Assam’s Economic Hot Potato

Potato growers dumping their produce on the road as a mark of protest at Sadiya in Assam bears a striking paradox—even as the state is dependent on supplies from other states to meet its demand, the local farmers are not getting remunerative prices. Creation of adequate cold storage facilities, increasing productivity, and cooperative farming are essential to increase the price bargaining capacity of local farmers. Protesting farmers allege that traders are offering them a paltry sum of Rs 7 a kg, which is much lower than the production cost and has turned potato production commercially unviable. Ironically, the current retail prices of potatoes in the state range from Rs. 20 to 30 a kg, which indicates that the market has the capacity to pay growers a remunerative rate. Potatoes are grown in about a one lakh hectare area in the state, but the state is dependent on procurement from major potato-growing states such as Uttar Pradesh, Bihar, and West Bengal to meet its demand. Dependence on supplies from other states also exposes retail consumers to price volatility at the source and hoarding by unscrupulous wholesale traders. In addition to impacting the livelihoods of potato growers, distress selling by local growers will increase retail price volatility, which will have a greater effect on end consumers. Official data highlights that the farmers in the state spend about Rs 800 crore to Rs 1,200 crore annually for procuring about 75% of potato seeds required from other states. The Horticulture Department observes that most potato seeds are of poor-quality table potatoes, due to which the productivity of potatoes in the state is much less. High investment in input costs, including seeds, coupled with low productivity pushes up the production cost, which leaves the farmers disadvantaged in the competitive market. The pragmatic solution to the problem is increasing production of high-quality potato seeds. The availability of high-quality seeds locally can assist farmers in reducing input costs and boosting production within the same area. Since potatoes are a perishable product, it is crucial for small growers to obtain cold storage facilities that are affordable and located nearby in order to prevent post-harvest losses and ensure they do not have to sell their produce at non-remunerative prices. However, most cold storages are privately owned; the charges for hiring them are fixed by market forces, which are often very high for individual small growers to bear. The small-scale potato growers can form collectives in the form of Self Help Groups (SHG) or Farmer Producer Organizations (FPO) for seeking bank loans and availing various subsidies under central government schemes to take private and government cold storage facilities on rent to enhance their individual affordability. Under the Mission for Integrated Development of Horticulture (MIDH), under which financial assistance is provided for various horticulture activities, including construction/expansion/modernization of cold storages of capacity up to 5000 MT in the country, assistance is available for individuals, groups of farmers/growers/consumers, partnership/proprietary firms, SHGs, FPOs, companies, corporations, cooperatives, cooperative marketing federations, local bodies, Agricultural Produce Market Committees (APMCs), Marketing Boards, and State Governments. Credit linked to a back-ended subsidy at the rate of 50% is available for Northeastern states for construction/expansion/modernization of cold storage, and Controlled Atmosphere (CA) storage of capacity above 5000 MT and up to 20,000 MT is available under the “Capital Investment Subsidy for Construction/Expansion/Modernization of Cold Storages and Storages for Horticulture Products” implemented by the National Horticulture Board. Motivating farmers’ groups to leverage these opportunities can help them explore alternative cold storage facilities. If farmers’ collectives are able to construct their own cold storages and also run them efficiently, then it can go a long way in moderating rental charges of existing privately owned cold storages in the state. As local bodies are also eligible to seek subsidies under these schemes, panchayat bodies can construct cold storages in the public sector to make the space available to farmers at affordable charges. The availability of quality farm produce for seasonal crops throughout the year increases the commercial viability of food processing units. Buy-back arrangements between food processing units and collectives of potato growers can enhance the financial capacity of growers, enabling them to secure larger loans from banks and repay those loans on time, as these arrangements will include predetermined remunerative prices that ensure profitability. With fruit and vegetable markets being unregulated, the state government cannot fix procurement prices for wholesale traders, which makes it imperative for farmers to increase their market competitiveness by making the best use of various government schemes and programmes. The “Potato Seed Production under Low Cost Net House” initiated in the state government under a World Bank Assisted programme has brightened hopes for the availability of quality seeds locally for boosting productivity and making quality potato seed production financially attractive. Small farmers learning to overcome commercial challenges through collective efforts is essential to make the state self-reliant in potato production.