WITH around 12pc additional acreage as compared to that last year and favourable weather conditions so far adding up another 10pc to the yield, Pakistan, in all probability, would harvest a healthy, if not bumper, potato crop as early estimates indicate a yield increase of 20pc.

The hopes for a good harvest, however, also instill fears among farmers of a price crash this season. If trade of early harvested crop, which is already underway in the central Punjab districts, is something to go by, the slide in price might be substantial.

At present, the red skin potato is being sold at around Rs1,700 per 115kg bag against Rs3,000-3,500 last year. The white skin variety, which normally finds its way to other provinces and Afghanistan, is being traded at around Rs1,300 per bag. For the growers, this is a bad beginning of the season.

The government tried to protect farmers last month when it by lifting duty on exports, which it had placed last year as the potato prices then skyrocketed, but the decision came a bit late for the exporters to secure orders and the domestic market to stabilise. Earlier, the government had slapped import duty as well. But the exporters think that both these steps might not help much to shore up a falling domestic price this year because of a combination of factors like, international market trends, lack of domestic infrastructure for export and the crop size.

Initial estimates put the crop size at over 6m tonnes. With domestic consumption only 50pc of it, the country would have a trading surplus of 3m tonnes.

Initial estimates put the potato crop size at over 6m tonnes. With domestic consumption only 50pc of it, the country would have a trading surplus of 3m tonnes

Russia has been the biggest market for the last few years. This year, a combination of sanctions from the EU and slide in world oil market has pushed the value of the Russian currency down substantially. That means all imports by Russia would become costly, and the Pakistani potato, even with this slide in prices, would be no exception. The Russians also recently announced some trade relaxations for India, including for potato.

Another factor, which might hit export this year, is gross reduction in Nato supplies to Afghanistan. Till last year, Pakistan saw massive flow of the Nato supplies through reefers, which were going back empty and provided a big window for exports of various Pakistani commodities on relatively easier terms and cheaper rates. That traffic has slowed down heavily as the Nato forces are leaving Afghanistan. Thus, even if Pakistani exporters secure some orders from the world markets, arranging reefers might not be easy for them — or at least would require more time and resources — both human and financial. The exports thus might take time to adjust to this new reality that might largely define potato export this year for Pakistan.

Initial estimates put the potato crop size at over 6m tonnes. With domestic consumption only 50pc of it, the country would have a trading surplus of 3m tonnes

Last year was an exceptional year for farmers and traders and they made windfall when prices of Pakistani potato touched the highest in the world. Because of high prices, the area expanded not only in the potato belt of the central Punjab but in non-traditional areas like Multan as well.

Though the country has developed huge storage capacity during the last few years, the crop might survive rotting in the fields, but this capacity may eventually help only traders, middlemen and exporters, and not the farmers. These traders invested in building storage capacity and would likely profit on their investment. But if this profit comes at the expense of farmers’ interests, it must raise some eyebrows in the official circles. The potato is fast emerging as another cash crop for growers in the central Punjab for the last few years due to better hybrid seeds and higher yields. Punjab alone contributes 90pc to national production.

Published in Dawn, Economic & Business, January 26th , 2015

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