Processing Potato Market Analysis: Indian Market Overview

Tarun Teja Goli, Agro-Potato Procurement and Supply Chain Manager at Agristo India, has provided an in-depth analysis of the recent fluctuations in India's processing potato market. 

The processing potato market in India operates as a "never-ending roller coaster ride" with significant price volatility throughout the season.

January Price Surge

In January, prices reached record highs at INR 21/kg (USD 0.24/kg) for the Lady Rosetta (LR) variety. This dramatic surge was primarily driven by:

• Increased sourcing competition among potato flake manufacturers
• Concentration of buyers in Punjab
• Punjab's importance as a major early harvesting state
• Limited availability of LR potatoes, the prime variety for processing (chips & flakes)

Price Stabilization Factors

Three key factors eventually neutralized the initial price surge:

• Strategic contract farming by manufacturers to reduce dependence on the open market
• Increased production due to favorable weather conditions
• Timely harvests across all major potato-growing states help to fulfil the demand

Market Dynamics in February

• Early February saw a brief price reversal from INR 13 to INR 14/kg (USD 0.15 to USD 0.16/kg)
• This temporary uptick led Punjab growers to sell at even lower prices eventually
• Unlike previous years, processing potato prices maintained a floor of INR 8/kg (USD 0.09/kg)

French Fry Potato Market Shift

The French fry potato segment has undergone significant changes:

• Santana and other French fry varieties are now widely available in Punjab, UP & Gujarat
• Higher yields this season
• French fry varieties are increasingly grown for the open market
• Excess supply driving prices below contract rates under INR 11/kg (USD 0.13/kg) vs. standard INR 12/kg (USD 0.14/kg)
• This downfall also puts a risk of a decrease in growers for French Fry varieties for next year

Cross-Segment Opportunism

Some flake manufacturers strategically shifted from chip varieties to French fry varieties for flake production, which:

• Helped stabilize chip variety (LR) prices
• Reduced competition for chip manufacturers

Future Outlook

The processing potato market for flakes & French fries appears stable in the near term, with potential disruptions from:

• Adverse weather events
• New variety trends
• Market instability if new manufacturers enter or increase capacity without secured raw material sources
• Continued reliance on the open market without proper planning

Positive Development

Individual growers adopting French fry varieties represents a positive trend that helps:

• Prevent unstable market conditions during weather disruptions
• Provide alternatives when contracted fields face crop failures