Heatwave Damages Vegetable Crops, Shooting Up Demand for Potatoes Amid Rising Food Inflation in India

The prolonged summer heatwave damaged summer crops and vegetables in India, shooting up food prices, including potatoes. In particular, the summer vegetables have been badly hit. 

Consequently, the demand for potatoes has increased as people prefer eating potatoes to other vegetables whose prices have increased significantly due to their dwindling supply. 

This year's production (58.99 million tonnes) was at least a million tonnes less than the previous year (60.14 million tonnes). However, the reason that caused potato prices to remain elevated since the harvest ended in March was the intense heatwave that spoilt the produce during its transportation. 

The two major potato-producing states Uttar Pradesh (UP) and West Bengal account for nearly 50% of India’s total potato production. Although monsoon rains have arrived, the heatwave condition is persisting in many parts of the country, notably in north and central India. 

The rising potato prices are contributing to the overall high food inflation rate in India, which hit a four-month high of 8.7% in April, with rural consumers witnessing a sharper 8.75% uptick. The wholesale potato prices range from INR 1800 (USD 21.52) to INR 5500 (USD 65.77) per quintal in different markets across the country. 

In a recent bi-monthly monetary policy review meeting, Reserve Bank of India Governor Shaktikanta Das pointed out the exceptionally hot summer and low reservoir levels as causing stress on summer crops of vegetables and fruits. 

Indian farmers cultivate a summer/monsoon crop of potatoes harvested around July-end. This time, this crop is eagerly awaited as it can bring a relief in prices which is expected to hit a new high by the time it arrives. The highest price is witnessed in the southern state of Kerala where the minimum wholesale price is INR 3200 (USD 38.26) per quintal and the maximum is INR 5600 (USD 66.96). 

In the retail markets, potatoes are selling for an average of INR 40 (USD 0.48) per kg, except in Kerala. The ordinary variety of potatoes is priced at INR 35 (USD 0.42) to INR 40 (USD 0.48) per kg while premium Chipsona potatoes sell upwards of INR 45 (USD 0.54) per kg. In grocery chain stores like Jio Mart and online grocery platforms BigBasket and Blinkit, potatoes are priced from INR 30 (USD 0.42) to INR 55 (USD 0.59) per kg. 

The current price levels are at least 20% higher than normal for this point of time in the year. The high potato prices reflect elevated prices for most vegetables, contributing to a high food inflation rate of 28% year-on-year for vegetables, as per data from India’s Ministry of Statistics and Programme Implementation. 

India was witnessing a national election from 19 April to 1 June 2024. Before the election, the potato prices began rising even though the harvest season had ended barely a month ago. Some traders believed that cold storage facilities were hoarding the tuber to jack up the prices. 

They expected after the elections there would a strict monitoring of the potato supply situation, given the alarming rise in prices. However, in the national elections, the ruling alliance won and formed the government for the third time in a row, but the main alliance partner the Bharatiya Janata Party (BJP) won fewer seats and missed the majority mark, making it dependent on alliance partners. The priorities seem to have changed due to the election results. 

However, the change is in favor of the agriculture sector, which has got the 65-year-old Shivraj Singh Chouhan as the agriculture minister. Last week, he held a meeting of agriculture ministry officials to review the preparedness for the upcoming Kharif season. 

He emphasized the proper and timely distribution of seeds and fertilizers to farmers to ensure a successful monsoon agriculture season. India receives over 70% of its overall rainfall during the monsoon, which plays a critical role in India’s agriculture. The timely and proper monsoon is crucial for the Indian economy as the livelihood of nearly 58% of India’s population depends on agriculture.