The Forward Markets Commission (FMC) on Wednesday suspended futures trading in potatoes from West Bengal (Tarakeshwar variety), “to curb excessive volatility in the prices”. There should be no launch of November delivery contracts, it has directed.
Tarakeshwar is one of only two varieties of potato futures being traded (the other is the Agra variety). It also forms the bulk of the trade. All the now-banned trade was on the Multi Commodity Exchange.
The West Bengal government had, on August 1, banned potato export elsewhere to the country. This year, potato output in West Bengal was 8.5 million tonnes (mt), against 11 mt last year. In addition, erratic weather had pulled down production in Uttar Pradesh, which produces around 14 mt in a normal year, by around 20 per cent.
As a result, potato prices in West Bengal had surged from around Rs 700 per quintal in March to about Rs 1,000 per qtl at present. Recently, Chief Minister Mamata Banerjee had written to the Centre to ban futures trading in potato to check prices. The retail price in most markets in West Bengal is around Rs 15 per kg, against Rs 7-8 per kg last year in the same month. The potato traders association, while welcoming the ban on futures trading, had been irked over the ban on export to other states. The domestic consumption of potatoes in Bengal is three to four mt, about half of this year’s production. The state accounts for 30 per cent of the country’s potato production, exporting the rest to Bihar, Jharkhand, Odisha, Assam and parts of Andhra Pradesh.
“Futures trading had been largely responsible for the spike in prices. However, a ban on exports would mean a large amount would be wasted,” said Dilip Pratihar, secretary, West Bengal Potato Merchants Association. FMC has been taking action to control volatility in potato prices. It had raised cash margins for potato futures from 15 to 30 per cent from August 1 and also disallowed fresh positions in futures during the 15 days of staggered delivery.