POTATO

INTRODUCTION

Potato is one of the unique crops grown in productivity and supplementing food needs. the country having high

Potato has higher nutritive value.

Potato is rich in carbohydrates, proteins, phosphorus, calcium, vitamin C and vitamin A. Potato is high yielding short duration crop and has high protein calory ratio. 4.Today, more than a billion people worldwide eat potato

GENERAL CHARACTERISTICS (FEATURES)

After wheat, rice and maize, potato is the most important food crop in the world. It contributes to almost 50% of the total tuber and root crop production owing to its good food value as compared to other staple food crops as it is rich in carbohydrates and also contain proteins, minerals like calcium and potassium and vitamins like vitamin C. It is vastly consumed as a vegetable and is also used in various forms such as starch, flour, alcohol, dextrin and livestock fodder. In addition, a potato field produces more energy per hecttare per day than any other crop. Potato is a crop that doesnt require complex processes to be cultivated. This crop is a long lasting crop though it is cultivated as an annual crop.

Because they can be grown on any elevation in a wide variety of soils and mature in as little as 60days. They rare regarded as the worlds most efficient means for converting plant, land, water, & labour into highly edible food. With an annual global production of about 300million tons, potato is an economically important staple crop in both developed n developing countries. It easily grows even on poor quality soils and unfavorable conditions. The best yield is derived when the climatic conditions in which potatoes are

HISTORY OF POTATOES IN INDIA

Potatoes were not produced in India till in the 17th century. The Portuguese introduced this crop and cultivated it in Surat for the first time. Then onwards, it spread over all of India quite rapidly. Since 1990, per capita consumption has risen from around 12 kg to 17 kg a year. It produces around 8% of the worlds total produce. Between 1960 and 2000, potato production increased by almost 850 percent, partly in response to growing demand from higher-income urban populations. Regarding the consumption pattern, India has a huge population to feed and thats why it has a large demand for this crop.

there is a very small quantity of the potatoes left for the exports making Indias share in world exports insignificant and inconsistent. Potato export from India is negligible. there is a very small quantity of the potatoes left for the exports making Indias share in world exports insignificant and inconsistent. India just exports around 0.5% of the total worlds export figuring around 7200 tons of potatoes. The countries to which India export potatoes are Sri Lanka Nepal Mauritius Singapore United Arab Emirates

GLOBAL SCENARIO

Around 315.1 MT of potato is produced in approximately 18.83 million hectares land with an average productivity of about 16.73 tonnes per hectare across the world during 2006. (Source: FAO) = China, the Russian Federation, India, the USA, Ukraine, Poland, Germany, Belarus, the Netherlands, France, the UK, Canada, Turkey, and Romania are the major potato growing countries. = However, the top five countries contribute for more than 50% of world's total production. China stands first with an average annual production of 70 MT followed by the Russian Federation (36 MT), India (25 MT), the USA (20 MT), and Ukraine (19.5 MT). = Only 23% of about 300 MT of the world potato is traded internationally. The Netherlands, Germany, Belgium, Luxembourg, France, Italy, Canada, the USA, Egypt, Turkey, and Cyprus account for about 80% of the potato export trade. The Netherlands, the USA, and Canada are leading in the production and export of processed potato products. = India's contribution to the world potato trade is hardly about

The following is the list of the major potato producing countries of the world with their production figures China (75 million metric tons) Russia (37 million metric tons) India (25 million metric tons) USA (20.5 million metric tons) Ukraine (19.5 million metric tons) China stands top at the list with around 23% of the worlds potato produce that is around 322 million metric tons

MAJOR PRODUCERS-2006

INDIAN SCENARIO
= India is ranked third in potato production after China and the Russian Federation. However, potato productivity in India is merely 1619 tonnes/ha vis--vis that of European countries and the USA (that is 3040 tonnes/ha). = Potato is cultivated in India under highly diversified agro climatic conditions ranging from sea level to snowline. The following three types of crops are raised every year : (a) Kharif crop: From JulyAugust to OctoberNovember (12%) (b) Winter crop: From OctoberNovember to FebruaryMarch (80%) (c)Summer crop: From MarchApril to JulyAugust (8%) = Potato is mainly a Rabi crop and is grown in UP, Punjab, Haryana, West Bengal, Madhya Pradesh, Bihar, Andhra Pradesh, Tamil Nadu, and Gujarat. = During 2007-08, 29.35 MT of potato was produced in the country, while the production in 2006-07 was 27.02 MT.

= Average acreage under potato varies between 12 and 15 lakh/ha depending on the weather condition during sowing

PRODUCTION OF POTATO IN INDIA

Major potato producing states in India are Uttar Pradesh Punjab Haryana West Bengal Madhya Pradesh Bihar Andhra Pradesh Tamil Nadu Gujarat Assam Karnataka Uttaranchal

STATEWISE PRODUCTION OF POTATO IN INDIA 2007-08

The yield rate per hectare in India is quite low that stands at 17.86 tons per hectare as compared to the productivity in the European countries that ranges between 30-40 tons per hectare. Uttar Pradesh produces the maximum yield of potatoes in India . Though this state has the highest potato production level in the country, it does not enjoy the highest productivity level, which is bagged by Gujarat. The states according to their productivity levels are placed in the following list Gujarat (22.62 tons/hectare) Uttar Pradesh (22.32 tons/hectare) Uttaranchal (21.73 tons/hectare) West Bengal (21.61 tons/hectare

MAJOR TRADING CENTERS OF POTATO

There are four potato export zones in india viz. in UP, PUNJAB, MP & WEST BENGAL. The major trading centers of potato in India are Agra, Hathras, Kanpur, Meerut, Farukkhabad in Uttar Pradesh. Jalandhar, Ludhiana, Phul, Patiala in Punjab. Ujjain, Indore, Dewas in Madhya Pradesh. Hoogly, Burdwan. Howrah in West Bengal.

