Potato J.

37 (1 - 2): 48-55, 2010

PROJECTION OF POTATO EXPORT FROM INDIA:

A MARKOV CHAIN APPROACH
Mahendra Singh
ABSTRACT: The paper analyses the trends in area, production and yield of potato during 1950-51 to 2006-07 in India. The
growth in value of output from potato and its comparison with fruits and vegetables and total value of output from agriculture
was estimated during 1999-2000 to 2005-06 in major potato growing states in India. Apart from this the export of fresh or chilled
potatoes in reliable markets and structural changes in composition of various products of potato were also predicted till the
end of XIth Five Year Plan by using Markov Chain approach. The study observed that the annual compound growth in area,
production and yield was lowest in post-WTO period (1997-2006) in comparison to any sub-period or entire period of the study.
The analysis of the export composition of potato products reveals that the share of potatoes, fresh or chilled, and potatoes other
than seed potatoes, fresh/chilled, declined while share of flakes, granules and pellets of potatoes had increased substantially
during 2003-07. Nepal, Sri Lanka, Mauritius, Malaysia, Singapore and United Arab Emirates are projected as reliable markets
for potato products till the end of XIth Five Year Plan. The study suggests that to strengthen potato production ensure positive
growth in yield and to sustain in world markets in exports of potato products there is a need to focus on reliable markets and
demand driven products, bring about changes in research priorities and strengthen the linkages among researchers, extension
personnel and policy planners.

INTRODUCTION
The objective of the International Year of
the Potato is to raise awareness of the
importance of potato and that of agriculture
in general in addressing issues of global
concern, including hunger, poverty and threats
to the environment (7). Potato is grown in
nearly 150 countries and is the worlds single
most important tuber crop with a vital role in
the global food system and food security. It is
the fourth major food crop in the world after
rice, wheat and maize and contributes to the
energy and nutritional needs of more than a
billion people worldwide. Potato is classified
as a high value crop (HVC), a non-staple
horticultural crop, which yields higher net
returns per unit of land than staples. In
agriculture sector, HVCs are expected to
contribute more to the wellbeing of the small
holders, as they require more labour in the
production and marketing process and
generate higher returns than cereals (11).

The shares of potato in value of output

from fruits and vegetables and agriculture in
major growing states of India are presented in
Table 1. Potato contributed over 6% in value
of output from fruits and vegetables and about
2% in value of output from agriculture (all
crops) at all India level during triennium
ending 2005-06. The maximum share of potato
in output from fruits and vegetables was
recorded in the state of Meghalaya, followed
by Uttar Pradesh, West Bengal, Madhya
Pradesh and Punjab where potato occupied
over 10% share. The state of Meghalaya also
ranked first in term of highest share of
potato in total output from all crops of
agriculture sector.
The states of Uttar Pradesh, West Bengal
and Bihar jointly contributed about two- thirds
of potato area and production of the country
during the triennium ending (TE) 2006-07
(Table 2). However, these prominent states
were behind Gujarat in terms of yield,

Division of Agricultural Economics, Indian Agricultural Research Institute, New Delhi-110012, India.
E-mail: mahendrasingh582005@yahoo.com

Projection of potato export from India

Table 1. Share of value (percent) of output from potato in fruits and vegetables and total value of output from agriculture in
major potato producing states in India, 2003-04 to 2005-06.
Sl. No.

State

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Share (%) of potato in value of output of

Assam
Bihar
Gujarat
Haryana
Himachal Pradesh
Karnataka
Madhya Pradesh
Meghalaya
Orissa
Punjab
Tamil Nadu
Tripura
Uttar Pradesh
West Bengal
All India

Fruits and vegetables

Agriculture (all crops)

8.98
3.97
7.26
5.92
3.91
1.83
10.95
29.07
0.50
10.11
0.60
5.82
28.57
11.36
6.41

2.09
1.89
1.19
0.60
2.35
0.51
1.00
13.29
0.21
0.71
0.19
2.80
4.07
4.98
1.52

Source: Authors calculations with data from Central Statistical Organization, Ministry of Statistics and Programme
Implementation, Government of India (8).

