The Potato Value Chain in Bihar: An Assessment and Policy Implications
51 Pages Posted: 10 Mar 2014
Date Written: January 9, 2011
As part of the National Agricultural Innovation Project (NAIP), a potato value chain study was organized in Bihar, in collaboration between the Indian Council of Agricultural Research (ICAR) in Patna, the International Fund for Agricultural Development (IFAD) and the International Food Policy Research Institute (IFPRI), as potatoes are one of the core crops that the NAIP project in Bihar are focusing on. Primary surveys were fielded with producers, traders, cold storages, and retailers at the end of 2009 on the rural-urban potato value chain in Bihar, more in particular from the disadvantaged districts part of the NAIP project (Vaishali and Samastipur) to urban consumers in Patna. The study has shown the importance of appropriate policies as to stimulate the take-off of agricultural businesses in Bihar. These policies should focus foremost on the provision of public goods such as reliable electricity, road infrastructure, and good governance. Given the still existing large deficiencies, Bihar should make further investments in this area as to allow private business to further flourish and to allow farmers in these disadvantaged districts to become better integrated in the market economy. Second, policy makers should further stimulate increased investments in the cold storage sector, but not necessarily through subsidies. More competition in the cold storage sector is desirable as to drive down the cost of storage. The further spread of cold storages as intermediaries in the potato value chains might also open some important opportunities towards upgrading the potato value chains as cold storages can serve as focal points for the distribution of better seed varieties, extension advice, marketing advice, etc. This could especially benefit smaller farmers who, because of liquidity constraints, are less willing to sell after storage and benefit from the higher prices off-season. Third, Bihar might further be a good area for the cultivation of processing varieties given its unique agro-ecological potential for those. As it is one of the areas in India where the growing period is later and where the minimum temperature during the production period is relatively high, leading to the required higher production of dry matter, the region is better suited for processing varieties than most other states in India. Given such comparative advantage, it seems that the state could benefit from the increased presence of the private sector interested in potato processing. However, some of the processing companies that are currently active in India are bringing in potato varieties (e.g. Lady Roseta, Atlantic) which might be prone to diseases that might be more difficult to control in the Indian setting. Close collaboration with local research stations as to introduce the most appropriate varieties seems thus called for. Fourth, our data illustrate the devastating effects that the late blight disease has in Bihar. The development and spread of better suited varieties by public or private research institutions seem thus of utmost importance.
Keywords: Potato value chains, Agricultural Policy, Bihar, India
JEL Classification: O10, O12, O17, Q10, Q11, Q12, Q13
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