Perfectly competitive market:Potato market is known as PERFECTLY COMPETITIVE MARKET due to following characteristics (i) (ii) (iii) The

market consists of buyers and sellers who are price takers. Each firm in the market produces undifferentiated and homogenous products. Buyers and sellers have perfect information about the price prevailing in the mark! About the availability of commodities at any given point of time. (iv) Firms can enter or exit the market freely.

(In the short-run, it is possible for an individual firm to make an economic profit. This situation is shown in this diagram, as the price or average revenue, denoted by P, is above the average cost denoted by C.)

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(However, in the long period, economic profit cannot be sustained. The arrival of new firms or expansion of existing firms (if returns to scale are constant) in the market causes the (horizontal) demand curve of each individual firm to shift downward, bringing down at the same time the price, the average revenue and marginal revenue curve. The final outcome is that, in the long run, the firm will make only normal profit (zero economic profit). Its horizontal demand curve will touch its average total cost curve at its lowest point.)

Implications:
The implications of all these features is that there is single price in the mark no individual buyer can change it. On this price a firm can sell any amount of output. Because of flu demand of a firm is perfectly elastic and hence a horizontal line at the market price. Another implication is that a firm will produce only when it is profitable to produce, otherwise it will stop the products.

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Demand and supply of potato:-

Factors affecting prices of potato :1. Fluctuations in area, weather, production and yield 2. Irrigation facility 3. Demand for potato in cities and from food-processing industries 4. Input cost for potato cultivation 5. Transportation charges 6. Labour availability during planting and harvesting 7. Storage capacity and stock position in cold storage. Potato can be stored in cold storage for 5-6 months 8. Outbreak of pest attack or disease in key growing areas
9. Price of other vegetables.

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Supporting factors for the price view :Higher production Production in West Bengal has gone up by nearly 73% to 9.5 million tonnes in rabi 2009-10 At national level the production estimates are of 30 million tons, up by 20%. Stock position has gone down As per market sources, nearly 70% of the total produce has been stored in cold storages The outflow of produce from cold storage is reported to be slow as compared to previous year Summer crop from Karnataka will come to market by the month of July Increase in storage cost The storage cost has gone up by Rs 10, at Rs 110 per quintal per season There is one factor which is likely to restrict the sharp fall in prices. These factors are: Government intervention The fall in potato prices may become a cause of concern. Therefore, the government may take some measures to restrict further fall in prices. Like, The West Bengal State Government decided to protect the farmers' interests to an extent by announcing that the government would buy potatoes through cooperatives and the West Bengal Essential Commodities Supplies Corporation at Rs 3.50 a kg to be kept in cold storages. Once the market price rises, the potatoes in the cold storages will be sold through ration shops at a price lower than the market price.

Seasonality:(4)

Potato is mainly a Rabi season crop. Around 80% of potato production is done as a Rabi crop. The rest of the production mainly comes from Karnataka and the hilly areas during long summer days. The Rabi crop is sown in the month of October and harvested in March. Potato is grown as a kharif crop in Maharashtra, Himachal Pradesh, Jammu & Kashmir and Uttarakhand. Kharif potato is sown in July and becomes available in the market by the month of October. The share of kharif potato in total production of potato in the country is 12%. The major potato producing states are Uttar Pradesh, Bihar, Punjab, West Bengal, Gujarat and Assam where potato is grown as a Rabi crop. The normal crop duration is 5-6 months.

Kharif crop: July-Aug to Oct-Nov. Rabi crop: Oct-Nov to Feb-March

Arrival season for potatoes in India:-

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The arrival of the winter crop potato is the major contributor to total production. Potato harvesting in India stretches between Dec-Jan to March-April. The season of potato arrivals in the major markets in different states are described below:

Name of State Uttar Pradesh West Bengal Punjab

Season November-April March-April, Sept-Nov (plains), Jan-March, Jul-Aug (hills) Dec-April (peak arrival), April, Oct-Nov (average arrival), May-Sept (lean period of arrival) Dec-Jan (for early variety), JanMarch (for mid variety) March-April (late variety) Sept-Oct (seed potato varieties) Dec-Jan (for early variety), March-May (for late variety) Feb-April Feb-March Sept-Oct (Kharif crop), March-

The major trading centers of potato in India are:

Haryana

Himachal Pradesh Bihar Gujarat Maharashtra Karnataka

Utt ar

April (Rabi crop) Madhya Pradesh Dec-April Pradesh: Agra, Aligarh, Hathras, Kanpur, Meerut, Badauin, Firozabad and Farukhabad

Punjab: Jalandhar, Ludhiana, Phul, Patiala Madhya Pradesh: Ujjain, Indore, Dewas West Bengal: Hoogly, Burdwan, Howrah and Midnapore (West) Gujarat: Deesa Karnataka: Hassan and Kolar . (6)

The major export zones for potato in India are Uttar Pradesh, Punjab, Madhya Pradesh and West Bengal.