Table 2. Status of area, production and yield of potato in major potato producing states in India, 2006-07.
Sl. No.

State

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Uttar Pradesh
West Bengal
Bihar
Assam
Punjab
Karnataka
Madhya Pradesh
Gujarat
Haryana
Meghalaya
Himachal Pradesh
Orissa
Tripura
Tamil Nadu
Others
All India

Area TE 2006-07
000 hectare

% of all India

Production TE 2006-07
000 tones

% of all India

Yield TE 2006-07
tonne/hectare

451.5
331.1
201.3
73.5
72.4
61.4
45.7
44.3
19.0
18.4
13.8
9.6
5.4
5.1
101.0
1453.4

31.1
22.8
13.9
5.1
5.0
4.2
3.1
3.1
1.3
1.3
0.9
0.7
0.4
0.4
7.0
100.0

10018.8
7215.2
2678.9
482.5
1291.5
393.0
654.3
1212.8
346.6
153.0
143.2
113.0
100.0
78.1
1029.3
25910.4

38.7
27.8
10.3
1.9
5.0
1.5
2.5
4.7
1.3
0.6
0.6
0.4
0.4
0.3
4.0
100.0

22.2
21.8
11.4
5.1
18.0
5.5
14.3
27.4
12.2
5.9
8.4
8.7
12.9
10.6
12.7
12.5

Source: Authors calculations with data from Agricultural Statistics at a Glance, National Horticulture Board, Ministry of
Agriculture, Government of India (9).

especially Bihar where yield is less than half

of the Gujarat yield and below the national
average.

and yield of potato during the period 195051 to 2006-07; (2) the growth in value of
output of potato relative to fruits and
vegetables and total value of output from
agriculture during the period of 1999-2000 to
2005-06 in major potato growing states in

Given the importance of potato in the

Indian agricultural sector, the present study
analyses (1) the trends in area, production

49

Mahendra Singh

India; and (3) the structural changes in exports

of potatoes and potato products to reliable
markets. The paper also attempts to predict
the exports of potatoes and potato products
to different markets by the end of XIth FiveYear Plan.

r
E jt = E jt 1 Pij + e jt
i=1
where
Ejt = export of fresh or chilled potatoes (per
cent of total potato export) to the jth country
during the year t;

MATERIALS AND METHODS

Ejt-1 = export to

Growth and variability in area, production

and yield of potato at national level are
analysed for the trend 1950-51 to 2006-07. The
period of 56 years is divided into five subperiods as pre-green revolution period (19501967), green revolution period (1968-80), wider
technology dissemination period (1981-90),
early reforms period (1991-96) and post-WTO
period (1997-2006). It is assumed that the
impact of the WTO agreement (January, 1995)
on multilateral trade would be evident two
years after adoption of the provisions by
member states.

th
j

country during the year

t-1

Pij = probability that exports will shift from

the ith country to jth country;
e jt = Error term which is statistically
independent of ejt-1; and
r = Number of importing countries.
The estimated share of importing country
during a period t was obtained by multiplying
the value of import during the previous period
(t-1) with the estimated transitional probability
matrix. The transitional probability matrix was
estimated in the linear programming
framework by applying mean absolute
deviation method in which objective function
is to minimize the sum of absolute errors,
subject to the constraints of the equation, the
row sum condition and the non-negativity
condition as follows:

Export projections
To predict the changes in shares of
importing countries and structural changes in
exports of various products of potato, first
order finite Markov chain model was used.
This model has been used to analyse the
structural changes in land-holdings, land use,
farm and market structure, share of area under
various horticultural crops (2, 3, 6, 12, 16, 17,
18); and forecasting of milk supply,
distribution of agricultural firms and crop
production (4, 5, 14); identification of stable
markets for onion and cashew exports (1, 13,
15). The first order finite Markov chain model
is a stochastic process which has specific
features such as the finite number of possible
states, the random nature of the process, the
condition that the outcome of this period is
affected only by the previous periods outcome
and the stationarity condition. The model can
be expressed algebraically as follows:

