Profits from Potatoes: Evergreen Recession Proof Business Opportunity with Value Addition Options

India offers Investment Opportunities in Potato Sector:

Crop for Nutrition, Employment and Wealth Creation
42 Million Tons to be Managed Every Year... 

By:

Vijay Sardana

 Potato is one unique crop which is consumed in every part of the world, in every season, by every community, irrespective of social status, socio-political and religious belief.

 Table 1: Potato Production in India

Year	Potato Area (in '000 Hectare)	Potato Production (in '000 Tonne)	Productivity (Tons/Ha.)
2001-02	1259.5	24456.1	19.42
2002-03	1337.2	23161.4	17.32
2003-04	1484.7	27925.8	18.81
2004-05	1523.9	28787.7	18.89
2005-06	1569.2	29174.6	18.59
2006-07	1742.8	28599.5	16.41
2007-08	1795.0	34658.3	19.31
2008-09	3667.0	73124.2	19.94
2009-10	1835.3	36577.3	19.93
2010-11	1863.2	42339.4	22.72

The major potato producing states in India are Uttar Pradesh, West Bengal, Punjab and Gujarat.

Stagnant Productivity means Need for Seed Technology Intervention:

The total production in India is about 42 million tons but the productivity is almost stagnant. This is a not a good sign for a country with a growing population. In inflationary economy, this is an early sign that potato prices for consumer will become a serious socio-political issue in coming days.

The chance of enhancing area under potato cultivation is neither possible nor advisable due to competition from other crops and other land uses. Existing seeds used for potato cultivation is also loosing vigor.

If we compare potato productivity with leading potato producing countries in the world, this indicates that the average productivity has potential to become double with proper use of seed and production technology.

Which seed technology will suit Indian market?

Majority of potatoes in India are consumed for home cooking purpose, so the natural choice is, potatoes must meet the expectations of home makers in India for their kitchen application. At the same time there is growing market for eating out fast food industry and snack food industry where potato is a major ingredient.  Potato must meet the expectation of these segments as well. This is a growing market for potato seed varieties.

One area where so far virtually no development has taken place in India is the industrial use of potatoes, mainly for potato starch and alcohol production. Potential use and market for potato starch market is growing in India but there is no domestic supply of this product.

This leaves a big question for potato seed supplier which segment they should focus on? It is important for potato seed companies to come and explore the potential of their seed technologies in Indian market. Irrespective of the segment, one thing must be clear; there is huge market for all segments in India.

With growing population and growing purchasing power every good potato seed company can find an opportunity for them which can be bigger than their existing markets.

Potato harvesting technologies:

The potato production and harvesting technology is required for 1.8 million hectare area. Existing National Rural Employment Guarantee Schemes and New Food Security Act will seriously prevent migration of labor. This will reduce the availability of labor for all agriculture and industrial activities.

Due to non-availability of labor on time at an affordable cost, Indian agriculture has to move towards mechanization. The biggest challenge for equipment designing and manufacturing companies is to meet the requirement of small farmers. The biggest challenge for them is to design equipment to suit the needs of small farms, both in terms of capital cost and maintenance cost. Many companies feel hesitant in exploring this huge potential because they do not want to innovate and just willing to supply products from their existing product portfolio. This may not be a sensible business decision to explore the potential in Indian market.

In my view, Indian potato market offers huge opportunity for all those players who are willing to think out-of-box and willing to innovate or redesign their products to meet needs of Indian small farmers. Market size is huge and it will justify all the efforts taken by technology companies for innovation and new designs.

Potato Storage and Transportation Technologies:

As we all know that demand for potatoes and its consumption is round the year. It means potato storage technologies are essential part of any potato economy. Today, India is producing about 45 million tons of potatoes.

India needs storage technologies which are low cost, consumers less power and also easy to maintain.

Besides just temperature control, cold storage also need proper warehousing technologies including proper stacking, material handling, documentation and trace-ability systems to ensure proper control of consignment and proper trace-ability of the consignments to meet legal and trade obligations.

Different varieties of potatoes will need different handling environment. Conventional cold storage are either energy inefficient or do not have proper handling infrastructure.

Another area which needs immediate attention is transportation of potatoes to far off places that too when ambient temperature is very high, humidity is sometimes very low and time for transportation can be as long as one week or more.

Potatoes are mainly produced in upper half of India but consumed all of the country. Very often potatoes have to travel as far as 2000 Kms. There is lack of dedicated handling and transport system to meet the needs of delicate products like potatoes. This leads to physical damage to the potato crop or very often it lead to biochemical changes inside potatoes which impacts the consumer acceptability, frying quality and also sensory properties when put for industrial application or processing uses.

Considering the huge market and existing ground level problems in potato trade in India, there is huge opportunity for companies dealing in potato storage systems, potato handling and staking, loading and unloading facilities.

Automation of potato cold storage and potatoes quality testing equipment are also in good demand. I hope companies with suitable technologies will explore Indian market for mutual benefits.  It will be rewarding experience.

Potato Processing & Waste Management Technologies:

With changing consumption habits and growing market of ready-to-eat foods, there is great demand for processing technologies and equipment to convert potatoes into value added products. As convenience food market is growing in India, the need for these technologies will also grow. In a population of 1.25 billion, where potato is universally accepted food, any processing technology to improve the quality, presentation and shelf-life of potatoes will always remain in demand.

Processing technologies for peeling, boiling, slicing, mesh, extrusion, breading, baking, frying, freezing, etc. are in growing demand in Indian market. These are also in demand by restaurant and small scale processing units.

Primary and Secondary packaging technologies of pre-processed potatoes is also in good demand.

The way trends are emerging, the processed potato market in India will be the biggest market in the world in coming days.

Another area which has not received any attention so far is the waste management in potatoes value chain. Due to rich nutritional value, waste potatoes can be used in animal feed application, alcohol production and also as organic manure, if unfit for any other application.

The Way Forward:

Considering the 1.25 billion population size of Indian market, with 42 million tons of potatoes to handle where labour, energy and space is becoming expensive, potatoes value chain needs interventions at all levels from seed to waste management.

This offer huge business opportunity for all those, who are willing to customize the products and services to meet the expectation of this fastest growing processed potato market in the world.

The biggest challenge for any new player is to understand the needs to the farmers, traders, processors and customers. Indian market always rewarded the companies those who made efforts to customize the products and services to meet the expectations of stakeholders.

About Author:

Vijay Sardana can be reached at sardana.vijay@gmail.com. For more investment opportunities, you may visit the blog : “Vijay Sardana Online”.