No liquidity, growers stuck with surplus crop

Ruchika M Khanna
Tribune News Service
Chandigarh, January 7

India’s withdrawal of high value banknotes in November 2016, has hit the potato growers of Punjab hard. With the potato traders facing a liquidity crunch post-demonetisation, the growers have failed to find buyers for the surplus crop.

As a result, they are forced to sell produce at prices much less than the input cost. The first harvest of potato yielded just Rs 150- Rs 200 per 50 kg (Rs 3-4 per kg) to the growers in the Doaba region of the state. The cost of production per kg works out to be Rs 4.50.

Jaswinder Sangha, a potato grower in Jalandhar, told The Tribune that the traders had stopped buying the potatoes and potato seed after demonetisation. “The traders face a cash crunch. The farmers, however, planted more potato this year as they did not want to waste the bumper potato seed from last year’s harvest. Traditionally in potato trade, the trader would not just buy the crop, but also ploughs money in the farming operations. Since the trader did not give loans to the growers, the latter borrowed money from elsewhere (family and friends) to pay for pesticides, fertilisers and labourers, and increased the area under potato. This led to a bumper crop for the second year in a row, but traders have not bought the produce, leading to a glut and farmers throwing away their produce on the roads,” he said.

Figures available from the state Department of Horticulture suggest that area under potato has increased from 99,000 hectares last year to 1.0 3 lakh hectares this year. Paramjit Singh, nodal officer, potato, Punjab, said they were expecting the production to be 27 lakh metric tonnes (LMT) as compared to 25.7 LMT last year. “The cold stores are already full from last year’s produce. There is little space to keep this year’s bumper produce,” he admits.

Though the problem of plenty is at hand, the state government is still mulling various short and long-term options to deal with the glut. So far only 40 per cent of the crop had been harvested. The real problem will begin in March when the potato seed (60 per cent of total produce) will be harvested, especially as the cold stores in the state are filled to capacity. It is estimated that on an average, each cold store has 10,000-15,000 bags (50,000- 75,000 kg) of potato and potato seed stored. Officers in the state Agriculture Department say they are thinking of introducing potato in the mid-day meal scheme, besides setting up and using a price stabilisation fund (it was announced by the government, but has been set up so far).

KS Pannu, Secretary, Agriculture, told The Tribune that the government was working on establishing the price stabilisation fund soon by using resources from the Rural Development Fund. “We are also looking at seed certification for potato seed and geographic indication (GI) tagging for the seed in Doaba region. We are also looking at setting up 600 state-of-the-art cold stores to store the crop,” he said.

Caught in price trap 

Growers are forced to sell produce at prices much less than the input cost. The first harvest of potato yielded just Rs 150- Rs 200 per 50 kg ( Rs 3-4 per kg) to the growers in the Doaba region of the state. The cost of production per kg works out to be Rs 4.50.