Min O P* +Ie (sum of the absolute errors)

Subject to
XP* +U = Y (matrix from the equation)
G P* = 1 (row sum condition)
P* e 0 (non-negativity condition)
where
O is a null vector;
P* is the vector in which the probabilities Pij
are arranged in one column;
I is an appropriate dimensional column vector
of units;
e is the vector of absolute errors;

50

Projection of potato export from India

implies that the total growth in production

was contributed by area expansion rather than
yield increment during post-WTO period.
However, variability in area and production
showed a continuously declining trend and
reached below 10% during post-WTO period.
The variability in yield declined substantially
but a sudden spurt in variability was observed
during Green Revolution period (16%). This
implies that the growth in yield and its stability
was crucial factor for sustaining potato
production in the country. The deceleration in
variability in area, production and yield is a
positive indicator for sustainable production
of potato in the country, because it could be
helpful to producers, consumers, exporters
and policy planners in terms of area expansion
under the crop, availability of potato on
reasonable price, export contract with
importing countries and framing the suitable
policy respectively.

X is the block diagonal matrix of lagged values

of Y;
U is the vector of errors;
Y is the vector of exports of each country; and
G is a grouping matrix to add the row elements
of P as arranged in P*.

SOURCE OF DATA
The study is based on secondary data
which were compiled from published reports
of various government departments, namely,
Ministry of Agriculture, Central Statistical
Organization, Ministry of Statistics and
Programme Implementation, Government of
India. Data were also accessed from website
of Commodity Trade Statistics Database,
United Nations Statistics Division (http://
comtrade.un.org).

RESULTS AND DISCUSSION

Dynamics of area, production and yield
of potato

Value of potato
The analysis of growth in value of output
from potato, fruits and vegetables and total
value of output from agriculture in major
potato producing states in India during 19992000 to 2005-06 indicated that the maximum
growth in value of output from potato was in
the state of Gujarat, followed by Haryana,
Madhya Pradesh and Uttar Pradesh. However,
the states of Bihar and West Bengal, which
contribute significantly in national potato

The growth and variability of area,

production and yield of potato were estimated
for various sub-periods (Table 3). It is
observed that growth in area, production and
yield had drastically declined during postWTO period. In case of yield, the decline was
substantial with the growth rate becoming
negative (-0.3%) from a high rate of 4.2% in
the previous (early reforms) period. This

Table 3. Trends in area, production and yield of potatoes in India during 1950-51 to 2006-07.
Period

Entire period(1950-07)
Pre-Green Revolution period(1950-67)
Green revolution period (1968-80)
Wider technology dissemination period (1981-90)
Early reforms period (1991-96)
Post-WTO period (1997-06)

Annual compound growth (%)

Coefficient of variation (%)

Area

Production

Yield

Area

Production

Yield

3.3
4.6
4.0
2.9
3.4
1.5

5.5
5.7
8.0
5.0
7.7
1.2

2.2
0.9
3.8
2.0
4.2
-0.3

49.5
24.3
17.4
8.6
7.4
6.6

75.2
33.0
32.3
16.2
17.3
8.6

35.3
10.9
16.0
9.2
9.7
9.2

Source: Authors calculation with data from Agricultural Statistics at a Glance, 2008, Ministry of Agriculture, Government of India (10).

51

Mahendra Singh

production, showed negative growth in value

of output. Similarly, in Himachal Pradesh,
which showed highest growth in value of
fruits and vegetables, the growth in value of
output from potato was negative. In case of
Gujarat, the growth in value of fruits and
vegetables output and total agricultural output,
though positive, was less than that of these
two sectors indicating slowdown relative to
other commodities. Such a situation of a
negative or low growth in value of output of
potato is a cause of concern for researchers,
extension personal and policy planners.

Table 5. Correlation and regression between production and

export quantity of potatoes (fresh or chilled SITC code 0541)
during 1988-89 to 2006-07 in India.