Global scenario:Potatoes are grown in about 155 countries around the world and more than a billion people worldwide eat this vegetable. About 300 million tonnes of potato was produced worldwide over an area of about 19.13 million hectares in 2009, nearly 5-7% lower as compared to previous year due to unfavorable weather conditions and disease attack in potato crop in certain major potato-producing regions across the globe. For the year 2010, the world potato production estimates are nearly 320 million tonnes from acreage of about 19.33 million hectares. This year there has been a significant increase in production in most of the major potato producing countries like China, India, United States, Europe etc.

Chart: World Potato Production from 1995-2010:-

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The top-ten producers in the world are China, Russia, the US, Ukraine, Poland, Germany, Belarus, the Netherlands and France. These together contribute about 70% of the total production. China is the major producing country for potato, producing 72 million tonnes followed by Russia which contribute nearly 36 million tonnes to world potato production. Chinese potatoes come to the market by the month of October, but in some regions it is harvested in the month of May-July. India ranks third, contributing nearly 8% to the worlds production. Production-wise, India has always remained in the top-ten for the last twenty years.

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Chart: Percentage Share in global production

Indian scenario:Currently, India is the third-largest producer of potatoes in the world. The production level of the country hovers around 25 million tonnes. It produces around 8% of the worlds total produce. Uttar Pradesh (39-40%) produces the highest quantity of potatoes for India followed by West Bengal (35%). Regarding the consumption pattern, India has a huge population to feed and thats why there is a large demand for this crop. As a result, there is usually very little quantity left for exports, making Indias share in world exports insignificant and inconsistent. India exports just around 1-0.5% of the worlds total potato exports. As per the Directorate of economics and statistics, Indian exports of potato were around 1,84,961 tonnes valued Rs.11,503.59 lakhs. The countries to which India exports potatoes are: (i) (ii) (iii) Sri Lanka Nepal Mauritius (9)

(iv) (v) (vi)

Singapore United Arab Emirates Japan

Area and Production of Potato in India

The area under potato crop has been nearly 1.3 million hectares until 2005. The area under potato crop was at its high of 1.47 million hectares in 2008. During 2008, potato production hit a record 30 million tonnes, resulting in a glut situation. It led to a sharp decline in prices, forcing farmers to dump the produce anyhow rather than selling it. The transportation cost was higher than what the farmer was getting on sale of the produce. In the absence of support (10)

measures, farmers had not brought any new area under potato cultivation during 2009. Hence, the acreage under potato crop went down to nearly 1.2 million hectares last year. Likewise, the production has been stagnant at nearly 20 million tonnes until 2005-06. The potato production hit a record in 2008 of 30 million tonnes. This year also, potato production estimates are nearly 30 million tonnes. Last year it had been around 25 million tonnes.

Chart: State-wise potato production in India The productivity level is nearly 20 tonnes/ha in India which is below the world average level of 35-40 tonnes/ha. The production of potato has gone up during the last ten years due to better varieties and larger acreage under potato. Uttar Pradesh produces the maximum yield of potatoes in India, at 98.21 lakh tonnes on 4.40 lakh hectares of land. Although this state has the highest potato production level in the country, it does not enjoy the highest productivity level, which is bagged by Gujarat. (11)

The productivity level is only 18 tonnes/ha in India which is below the world average level of 35-40 tonnes/ha. The states according to their productivity levels (in descending order) are placed in the following list: Gujarat (22.62 tonnes/hectare) Uttar Pradesh (22.32 tonnes/hectare) Uttaranchal (21.73 tonnes/hectare) West Bengal (21.61 tonnes/hectare) . Uttar Pradesh contributes 39%, West Bengal 35%, and Gujarat 6% to domestic potato production. These three states are the major producers of potato in the country, constituting 80% of the total domestic potato production. The major domestic markets for potato are Agra, Delhi, Kolkata and Ludhiana. Name of state Uttar Pradesh West Bengal India Production 2009 (mt) 10.9 5.5 25.0 Production 2010 (mt) 12.0 9.5 30.0 % Change 10.0 72.7 20.0

At the national level, the overall potato output estimates are up by 20%, to 30 million tonnes for the year 2010.

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