Potato prices rise on high demand from bulk consumers

The potato price hit the upper circuit for a third day today due to rising demand from bulk consumers, and a possible threat of a decline in yield this year on an adverse climate during the harvesting season. The essential commodity for the near-month delivery on the Multi Commodity Exchange (MCX) shot up four per cent today to close at Rs 919.30 a quintal. Potato is up 22 per cent so far this month.

Harvesting is currently in full swing, with around 30 per cent of India's crop taken out of the field. Bulk consumers have started storing good quality potato for use through the year. Generally, bulk consumers, including chips manufacturers, corner the early harvest crop to store in their "temperature maintained" warehouses resulting in a sudden spurt in its demand.

"Bulk consumers take advantage of the lower price for storing early harvest crop for its use through the year. Apparently, potato stored in normal warehouses loses starch over a period of time, due to gradual rise in temperature. Such potato is not fit for chips manufacturing. Hence, bulk consumers build inventory normally in the early harvesting season when moisture content remains high in potato," said Ramchandra, a Vashi-based trader.

About 60 per cent of the crop being harvested is supplied to warehouses. The rest goes to mandis for sale. At the Vashi APMC, around 300 tonnes of daily arrival meets demand from local as well as nearby consumption markets. Hence, the price has remained almost rangebound so far this month, at Rs 900 -1,000 a quintal.

"There is no unusual demand-supply mismatch happening today in Vashi APMC with supply adequately meeting its demand. Supply is largely coming from local producing centres," said Ashok Valunj, director, Vashi APMC.

Sanjeev Mittal, an Agra-based trader, attributed the price spurt to excessive speculation in the futures market.

With absolutely no reason, potato prices have been rising for the last few days in the futures market. The spot market in Agra has also supported the upward move with the essential commodity witnessing a rise of Rs 100 in the last couple of days to trade at Rs 900 a quintal. Data compiled by the National Horticultural Research and Development Foundation showed a rise of Rs 70 to Rs 620 a quintal in Agra mandi in March.

With increased acreage, potato output was expected to remain 10-15 per cent higher this season from its estimated output between 32-33 million tonnes in the previous season till January this year. But the unseasonal rainfalls in late-February and early-March, the trend in potato output is set to reverse with the possibility of rots to develop when temperature rises in coming months. Although there is no evidence of a decline in potato yield in early harvest crop, experts believe it may come true going forward.