Potato exporters stay away from fresh orders

Export demand for potatoes has come to a standstill in major mandis, owing to the minimum export price fixed by the government. Against the current realisation of about $300 a tonne, the government had, on Thursday, set the base export price at $450 a tonne. Consequently, demand fell, as exporters refrained from fresh purchases and a large quantity of booked orders remained unexecuted.

Since potato prices started increasing a couple of weeks ago and Wholesale Price Index-based inflation hit a nine-month high of 6.1per cent in May, the government took steps on two sensitive agri commodity fronts—-onion and potato. Besides cautioning against hoarding, the government fixed base prices of $300 a tonne and $450 a tonne (Rs 18,000 a tonne and Rs 27,000 a tonne) for onions and potatoes, respectively.



“Exports of onions and potatoes have come to a standstill, as exporters remained absent from physical markets. Barring a very low quantity of purchases from local players, there was no demand in the Pimpalgaon mandi. The case was almost the same in the Vashi APMC (agricultural products marketing committee), too,” said Atul Shah, director, Pimpalgaon APMC.

In a month, onions and potatoes have turned costlier by 60 per cent and 10 per cent, respectively. While onion is being traded at Rs 14 a kg in the Delhi spot mandi, it is being quoted at Rs 17.5 a kg in Lasalgaon (Nashik), Asia’s largest spot mandi for onion. In Agra (Uttar Pradesh) and Purulia (West Bengal), potatoes are being quoted at Rs 15.5 a kg and Rs 13 a kg, respectively.

Recently, Union food minister Ram Vilas Paswan announced the government wouldn’t allow the prices of essential commodities to rise. However, Madan Sabnavis, chief economist of CARE Ratings said, “Price movement of agricultural commodities is a matter of demand and supply. Beyond a point, the government will have no role in price control.”

In 2013-14, potato exports rose 37.5 per cent to 220,000 tonnes from 160,000 tonnes in 2012-13. In value terms, the exports rose to Rs 251 crore from Rs 148 crore. In 2012-13, potato production in India stood at 42.4 million tonnes.

“Exports will automatically come down, as the base price is unviable,” said R P Gupta, director, National Horticulture Research & Development Foundation.

To restrict traders from excessive speculation in the futures market, the Forward Markets Commission (FMC) has levied a 100 per cent margin on potato contracts, effective July 9; this means all trades will be executed in cash. FMC has also allowed traders to square off positions, resulting in a dramatic fall in open positions—from 49,590 tonnes for June 18 to 17,430 tonnes for June 27.