The Telegraph
Wednesday , June 25 , 2014
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Advisory, not tall order, on potato price

Calcutta, June 24: The state government’s request to traders to peg the price of potatoes at Rs 14 a kg in the retail market has brought back memories of last year’s intervention, which had led to a demand-supply mismatch and a consequent spike in rates.

As this year the government has confined itself to issuing an advisory, which is not binding on traders, the Jyoti variety sold at prices between Rs 18 and Rs 20 in Calcutta’s markets today.

An official said it was not possible for traders to sell the tuber at the rate prescribed by the government. “The government should have taken steps to keep the price in check when potatoes were being harvested,” he added.

Senior agriculture marketing department officials said there was “lack of planning” despite last year’s crisis — when the price of potatoes had gone up to Rs 23 a kg.

“Last year, a notification was issued, pegging the maximum retail price of potatoes at Rs 13 a kg. But no such notification was issued this time as the government has realised that it is not possible to sell potatoes at Rs 14 a kg this year,” another official said.

According to the officials, potatoes were sold at Rs 9 a kg from the field this year. “A crop bought by traders for Rs 9 a kg will cost Rs 5 more when it is brought out of the cold storage. The sum is added to the base price as storage, shrinkage, insurance, wastage and labour charges,” a cold storage owner in Hooghly said.

The price increases further on the way to the market from the storage.

“The price of potatoes goes up by Rs 4 when it reaches the retail market because of the ferrying cost and the profits cornered by wholesalers and retailers. This is the reason why potatoes are being sold at prices between Rs 18 and Rs 20 a kg,” a potato trader said.

A member of a cold storage owners’ association said: “If the government forces traders to sell potatoes at a lower price, it could lead to hoarding. This would lead to a shortage in supply and result in price rise.”

The officials said that to keep the price in check, the government should have bought potatoes and stored them so that they could be sold through fair price shops in case of a crisis.

He said had the state government stored potatoes after buying them at Rs 9 a kg from the field, it could have made the tuber available through ration shops at the same price. The government can sell potatoes on a no profit-no loss basis.

Potato traders feel that because of the government’s “wrong intervention” in the market, the base price of the tuber increased to Rs 9 a kg this year from Rs 6 a kg last year.

Last October, the government had issued a blanket ban on the export of the produce to other states.

“Many potato traders suffered losses because of this. Soon after the fresh produce was harvested this time, traders tried to recover last year’s losses by selling potatoes to other states in large quantities. This increased the base price,” an official said.