The Telegraph
Friday , August 8 , 2014
CIMA Gallary

State intervenes again, potato price soars

Calcutta, Aug. 7: The Bengal government’s intervention in the potato market has raised fears of a replay of last year’s cycle in which prices soared when traders reportedly controlled the supply within the state after they were prevented from sending stocks outside.

The price of the Jyoti variety of potato has already hit Rs 22 a kilo in some Calcutta markets.

Last week, the state government had barred the transportation of potato to other states. From Rs 17-18 a kilo on July 28 — the day the export ban was announced — the price has risen to Rs 22 within a week.

The price is rising in spite of projections that Bengal could end up with a surplus stock of around 6 lakh tonnes by December-end when fresh stocks arrive.

According to officials, many traders depend on sales to other states since potato is usually in surplus in Bengal. However, hit by the ban on exports, the traders could be regulating the supply within the state to make good their loss, the officials said. Any squeeze on the supply will tell on the prices.

In October last year, the Bengal government had fixed the price of potato at Rs 13 a kilo and stopped export to others states, following which the price went up to Rs 18 a kilo.

“It appears that exactly the same thing is happening now,” said an official.

A member of the West Bengal Cold Storage Association appeared to corroborate the surmise. “Every week, the state requires 1.25 lakh tonnes of potato. But since the traders were barred from taking potato out of the state, about 80,000 tonnes of potato is being released from the stores in a week,” the association member said.

The seeds of the current problem appear to lie in Uttar Pradesh, which exported a huge quantity to Pakistan.

“This left an impact in supply of potato to other states, which hiked the demand of potato from Bengal. This continued for a week or so and a few thousand tonnes were sent to other states. Although no potato is being sent to other states now, the price of the commodity is increasing in Bengal markets,” said an official.

Such situations have to be handled with extreme sensitivity as any sign of government intervention will encourage traders to sit on stocks in the hope of higher prices.

But the announcement of the export ban without adequate homework carries risks.

“The government did not calculate what stock we have in our cold storages right now…. We have 31 lakh tonnes of potato in cold storages across the state and we would require around 25 lakh tonnes to meet the state’s consumption requirement till December 31, when the fresh stock arrives in the market,” an official said.

The official added that the state would have a surplus of six lakh tonnes of potato by the year-end. “If the surplus produce is not sent to other states, farmers and traders will suffer heavily,” he added.

The government appears to be banking on policing methods to tackle the problem. The officials said the government had decided to stop transportation of potato to other states. Trucks that will be caught ferrying potato to other states will be seized and the tuber will be sold at government outlets in Calcutta’s markets at Rs 14 a kilo, the price mentioned in a government advisory to traders.

Since last night, police have stopped around 30 trucks on the Bengal-Odisha border near Digha.

Senior officials said the steps initiated by the government could make the situation more critical and cited last year’s example.

Chief minister Mamata Banerjee today pulled up members of the task force set up to keep a check on prices of essential commodities.

Mamata convened a special meeting of the task force — represented by senior officials from the agriculture, agri-marketing and food and supplies departments, the enforcement branch and the Calcutta Municipal Corporation — today to express her concern about the soaring potato price.

“She was furious after coming to know that potato was being sold in Calcutta’s markets at Rs 22 a kilo despite the government’s advisory. All the task force officials faced her wrath. The chief minister feels that the task force failed to stop the transportation of potato to other states,” an official present at the meeting said.