The Potato Value Chain and Benefits of Cold Storages: Evidence from Bihar (India)

Abstract

The Indian government has provided large subsidies to stimulate the take-off of the cold storage sector. However, the impact of this policy is not well understood. In a case study of the potato sector in Bihar, we find that there have been dramatic increases and rapid up-scaling of cold storages, seemingly driven by these government subsidies among others. While availability has improved, we further find that the subsidies do not show up in lower storage costs for the farmer. Wealthier farmers participate more directly and relatively more in cold storages, especially towards the commercialization of potatoes. Small farmers benefit relatively more indirectly, i.e. through the higher prices in the harvest period, as well through the cheaper storage of seed potatoes. However, a more competitive environment for the cold sector in Bihar seems called for as to drive down the relatively high cost of storage as well as to improve services delivery in input, output, and financial markets from these cold storages that especially the smaller farmers might benefit from.

Keywords: Potato, Cold Storages, Agricultural policy, Bihar, India

JEL Classification: O13, O14, O32, Q10, Q11, Q12, Q13