Potato Value Chain in India
The Indian Economy is primary agro based as over 58% of Indian population is directly involved in the occupations related to agriculture which is the main source of livelihood. The country is the leading or the second largest producer of many Fruits & Vegetables in the world. When it comes to Potato, India is the second largest producer with estimated production of 52 million tons in 2019. But when it comes to processing, India is not even in top 10 nations as Potato processing is insignificant.
In view of the prevailing primitive post-harvest handling system of the harvested crop and inadequate cold storage capacity, the wastages of potato are figured around 7% of the total production, which is about 3.5 million tons valued at INR 3500 Cr. approximately at farm level price.
It is therefore of paramount importance for the country to modernize the post-harvest handling system for the crop, create adequate cold storage capacity and encourage the processing of potatoes in a big way, so that this crucial wastage is prevented. The processing is also going to add substantial value to this horticulture produce, which in turn will result in the economic benefits to the farmers and prevent the wide variation of the prices of the raw potato between the harvesting and the off season much to the disgust of the common consumer.
India in comparison to others
The percentage of processing of potatoes in the advanced countries exceeds 65% which contributes a great deal to the development of their rural economy. The concept of processing & value addition of potatoes into a diverse product range started in India about 20 years back with the manufacturing of Potato Chips. The market success with the consumer acceptance of the product motivated PepsiCo to set up more processing facilities for manufacturing Potato Chips, which attracted a few more domestic companies to follow suit. Thereafter McCain, a Canadian company started their unit in 2008 and HyFun Foods built their first processing unit in 2015 for manufacturing of Frozen French Fries & Potato Specialties at Gujarat.
India is still in its infancy as a potato processing country which gets illustrated from the following table, comparing the existing raw Potato utilization pattern between USA and India.
Comparative Analysis of Potato Utilization Between
India & USA
|S. No.||Potato Utilization,
|India||USA % of Total Potato Production|
|Qty. in mn. MT||%|
|1||Sale as Table / Fresh Stock||37.00||71.15||20.00|
|i.||As Potato Chips||2.30|
|ii.||Frozen French Fries||0.30|
|3||Exports||0.60||1.15||Included in ‘2’|
|4||Seed Potato & Stock||5.50||10.58||7.00|
|6||Sale as Livestock feed||–||–||5.00|
The above data reveals that the maximum quantity of Potato consumed in India is as fresh produce sold in the domestic market, while a small percentage is exported to countries like Nepal, Maldives, Mauritius, Indonesia, Saudi Arabia, Kuwait, Oman etc. The potato processed into Chips is again consumed maximum in the domestic market with the brands produced by PepsiCo (Lays), Balaji Wafers, ITC (Bingo), Haldiram, Yellow Diamond etc. These high-quality branded Chips are produced from potato varieties like Kufri Chipsona, Lady Rosetta and Atlantic procured from Gujarat, Madhya Pradesh, Uttar Pradesh, Punjab and West Bengal.
India so far
The country has also done well by successfully producing the potato varieties like Santana, Innovator, Frysona and Kennebec suitable for manufacturing Frozen French Fries, the major producers of which are McCain, HyFun Foods and Iskon Balaji. All these companies have preferred Gujarat as their base as these potato varieties are grown well here due to the favorable agro climatic conditions. The state has emerged as the leading producer of the processing variety of potatoes, which has ushered in an era of prosperity for its farmers, through higher productivity and superior sale price at the farm.
A year-wise comparison of the cost of potato sold as table variety and as the processing variety is presented in the following table:
|Year||Price/kg of Processing Varieties (Gujarat)||Price/kg of Table Varieties (other states)|
|2015||9.5 – 10||5.5 – 6|
|2016||9.5 – 10||10.5 – 11|
|2017||8.0 – 8.5||5.5 – 6|
|2018||12 – 12.5||10.5 – 11|
|2019||10.5 – 11||6.5 – 7|
In the last few years, India has adopted new technology and modern farming practices for multiplication of the seed potato, which has yielded rich dividends in terms of the quality of potato, superior yields and extended shelf life in modern cold storage.
The necessary areas of support from the Government Agencies to provide boost to the potato processing industry are summarized as under:
- They help create awareness amongst the masses on consumption of processed potato products.
- CPRI as well as the R&D Institutions in the private sector involved in the development of newer varieties of potato, to be encouraged, facilitated and provided with adequate financial support.
- To assist the post-harvest handling system for raw potato so that the wastages occurring due to handling and transportation are prevented and rendered economical too.
- Since the Frozen Potato Products command a huge global demand, the products from India have to be made popular, for which financial assistance is urgently required for promotion and campaigning activities through platforms like exhibitions, trade shows & organizing buyer-seller meets.
- The MoFPI and the other Government Agencies like APEDA, to get the studies conducted through experienced consultants for identification of new global markets for diverse potato products from India.
- APEDA to promote aggressive lobbying for inclusion of Frozen Potato Products from India into FTA / PTA with Japan, South Korea, Taiwan, China, Australia, New Zealand and African countries.
- The incentive proposed in the new scheme against Merchandise Exports from India Scheme (MEIS) must be more than the previous value as processed potato products from India are competing with large-scale manufacturers from the EU and US.
The future of the potato in India is expected to be highly promising and sustainable for a high profile of growth, through the fast emerging of potato processing industries, in the other major potato producing states of Uttar Pradesh, Punjab & West Bengal and is poised to be the sunrise industry in India.
However, in order to achieve the fantastic potential of this industry, the wholehearted support of the Government would be required, which would attract further more investments in the processing industries and subsequent increase in the export of potatoes in both fresh and processed form.
About the author: Kamlesh Karamchandani is Director, HyFun Foods (Ahmedabad).