Relationship between production and

export of potato

The analysis of the composition in exports

of potato products revealed that the share of
potatoes (fresh or chilled) and potatoes other
than seed potatoes (fresh/chilled) have
contributed over 70% in potato export in the
year 2007. However, the share of potato (fresh
or chilled) and potato other than seed potato
(fresh/chilled) declined while share of flakes,
granules and pellets of potatoes had increased
substantially during 2003-07 (Table 6). The
maximum growth was recorded in flakes,
granules and pellets of potatoes followed by
potato flour, meal, pellets and potatoes
prepared, not frozen. The overall share of
export of potatoes products in world trade
was below one percent, in spite of third
producer after China and Russian Federation
in the year 2007, this is a challenge before
researcher and policy planner.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Assam
Bihar
Gujarat
Haryana
Himachal Pradesh
Karnataka
Madhya Pradesh
Meghalaya
Orissa
Punjab
Tamil Nadu
Tripura
Uttar Pradesh
West Bengal
All India

Potato

-8.29
-2.46
9.13
6.67
-4.72
-5.39
1.39
0.59
-2.01
-1.18
-2.82
-2.02
1.26
-0.70
0.61

Fruits and Total value

vegetables of output
from
agriculture
-6.38
3.51
14.35
4.57
16.45
-4.75
-1.40
-0.02
1.84
7.64
1.52
6.04
0.90
1.87
2.13

Correlation coefficient
Regression by using Power
function (dependent variable:
quantity of exports)

0.59
Standardized Coefficients
()= 0.75

Export performance

Table 4. Annual compound growth (percent) in value of output

from potato, fruits and vegetables and total value of output
from agriculture in major potato producing states in India
during 1999-2000 to 2005-06.
State

Value

Source: Authors calculation with data accessed from

Agricultural Statistics at a Glance, 2008, Ministry of
Agriculture, Government of India and Commodity Trade
Statistics Database, United Nations Statistics Division (http:/
/comtrade.un.org) on 27th September 2009 (10).

It is evident that the production and export

of potatoes (fresh or chilled) was found
positively correlated. The regression result also
shows that an increase in one percent in
production influences the 0.75% export quantity
positively (Table 5). It implies that production
of potato is a prerequisite for strengthening the
exports of potato and potato products.

Sl. No.

Parameter

-2.66
-1.50
11.62
2.02
8.82
-2.23
1.50
0.33
2.91
1.09
-3.20
3.77
-0.04
1.33
1.65

The predicted share of export of various

products of potato from India for 2009-12 is
presented in Table 7. The results show that the
share of raw potato will decline while share of
processed products of potato will increase by
the end of XIth Five-Year Plan period. This
implies that the scope of value addition in
potato sector will increase in future which is
beneficial for our labour abundant economy.

Source: Authors calculations with data from Central

Statistical Organization, Ministry of Statistics and Programme
Implementation, Government of India (8).

During 1997-2007, Nepal, Sri Lanka,

Mauritius, Malaysia, Singapore and United Arab
52

Projection of potato export from India

Table 6. Changes in value (percent) of export of various products of potatoes from India during 2003-07.
Commodities

Share in total
potatoes products
export 2003

Potatoes fresh or chilled

Seed potatoes fresh or chilled
Potatoes other than seed potatoes
fresh/chilled
Potatoes uncooked
Potatoes flour, meal, pellets
Potato starch
Potatoes prepared/preserved
Potatoes prepared not frozen
Flakes, granules & pellets of potatoes
Total

Share in total
Share in total
Annual
Share in world
potatoes products potatoes products
compound
export TE2007
export 2007
export (2003-07) growth (2003-07)
(2003-07)

46.41
4.88
41.53

38.10
1.87
36.23

40.52
2.74
37.78

23
-5
25

0.49
0.15
0.58

3.59
0.72
0.39
1.49
0.96
0.04
100.00

5.63
7.03
0.11
2.61
4.52
3.90
100.00

5.97
5.33
0.11
2.46
2.87
2.22
100

55
139
-9
40
133
296
29

2.12
0.42
0.01
0.02
0.06
0.18
0.26

Source: Authors calculation with data accessed from Commodity Trade Statistics Database, United Nations Statistics Division
(http://comtrade.un.org) on 25th March 2009.

probability that Sri Lanka retains its share

from one period to another period is 84%. Sri
Lanka loses 9% to UAE, 1% to Singapore and
6% to other countries. However, it gains 18%
share of Nepal, 78% of UAE, 45% of Malaysia
and 22% share of other countries. Sri Lanka is
followed by Nepal as the second most stable
destination with a retention probability of 0.64.

