In spite of an abundant supply of potato in cold storages, the price of the commodity in the futures market is high as traders expect a short crop next season.
At the Multi Commodity Exchange (MCX) potato prices for the Tarkeshwar variety is hovering around Rs 450 for 100 kg for 14th March 2009 delivery, against Rs 280 for 100 kg at the cold storages.
Moreover, last week the early potato which arrived from Punjab in the Kolkata market traded at a discount, at nearly Rs 170-180 per quintal, against the actual cost (inclusive of transportation cost) at nearly Rs 225 per quintal. This is in spite of the fact the early crop is late by at least more than a week this year, due to late winter.
According to traders, the early crop may be short by 5-10 per cent. Usually, the early crop, which accounts for 8-10 per cent of the total potato cultivation in West Bengal, arrives in the market by November.
Cold storage owners blame comexes for unrealistically inflating prices, and warn of price crash. Against a normal stock of one lakh tonne of potato, this year the collective stock of the cold storages is 2.75 lakh tonne. Thus, they do not anticipate any drastic rise in prices for the next few months.
"There is no reason that potato futures should be Rs 450 per quintal, when there is already an oversupply situation," said a cold storage owner, who blamed the exchanges for price crash last year. The state cold storage association had pegged the collective loss of the traders and farmers associated with the crop at Rs 750 crore, which might dissuade farmers to grow potato this year.
The highest price that potato fetched last year was Rs 380-400 per quintal, after which the price tumbled down to nearly Rs 140 per quintal, a loss of nearly Rs 70-80 per quintal for farmers.
However, sources at MCX said, Rs 450 per quintal were normal prices, and less than last year's prices. The high prices can be attributed to speculation of a short crop next year, due to the distress sale of potato by farmers this year,
"At this point of time the climatic conditions are not good for potato. While there is no impact on the acreage, the productivity is yet to be ascertained. The crop might be less by five per cent at least," said said Patit Paban De of the West Bengal Cold Storage Association. Last year, potato production in West Bengal was 8.8 million tonnes, an increase of almost 25 per cent over the last year.