MCX POTATO FUTURES

When the Multi Commodity Exchange of India (MCX) decided to launch a potato futures contract in December 2005, it took a bold step. Despite potatoes abiding place in the human diet and the bulk nature of the crop potato futures have either failed to develop or ceased abruptly at other commodity futures exchanges worldwide. None of Chinas three major exchanges has listed a potato contract even though the country produces a record 70 million MT crop MCX launched two domestic potato futures contracts in March 2006. One features delivery in cold storage warehouses in Agra; the other delivery in Tarkeshwar. The contracts are traded in Rs. per quintal and are based on a quantity of 30 MT the approximate harvest tonnage from two hectares. During the October/November 2006 season, the volume of trade for both futures contracts was approximately 12,000 MT, which should be considered a vibrant start for a new agricultural contract. Deliveries of potatoes began occurring on the April 2007 contract, one year after inception, when 40 contracts were tendered in Agra for 1200 MT. The May 2007 contract experienced deliveries on both the Agra and Tarkeshwar contracts, totaling 5130MT and 1230MT, respectively.

MCX POTATO FUTURES

Symbol Potato Potato Expiry Date 15 Mar 2012 15 Mar 2012 Unit 100 Kgs 100 Kgs LTP 626.9 765 Net Change 1.9 -0.2 High Price 623 770 Low Price 620 759

Potato
Potato Potato Potato

13 Apr 2012
14 Apr 2012 15 May 2012 15 May 2012

100 Kgs
100 Kgs 100 Kgs 100 Kgs

609.9
751.5 639 774

9.3
-0.3 -6 -1.4

618
759.9 653 777.8

600
746.6 626.6 769.9

HOW DOES TRADE TAKE PLACE

A potato producer could purchase potato futures on a commodity exchange to lock in a price for a sale of a specified amount of potato at a future date, while at the same time a speculator could buy and sell potato futures with the hope of profiting from future changes in potato prices

PROCESS

EXAMPLE

OF A PUT OPTION

For example, suppose a farmer buys a put option to sell 100 Quintals of potatoes at a price of $25 per quintal and pays a premium of $0.5 per quintal (or a total of $50). If the price of potatoes declines to say $20 before expiry, the farmer will exercise his option and sell his potatoes at the agreed price of $25 per quintal. However, if the market price of potatoes increases to say $30 per quintal, it would be advantageous for the farmer to sell it directly in the open market at the spot price, rather than exercise his option to sell at $25 per quintal.

TRADING Trading Period Monday through Saturday

Trading Session
Trading Unit Quotation/base value Basis variety Tick size (minimum price movement Daily price limit

Monday to Friday 10:00 a.m. to 5:00 p.m. Saturday - 10:00 a.m. to 2:00 p.m.
30 MT Rs. per quintal, ex-cold storage, Agra district excluding mandi tax and other levies 3797 10 paisa 4%

Initial margin
Special margin

6%
In case of additional volatility, a special margin of such percentage (as deemed fit) will be imposed immediately on both the buyside and the sellside in respect of all outstanding position, which will remain in force for the next two days. After which, the special margin will be relaxed. 25% of the open position during the delivery period Client level: 15,000 MT Member level: 45,000 MT or 15% of the market-wide open position, whichever is higher For near month contracts, the following limits will apply one month prior to the expiry date: Client level: 1,500 MT Member level: 4,500 MT

Delivery period margin Maximum allowable open position

MARKET INFLUENCING FACTORS

Variations in the domestic average production of potato Based on yeild and price realization. Crop development based on weather (particularly cold wave and heavy rains) in key growing regions during tuber formation. Comparitive price with other vegetables in the domestic market. Upcountry demand of potato from the major cities and food processing industries. The potato price tends to firm up during the planting period and eases down during the harvesting period. Transportation charges also have a profound impact on prices.

Potato growers and traders hoard the commodity before selling in expectation of better prices. Potato can be kept in cold storages without spoilage for 68mnths. Hoarding and black marketing.

IS COMMODITY TRADING IN POTATOES A VIABLE OPTION?

Those who are involved in trading of potatoes are sure to find it a profitable business if they can buy or sell the commodity at the right time. Over holding of the stock or sudden release of the potatoes may not be viable and hence a watch and win situation has to be adopted while trading in potatoes. The market rates of potatoes tend to fluctuate very rapidly. If the demand for the potatoes increases world over, the market prices also tend to shoot up. But nowadays, the quality of potatoes is on the decline and hence the market rate for the same is also on the lower side. But with fresh yield coming up, we can expect the markets for potato trading to shine in the near future.

CONTD

The potato commodity traders will always trade in commodity futures and not on the actual potato itself. Hence a person involved in potato trading has to always be on his toes while trading. As any essential agricultural products yield depends on favorable weather conditions, traders may sometimes gain huge profits while trading or may even lose a lot of money due to poor yield. Cautious approach is recommended when it comes to commodity trading of potatoes. It is definitely a viable option, but a thorough market study on the history of potato trades is very essential before involving completely into the potato trading business. There is no doubt that with day to day market study and research trading in potato futures will turn out to be a very successful option in commodity trading business.