Emirates were major importers and accounted

for over 80% of the share of the total potato
exports during the period. Nepal and Sri Lanka
together imported for over half the potatoes
exported from India (Table 8).
The first step transitional probability
matrix for exports of potatoes fresh or chilled
from India during 1997-2007 (Table 9) showed
that Nepal and Sri Lanka are the only two
reliable and stable importers of potatoes,
having more than 50% of probability of
retaining import shares of potatoes fresh or
chilled from India. Sri Lanka is the most stable
destination for Indias potato exports among
major importers as reflected by the high
probability of retention of 0.84 i.e., the

The projected shares of importing countries

for potatoes, fresh or chilled from India for
the period of 2009-12 (Table 10) showed that
Sri Lanka ranked first followed by Nepal as
importing markets. A relatively smaller
increase in exports is also predicted to UAE
during 2009-12. While stagnating exports are
predicted for Malaysia and Singapore markets,

Table 7. Predicted share of export of various products of potato from India during 2009-12.
(percent)
Year

Potatoes
fresh or
chilled

2009
2010
1011
2012

33.66
30.93
27.90
24.41

Seed
Potatoes
Potatoes
potatoes fresh other than
uncooked
or chilled
seed potatoes
fresh/chilled
2.01
2.25
2.13
1.82

31.26
27.60
24.06
20.62

4.85
4.28
3.72
3.18

Potatoes,
flour, meal,
pellets

Potato
starch

Potatoes
prepared/
preserved

Potatoes
prepared
not frozen

Flakes,
granules
& pellets of
potatoes

7.65
7.40
6.50
5.53

0.09
0.08
0.07
0.06

2.25
1.97
1.71
1.46

7.23
7.00
6.24
5.31

10.98
18.48
27.67
37.60

Source: Authors calculation with data accessed from Commodity Trade Statistics Database, United Nations Statistics Division
(http://comtrade.un.org) on 25th March 2009.

53

Mahendra Singh
Table 8. Destination of export of potato (fresh or chilled) from India during 1997-2007.
Year

1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

Share of importing country (percent)

Nepal

UAE

Singapore

Malaysia

Mauritius

Sri Lanka

Others

11.7
3.6
0.6
10.8
64.4
41.2
67.5
51.6
35.9
26.6
41.2

12.8
8.1
2.2
7.5
21.8
1.6
0.6
0.2
0.2
7.6
10.7

0.7
0.6
0.5
0.4
1.6
1.7
0.3
1.6
1.1
0.7
0.5

0.1
0.6
1.9
0.8
2.9
0.2
0.3
2.4
9.1
2.1
2.5

2.2
5.5
0.1
4.8
0.2
7.0
11.9
10.7
19.4
9.7
18.1

64.9
68.6
74.4
72.5
5.6
40.0
8.6
22.4
27.1
35.2
12.9

7.6
13.0
20.4
3.3
3.5
8.4
10.8
11.0
7.2
18.2
14.1

Source: Authors calculation with data accessed from Commodity Trade Statistics Database, United Nations Statistics Division
(http://comtrade.un.org) on 25th March 2009.

a declining trend is predicted for Malaysia

and Mauritius.

comments of the anonymous referee are

gratefully acknowledged.

ACKNOWLEDGEDMENT

LITERATURE CITED

The author is indebted to Dr. V. C. Mathur,

Head, Division of Agricultural Economics,
Indian agricultural Research Institute, New
Delhi-110012 for his insights and suggestions
on earlier draft of this paper. The valuable

1.

Ashalatha. 2004. Direction and changing pattern of

Indian cashew trade: An application of Markov
analysis. International J. Applied Economics and
Econometrics 12: 557-72.

