15-20 per cent increase over last year’s production of 90-95 lt. The Jyoti variety tuber was ₹210-260 for a 50-kg pack (which works out to be ₹4.20-5.20 a kg) at the farm-end. The price was 30-40 per cent lower compared with the same period a year ago. West Bengal government’s policies for limiting growth in consumption can be partly blamed for this. Reacting to rise in potato prices in the local market, the Mamata Banerjee government restricted movement of potato to other consuming centres over last two years. As a measure it was on March 12, 2015 that the Bengal Government had announced its decision to purchase potatoes at Rs. 5 a kilo directly from the farmers. Purchases were made through various State-owned agri marketing department shops (called Sufal Bangla). The procured tuber was then sold in retail markets through various fair-price shops.

Studies show that the most rapid annual growth of potato production is in India at 3.8%(1999-2020). To cope up with this increasing potato production and save farmers of the crashing of potato prices India has to find an outlet of utilizing the excess production. Currently India exports 1-2 million ton potato to Pakistan, Singapore, Dubai, Malaysia, Sri-Lanka. Punjab govt. took some initiative to export potatoes to European markets. But potato being a perishable crop is hard to export to faraway countries as a fresh vegetable. As an example in 2008 there was a potato price disparity that some people referred to as ‘the tale between two countries’. US prices reached record high levels in August 2008. During the same year potato growers in India became so upset with low prices that they made public protests. This situation points out two important facets of international potato trade. First, fresh potatoes are expensive to transport. It was not economically feasible to ship potatoes from India where they were plentiful to the US where they were scarce. But if the Indian government can set up some processing units at the right time this crisis can be averted. In the past govt. toyed with the idea of setting up vodka units, potato chip units. But no ground work has ever been done. So the plight of the farmers continues. The Indian potato industry had a futures market that growers and buyers could use to reduce price risk. But that market going defunct, potato price fluctuation can only be averted by encouraging export of frozen processed potatoes and setting up potato processing units. There is a famous saying around “out of ten years five will be break-even, two will be very profitable and three will be losses”. This has to be changed.

An additional point regarding our study on the price patterns of Chandausi Mentha oil market and Agra and Tarakeshwar Potato Market.

Comparing the futures price of Potato Agra Market with the Potato Tarkeshwar Market in MCX India.

Futures price correlation: Correlation between futures price : 9th Sep 2007 to 7th May 2008= 0.719 4th December 2008 to 15th October 2009= 0.981 19th October 2010 to 31st December 2011= 0.718

Potato Agra and Tarkeshwar-A Survey 2015

Comparing the Condition of Potato Market with the MenthaOil Market in MCX India.

[Fig 6]

Fig. above shows the Futures Rate (per Kg) and the Spot Price (per Kg) in MenthaOil market (MCX) from 26th of April-05 to

30th of April-15.

Notice the extent of correlation between the futures and the spot prices in the Fig 1 and Fig 6. It can easily be noticed that

correlation between the prices in Potato Agra(correlation coefficient=0.9382) is less than the correlation between the

Prices in case MenthaOil (Correlation coefficient ≈ 1).

And this is mainly because of the fluctuating nature of price of potato. We have noticed that sometimes potato price

crashes abruptly (during the bumper crop seasons e.g. in 2015 itself in India) and sometimes it rises steeply (mainly due to

bad production of potato e.g. in 2008 in U.S.A and in 2009 in India). And these fluctuations affect the growers as well as

the buyers badly. Now the focus of this paper is to determine the causes of this not-so-wanted fluctuation and to find out

a solution to this.

Potato Agra and Tarkeshwar-A Survey 2015

Reasons why the potato trading has stopped

The spot market price for potato was fluctuating in a great range, too often. And this was affecting the futures market

greatly, as there exists a contemporaneous and bi-directional lead-lag relationship between the spot and the futures

markets. As against the widely accepted hypothesis of futures market, with its cost and hedging advantages, leading the

spot market, Indian futures market fails to supply early information to spot market. The average means of future and spot

are almost equal for the sample period. The spot volatility is greater than the future price volatility as revealed by

standard deviation. This is to be expected as the futures market is regarded as a source of price stability in the spot

market. The paper published by International Journal of Business Quantitative and Applied Management Research 'Lead

Lag Relationship and Price Behaviour in Potato' explores the price discovery role and lead-lag relationship between spot

and future price of potato.

The paper gives us an insight on how the futures and spot price changes accordingly. And the huge fluctuation in spot

market price lead to the same in futures market price also the buyers and traders suffered to a great amount. It is also

been said that contracts were no longer serving the purpose of price discovery and hedging because of lack of liquidity,

participation and adequate stock of potato in the exchange's accredited warehouses. While interacting with some traders

in Tarakeshwar belt it became quite evident that futures market of potato lacked broad based participation. They are not

even familiar with the name 'Futures Market'. After a study by Abhijit Sen and associates, “Reportof the Expert Committee

to Study the Impact of Futures Trading on Agricultural Commodity Prices" Futures Trading on potato has been stopped

once again from July 2014 (in MCX) after a small pause in 2008.