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Cultivation Under Contract: West Bengal shows the way in win-win potato farmer-corporate tie-up

Farmers are getting Rs 8.40 per kg for potatoes under collaborative farming with PepsiCo, compared with Rs 3.40-3.80 per kg for normal potatoes.

Potato, Potato farmers, Lays potato farmer, farmer corporates, PepsiCo farmers, contract farming initiative, contract farming, corporate farming, business news Representational Image. (PTI Photo)

This has been a terrible year for potato farmers, with prices everywhere — from Agra and Farrukhabad in Uttar Pradesh to Burdwan in West Bengal — crashing to well below Rs 4 per kg levels. But about 10,000 growers in West Bengal have managed to realise an extra Rs 5 or so per kg, by supplying to the global snack and beverage giant PepsiCo under a contract farming initiative.

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“At current rates of Rs 3.40-3.80 per kg for normal potatoes, farmers are grossing Rs 170-190 from every 50-kg sack that doesn’t even cover production costs. However, some of us who have entered into collaborative farming with PepsiCo are being paid Rs 8.40 per kg. That works out to an extra Rs 230-250, compared to what we would have got by selling a sack of regular potatoes,” points out Shantinath Nandi.

This four-bigha (one acre) farmer from Anandapur village in Hooghly district’s Goghat block under Arambag subdivision has been growing ‘process-grade’ potatoes for PepsiCo for the last six years. He produces between 90 and 110 sacks of the tuber from each bigha, which gives Rs 42,000 at Rs 8.40 per kg. After deducting costs of Rs 22,000-25,000, it leaves a profit of Rs 17,000-20,000 per bigha or Rs 170-200 a sack. Had Nandi been growing ordinary ‘table-grade’ potatoes, his total revenue itself would have been just Rs 170-190, not enough to take care of even cultivation costs of over Rs 200 per sack or Rs 4 per kg.

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The process-grade potato varieties such as ‘Atlantic’, ‘FC3’ and ‘FC5’, which PepsiCo is promoting, contain 20 per cent dry matter and 80 per cent water. Table varieties have about 85 per cent water. The lower dry matter content makes them less suitable for processing, as the extra water adds to dehydration and energy costs. Normal potatoes also have higher accumulation of reducing sugars. These, when fried, are subjected to certain enzymatic reactions, leading to their blackening. The resultant chips or fries tend to acquire a dark brownish colour, whereas ideally they should possess a light yellow hue.

Shantinath Nandi, Asim Chowdhury and other farmers at Anandapur are among the many who have taken to cultivating process-grade potatoes for PepsiCo, under an arrangement where the Indian subsidiary of the American multinational undertakes to purchase their entire produce at a fixed price announced a month before planting.

“All they have to do is to grow the potatoes for us,” says Jaideep Bhatia, director-agro at PepsiCo India.

The maker of Lay’s and Uncle Chipps potato chips brands does contract cultivation — “collaborative farming” is the term it prefers to use — in Punjab, West Bengal, Maharashtra, Gujarat and Uttar Pradesh. In West Bengal, its direct farm sourcing operations are spread across nine districts: Hooghly, Howrah, Burdwan, West Midnapore, Birbhum, Bankura, Jalpaiguri, Cooch Behar and Alipurduar.


“In 2010, our procurement was 39,998 tonnes from West Bengal. This year, we will do 72,250 tonnes. This programme is a big success for us,” claims Bhatia. He adds that PepsiCo not only provides farmers with disease-free true potato seeds produced from its laboratory in Punjab, but also tractor-drawn planters and other equipment, crop protection and extension services, cold storage and insurance facilitation.

“I’ve been working with this company for the last 5-6 years and there is certainly increased interest among growers for this kind of cultivation,” notes Chandicharan Mondal, a potato aggregator, who has brought 200-odd farmers under PepsiCo’s programme.

But the quantities being procured by PepsiCo and other food processing majors are only a fraction of the 10 million tonnes annual potato production of West Bengal alone. While contract cultivation of processing-grade potatoes is useful, there are limits to how much these can replace the normal aloo used in day-to-day meals and table preparations. And to that extent, the woes of growers cannot be wished away.

First published on: 09-03-2017 at 02:05 IST
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