Cold storages face the heat as potato prices crash in India
Owners of cold storages in major potato-producing States in India, including Uttar Pradesh, West Bengal, Bihar and Gujarat are worried a lot these days.
A sizeable amount of loans they took from banks to lend to potato farmers and traders have not been repaid and have turned into non-performing assets.
With the price of potatoes crashing, a majority of the farmers and traders have been unable to repay the loans they had taken from cold store owners against warehouse receipts. Unable to repay their loans, cold storage owners are shutting down operations.
According to Mahendra Swarup, President, Federation of Cold Storage Association, 200-300 cold storages in UP, which is the largest potato-growing State, are likely to close down as they have become unviable.
“A majority of the store owners have only been able to repay 50-60 per cent of the loans taken at the beginning of the loading season in February. While it is difficult to say the total amount of credit taken, as per our estimate, ₹400-500 crore are yet to be repaid,” Swarup said.
UP has close to 1,700 cold storages with a capacity of around 120 lakh tonnes. The State produces 140-150 lakh tonnes of potatoes a year. Agra and Farukkhabad, which are the key producing districts, have been the worst hit, said Swarup.
The situation is equally grim in West Bengal, the second largest potato-growing State with an average annual production of 100-110 lakh tonnes. The State has close to 470 potato cold storages with a capacity to load about 70 lakh tonnes of the tuber.