Business Daily from THE HINDU group of publications
Monday, Dec 25, 2006
Agri-Biz & Commodities
Horticulture/Fruits & Vegetables
Potato futures fall on rise in arrivals
Suresh P. Iyengar
A FILE photo of potatoes.
Mumbai, Dec 24
Potato, which was priced high at Rs 750 per quintal in October on MCX, declined to Rs 505 per quintal on Friday.
Similarly, the Tarkeshwar variety from Bengal has dipped to Rs 395 per quintal on Friday from Rs 550 in October. Yet, at the retail markets in Mumbai, potatoes, ahead of Christmas and New Year, are ruling at a high of around Rs 15 per kg.
Prices on the spot markets have skidded on rise in arrivals. In Farukhabad, Uttar Pradesh, one of the main markets for potato, prices have dropped to Rs 400-450 per quintal while in Tarkeshwar, they were marked down to Rs 350-380.
"Potato futures prices will fall further as rabi arrivals will peak from mid-January. Being a perishable commodity, farmers cannot store it to earn better prices," said Mr Harish Galipalli, head of research, Karvy Comtrade.
Though potatoes can be stored in cold storages for 5-6 months, the returns do not cover the costs.
In addition, potato production is expected to be higher this year at 28-30 million tonnes against 25 million tonnes last year as the area under cultivation has gone up from 15 lakh hectares to 20 lakh hectares.
Consumption has more or less remained stagnant at 24-25 million tonnes.
India is the fifth largest producer of the tuber after China, Russia, Poland and Ukraine.
However, potato productivity in India is just 16-19 tonnes per hectare as against 30-40 tonnes in the US and European countries.
It is mainly grown as a rabi crop in UP, Punjab, Haryana, West Bengal, Madhya Pradesh, Bihar, Andhra Pradesh, Tamil Nadu and Gujarat.
Potato is the world's fourth important food crop after wheat, rice and maize and accounts for nearly half of the world's annual output of all root and tuber crops. With an annual global production of about 300 million tonnes, potato is an economically important staple crop in developed and developing countries.
The Netherlands (ninth in production and the biggest exporter and importer) exports around 22-28 per cent of its production while India, the third largest producer, exports hardly around 0.45 per cent of its crop. The weather at the European nation enables growing varieties suitable for making chips and French fries.
"With the possibility of exports picking up being thin, the entire Indian produce has to be consumed locally lowering prices. We expect futures prices to fall further to touch the Rs 450-480 level," predicts Mr Galipalli.
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