Yogi government’s market intervention strategy: A cool move or a hot potato?

By Hindustan Times on 25 Apr 2017 | read
24 Apr 2017

In a first for Uttar Pradesh, the Yogi Adityanath government has offered a support price for potato and promised to procure 1 lakh metric tons of this vegetable at Rs 487 per quintal as a lifeline for farmers.

Realising the challenge of managing a bumper crop of potatoes in a state where prices fluctuate greatly between different bulk markets or mandis, the UP government has come up with a unique plan of inter-market fine-balancing of potato supply to keep the price within the acceptable range.

The potato crop is sown between September and December and is ready in three months with the last lot being harvested in March.

The state government has ordered district magistrates and horticulture officers to keep a close watch on price fluctuations of potato this summer and undertake the ‘juggling act’ to ensure supply of potato in adequate amount from low-priced districts to high-priced ones where the 19 bulk markets of the state exist.

  • Agra, Firozabad, Hathras, Kannauj, Farrukhabad, Aligarh, Badaun, Etawah, Mathura, Mainpuri and Barabanki districts produce about 64% of the total crop of the state, said Dina Nath Shukla, an agriculture expert and professor of botany at Allahabad University. He has done a wide-ranging research on potato and the diseases affecting it.
  • He said Uttar Pradesh was the biggest producer of potatoes in the country amounting, to 29-35% of the total national production.
  • Ground reports said 2016-17 saw potato cultivation in an area of 6.14 lakh hectare across the state with an expected production of 155 to 160 lakh metric ton.

With the BJP having made huge promises to farmers during assembly polls, handling of the potato harvest will be the first true test of the Yogi government, especially in light of UP being the largest producer of potatoes in the country where lakhs of farmers cultivate this cash crop. Last year, thousands of potato farmers were forced to dump their crop, leaving it to rot owing to very poor price being offered for their produce in the market.

To ensure that all promises are kept, the state government, based on recommendations of an expert committee, has come up with a market intervention strategy to handle the potato harvest in the state.

Based on it, the principal secretary (horticulture) Sudhir Garg has shared that a scrutiny of the 19 bulk markets or mandis of the state has shown that on April 10, 2017, the bulk price of potatoes varied between Rs 290 and Rs 690 per quintal.

Garg has communicated this information through a government order sent to director (horticulture and food processing department).

Potato sold at Rs 290 per quintal, the lowest in the state, in Farrukhabad and at Rs 680 per quintal, the highest, in Lucknow.

Further scrutiny of the markets has shown that in districts like Agra, Aligarh, Bareilly, Moradabad, Allahabad, Kanpur, Farrukhabad, Meerut and Saharanpur the bulk price of potato was Rs 400 or less per quintal on April 3, 2017. Its price was Rs 500 or above in districts like Gonda, Faizabad, Gorakhpur, Jhansi, Mirzapur and Varanasi.

The order says that the government believes that timely and adequate supply of potato from low-priced markets to high priced ones can help achieve a balance in pricing that benefits both farmers and consumers.

The government wants the district magistrates and the district horticulture officers to not just get the potato prices printed in local dailies but also through coordination with their counterparts of other districts facilitate flow of potato from low priced districts to markets in high- priced ones.

The state government also plans to send potato to other states with support of their agriculture ministers via respective distribution agencies and marketing federations and tapping the e-NAM or e-national agriculture market.

Welcome step but support price too low: Expert

Experts believe that extending support price for potato, which is the most important cash crop of UP, is a welcome step. However, they say the support price of Rs 487 per quintal is too low, especially as a bulk of the potato farmers are small scale cultivators.

“Out of the state’s total production, around 75 lakh metric ton is consumed by the people and around 7 lakh metric ton is used for processed food. Another 20 lakh metric ton is used as seed. The surplus is exported to other states and even abroad, including Nepal,” said prof Pradeep Bhargava, a noted development economist.

Uttar Pradesh has 1708 private and government cold storages at present with storage capacity of 130.26 lakh metric ton, amounting to 81% of the expected produce.

The state government has said that till March 31, 2017, 96.49 lakh metric ton of potatoes, 74% of the storage capacity, had already been achieved.

“When there is a bumper harvest, the government’s move will enable farmers to get at least the minimum support price. This is a welcome step. However, the support price should have been much higher so as to ensure a decent minimum earning for small-scale farmers who farm on 1 to 5 bigha land so that it justifies their investments and helps make enough money to promote farming and also support their livelihood,” he added.

Prof Bhargava says that on the face of it, the fact that cost of production on average is Rs 28,000 per hectare and the return is Rs 84,000 per hectare seems impressive. “However, when the farmer is small scale and sells potato at a price of Rs 4.87 per kilogram earning hardly Rs 8,400 per bigha, he ends up with hardly enough to justify his investments and labour of three-four months. A better support price therefore is needed,” he added.