Poor crop in India has raised potato prices, leaving snack-makers in a spot

Fries, chips and flakes manufacturers are concerned over firm prices of potato, which has seen a jump owing to poor crop this year. Companies assure that an increase in retail price was unlikely to take place in the short run.

Current prices of processing potato varieties from Chip Sona to Lady Rosetta is in the range of Rs 12-15 a kg in wholesale market of Azadpur mandi in New Delhi. Companies and traders don't rule out further rise in prices of both table and processing potatoes by 5 per cent in the coming days.

"Our margins are being squeezed with the rise in prices. For a processor to absorb fluctuation is difficult. Consumers will not have to bear the price rise," said Prakash Lohia, managing director, Vegit-agro division of Merino Industries. The company is one of the leading potato flakes and snacks manufacturer processing 50,000 tonne potato annually and catering to all large players from Pepsico, Nestle to Haldiram .

A good source of calcium, vitamin C and iron, potato is the king of vegetables loved by all age groups. With in-home snacking growing by more than 20 per cent amongst high-income household stable prices is what the industry is looking at. As per industry estimate over 1.5-2 million tonne of potato processing varieties is used across the country with organised players like ITC, Pepsico, McCain, Haldiram , Parle etc having a 15 to 20 per cent market share.

With India becoming a key market for processed food, Lohia said that the current prices would hit the export business. "In comparison to European players we are not competitive in United Arab Emirates or south Asian market as of now," he said. Processed potato prices have moved from Rs 7 a kg in January-February to the current level and could possibly further rise. "This year the potato crop is estimated to be lower by 13 per cent than previous year at 40 million tonne owing to adverse weather ..

Processors who usually tie up with traders and farmers ahead of the harvest are now looking ahead at the Hassan (karnataka) crop which will arrive in the market by August. "We are meeting our domestic and export orders and looking to further tie up with farmers in Karnataka and Maharashtra who will begin sowing by June 15 to ensure steady supplies ," said Manesh Agarwal, MD, Bankey Bihari Ji Food Products who has recently tied up with leading retailer Reliance to supply french fries.