The potato market in India is currently facing challenges. Odisha’s food supplies minister has accused West Bengal of creating an artificial scarcity of potatoes. This situation has arisen as West Bengal, a key supplier, has restricted shipments due to rising prices in its own markets. Odisha relies heavily on West Bengal for its potato supply but is now grappling with high prices.
India’s Potato Production Overview
India is the second largest producer of potatoes globally, following China. The area dedicated to potato cultivation has doubled from 11 lakh hectares in 1991-92 to 22 lakh hectares in 2020-21. Production has tripled during the same period, reaching 561.72 lakh metric tonnes. This increase in productivity reflects advancements in agricultural practices.
Key Potato Producing States
Major potato-producing states include Uttar Pradesh, West Bengal, and Bihar. Uttar Pradesh leads with a production of 161 lakh tonnes in 2021-22, followed closely by West Bengal at 124 lakh tonnes. Together, these two states contribute nearly half of India’s total potato production.
Odisha’s Dependency on External Supply
Odisha is consumer of potatoes but does not produce enough to meet its demand. The state’s climate is not suitable for potato cultivation, which thrives in cooler temperatures. As a result, Odisha heavily depends on West Bengal for its potato supply, with traders typically sending 150-200 trucks to the state.
Current Price Trends
Potato prices are experiencing an upward trend across India. The all-India average retail price was Rs 38.08 per kg, marking a 55.49% increase compared to the previous year. Wholesale prices have also surged, reflecting similar trends. This price volatility directly impacts consumers and the HoReCa sector.
Reasons Behind Price Increases
The spike in potato prices can be attributed to a decrease in production during the 2023-24 crop year. National production fell by 5.6% from the previous year. Both Uttar Pradesh and West Bengal reported declines in their potato yields. Factors such as adverse weather conditions and reduced cultivation area contributed to this downturn.
Impact of Potato Prices on Inflation
Potatoes play important role in India’s economy, with weight in the Consumer Price Index (CPI) and Wholesale Price Index (WPI). Fluctuations in potato prices can affect overall inflation, impacting the cost of living for the average citizen and the operational costs for businesses.
Future Outlook
The current situation indicates that the potato market may remain volatile. Continued monitoring of production trends and supply chain dynamics is essential. Stakeholders must adapt to changing conditions to ensure stability in the potato supply and pricing.
Questions for UPSC:
- Examine the impact of climate on agricultural productivity in India.
- Discuss the role of major potato-producing states in India’s economy.
- Critically discuss how fluctuations in potato prices affect the overall inflation rate in India.
- With suitable examples, analyse the relationship between agricultural supply chains and market prices in India.
Answer Hints:
1. Examine the impact of climate on agricultural productivity in India.
- Climate directly affects crop yield; temperature, rainfall, and soil fertility are key factors.
- Different crops require specific climate conditions; for example, potatoes thrive in cooler temperatures (15°C to 25°C).
- Adverse weather events, like droughts or floods, can lead to decreases in agricultural output.
- Regions with favorable climates for certain crops can boost local economies and food security.
- Climate change poses long-term risks to agricultural productivity, necessitating adaptation strategies.
2. Discuss the role of major potato-producing states in India’s economy.
- Uttar Pradesh and West Bengal are the top producers, contributing nearly half of India’s potato supply.
- Potato farming supports the livelihoods of millions in these states, impacting rural economies.
- Potatoes are a staple food, influencing food security and nutritional standards across the nation.
- These states play important role in the supply chain, affecting prices and availability in consumer markets.
- Potato production also contributes to agro-based industries, enhancing economic diversification.
3. Critically discuss how fluctuations in potato prices affect the overall inflation rate in India.
- Potatoes have weight in the Consumer Price Index (CPI) and Wholesale Price Index (WPI), impacting inflation metrics.
- Increased potato prices can lead to higher costs for consumers, reducing disposable income and purchasing power.
- Volatility in staple food prices can trigger broader inflationary trends, affecting overall economic stability.
- High potato prices can particularly burden low-income households, exacerbating poverty and inequality.
- Policy interventions may be necessary to stabilize prices and mitigate inflationary pressures on essential goods.
4. With suitable examples, analyse the relationship between agricultural supply chains and market prices in India.
- Supply chains involving key producers like Uttar Pradesh and West Bengal dictate market prices across India.
- Disruptions in supply, such as those caused by climate issues or government regulations, can lead to price spikes.
- For example, West Bengal’s restriction on potato shipments to Odisha directly influenced local market prices.
- Efficient supply chains can help stabilize prices, while inefficiencies often lead to price volatility.
- Market prices are also influenced by consumer demand, transportation costs, and storage capabilities within the supply chain.
