West Bengal Cold storages struggling to stay afloat

Cold storages in West Bengal are struggling to stay afloat because of the state government’s refusal to let them raise rent. 

Many cold storages were forced to shut shop in the past year and with an additional 100 such units unable to repay bank loans, more could be mothballed if banks pull the plug on them, say cold storage owners. 

For the past two decades, West Bengal has been the only state to regulate cold storage rentals. It was last raised in 2010 by Rs.14 to Rs.101 per quintal for storage up to seven months (March-November), but cold storage owners claim that unless the rent is raised to Rs.120 per quintal it is impossible for them to stay in business. 

Cold storages in the state, used almost entirely to preserve potatoes, are making a loss of at least Rs.19 per quintal, said Rampada Pal, president of the lobby group, West Bengal Cold Storage Association. Over the past three years, cost of storage per quintal has risen by at least Rs.40 a quintal, according to Satyabrata Mukherjee, president, West Bengal Cold Chain and Cold Storage Owners’ Welfare Association, another lobby group. 

The rise was largely on account of increases in labour, electricity and diesel costs through the years. At least two-thirds of the cold storages in West Bengal are facing closure as a result, Mukherjee said. 

West Bengal’s cold storages, which generate Rs.3,000 crore in annual revenue, are the key determinants of potato prices at almost every stage in the trading chain that links the farmer to the consumer. Chief minister Mamata Banerjee was concerned that allowing them to raise rent would lead to an increase in the market price of potatoes, but has lately agreed to form a panel of experts to examine the demands of cold storage owners. 

Potato preservation capacity in West Bengal, the second largest producer of the crop after Uttar Pradesh, has not expanded since the state government in 2011 withdrew subsidies given to build new units. Capacity is already insufficient and if more cold storages are forced to shut ahead of the soon-to-begin harvest season, the price realized by farmers could fall steeply. 

Farmers typically sell their produce at cold storages to their owners or investors who wager on potato bonds. The investors use these receipts to trade in potato. But if storage facilities are not available, farmers do not find buyers and the price at the farm-gate drops. In the years when they reaped a bumper crop in the past decade, farmers have had to sell potatoes at less than even Rs.1 a kg, largely because of inadequate storage facilities. 

The state produced 8.5 million tonnes of potatoes last year, and this year the yield is expected to rise to 10 million tonnes, according to official data.