For the last few weeks, your columnist has spent a few hours every day trying to find a way to ensure that the bumper production of potatoes in West Bengal (as also UP and Punjab) finds a good market both within and outside the country. Discussions have been held with the railways, with port authorities, cold storage owners, power utilities and regulators, bankers, financial institutions, farmers associations, Mandi Samities, marketing co-operatives and corporate houses using potato as a raw material to find some way of ensuring that the farmers get a fair return on their production. Here has been some success – thanks to market intervention support prices announced by the state and Union governments, but in the absence of cold storage capacities , and the reluctance of new players to get into the cold chain business because of power shortages and high energy costs , export of potatoes through reefer containers becomes a workable proposition, especially of some support is available to the exporter from the government to offset the high costs of shipment as this is a new avenue for export, and the trade is not very sure about the long term sustainability of potato exports.
It was in this context that your columnist attended a meeting at the Kolkata Port Trust with the leading shipping agencies and potato exporters from West Bengal. The rates offered by shipping lines were quite high, used as they are to handling very high value marine products. They were told that this was an opportunity to optimize the use of the reefer vans in the lean season. This is where business economics takes some very interesting turns. Among the shipping lines, there was a group which felt that it was better to lower the charges to achieve optimal capacity utilization , but the counter point was that marine exporters would feel short charged : new customers were being given a better rate than the loyal patrons. Shipping lines are not exactly cash starved, and given the fact that many different types of cargo are available, why would someone really bother about the perishable potato? One also realized that while the consumer price for potatoes was more or less in a ‘fixed range’, the shipment rates were subject to fluctuations depending on traffic volumes, weather conditions and congestion at ports.
Does potato really need reefer vans? Potato can also be transported in ventilated containers- which will bring down the energy costs substantially, as also the carbon footprints – but what happens on the return journey. If freight can be found for Nepal or Bhutan or Bangladesh, or if spices can be shipped back to India from Vietnam and Indonesia which are now more competitive than India in production of select spices, then the transaction becomes viable. The more time one spent in the Board room at Kolkata Port rust, the more one realize the inter connectedness of this world. Globalization is now affecting the potato farmer in many more ways than one had ever thought was possible.
From this end of the spectrum, let’s move to the other. At the farmer’s field, the potato is sacked in jute bags, and must find a place in a cold storage to increase the shelf life. Not much effort has been made by Agriculture Departments or Panchayats to think of low cost solutions to make primary level warehousing and storage available at an affordable price, and in a sustainable manner. Now that the crisis has reached proportions where proceedings in State Assemblies and the National parliament are being stalled on account of potato prices, an effort is being made to focus on low cost, appropriate technology based storage at the farmers filed or the nearby co-op society or the Farmers Club. This primary storage does not involve the use of power. It is important to mention this fact because readers of the column should be made aware of the fact that in large parts of the country, the rural areas are the first to be affected by power outages, especially in the summer season when the demand for power peaks. The Union Agriculture Ministry is now popularizing rural cold storages with ten to twenty tones storage capacity at the Gram panchayat level itself which can keep the crop from deterioration for up to three to four months. This is a sufficient lead time for the markets to stabilize.
Interesting fallout of the bumper production of potato is that the farmers who had entered into a partnership farming arrangement with corporate and food processing industry got a substantially higher rate than those who were producing for the general market. Not only was an assured market available, the prices were more than double the prevailing market prices. With or without a progressive legislation, the farmers are now pressing the officials of the Agriculture Department to facilitate their entry into these arrangements.
One can therefore look at the bumper harvest as a crisis , or as an opportunity to find new markets, new ways of handling logistics, new institutional arrangement in warehousing and forward trading, establishing SPVs and JVs for export of potatoes , or moaning the fact that there is no place to store the sack of potatoes !
The humble potato has indeed moved a long way from the time Vincent Von Gogh had made ‘The Potato Eaters’. Whether this movement adds up to the incomes of farmers, or the intermediaries rake in the entire moolah is largely a function of policy options and choices that have to be made and exercised carefully. In coming weeks, AgriMatters will devote more time on this issue, especially in the context of the next edition of the International Potato Congress which is slated to be held in New Delhi later this year.