2.

Buckwell, A.E. and D.M. Shucksmith. 1979. Projecting

farm structure change. J. Agric. Economics 30: 131-43.

Table 9. Ist step transitional probability matrix of export of potatoes (fresh or chilled) from India during 1997-2007.

Nepal
UAE
Singapore
Malaysia
Mauritius
Sri Lanka
Others

Nepal

UAE

Singapore

Malaysia

Mauritius

Sri Lanka

Others

0.64
0.00
0.00
0.00
0.00
0.00
0.51

0.00
0.00
0.00
0.55
0.00
0.09
0.00

0.02
0.00
0.00
0.00
0.00
0.01
0.00

0.02
0.00
0.00
0.00
0.06
0.00
0.04

0.12
0.00
0.00
0.00
0.20
0.00
0.23

0.18
0.78
0.00
0.45
0.00
0.84
0.22

0.02
0.22
1.00
0.00
0.74
0.06
0.00

Source: Authors calculation with data accessed from Commodity Trade Statistics Database, United Nations Statistics Division
(http://comtrade.un.org) on 25th March 2009.

Table 10. Projected shares (percent) of importing countries for exports of potatoes (fresh or chilled) from India during 2008-12.
Year

Nepal

UAE

Singapore

Malaysia

Mauritius

Sri Lanka

Others

2009
2010
2011
2012

26.2
19.1
15.6
14.6

4.5
5.4
5.8
6.0

0.8
0.7
0.7
0.6

1.7
1.2
1.0
1.0

8.6
6.4
5.4
5.1

45.6
56.2
61.3
62.7

12.7
10.9
10.3
10.1

Source: Authors calculation with data accessed from Commodity Trade Statistics Database, United Nations Statistics Division
(http://comtrade.un.org) on 25th March 2009.

54

Projection of potato export from India

3.

4.

Buckwell, A.E., D.M. Shucksmith and D.A. Young.

1983. Structural projections of the Scottish dairy
industry using micro and macro Markov transition
matrices. J. Agric. Economics, 34: 57-69.

Agric.
219-36.

Colman D. and Dennis Leech.1970. A forecast of

milk supply in England and Wales. J. Agric.
Economics 18: 351-61.

6.

Farris, P.L. and Daniel I. Padberg.1964. Measures of

market structure change in the Florida fresh
citrus packing industry. Agric. Economics Research
16: 93-102.

7.

FAO.2009. New Light on a Hidden TreasureInternational year of the potato 2008- An end of
year review. pp. 144.

8.

GoI.2006. Statewise Estimates of Value of Output for

Agriculture and Livestock (1990-91 to 2002-03).
Ministry of Statistics and Programme
Implementation, New Delhi, India.

9.

GoI.2008. Agricultural Statistics at a Glance.

Directorate of Economics and Statistics, Ministry of
Agriculture, New Delhi, India.

Research

Review

19:

12. Krenz, R.D. 1964. Projections of farm numbers for

North Dakota with Markov chains. Agric. Economics
Research 16: 77-83.

Colman, D.R. 1967. The application of Markov chain

analysis to structural change in the Northwest dairy
industry. J. Agric. Economics 21: 253-65.

5.

Economics

13. Mahadevaiah, G.S., P.C. Ravi and P.G. Chengappa.

2005. Stability analysis of raw cotton export markets
of India-Markov Chain approach. Agric. Economics
Research Review 18: 253-59.
14. Mellor, C. J. 1984. An application and extension of
the Markov chain model to cereal production. J.
Agric. Economics 35: 203-17.
15. Murthy, S. D. and K.V. Subrahmanyam. 1999. Onion
exports markets and their stability for increasing
India s exports: Markov chain approach. Agric.
Economics Research Review 12: 118-28.
16. Power, A.P. and S.A. Harris. 1971. An application
of Markov chains to farm type structural data
in England and Wales. J. Agricultural Economics 22:
163-77.
17. Prasad Y.E., Lalith Achoth and Y. Radha. 1997. Farm
technology in relation to changing structure of land
holdings in Andhra Pradesh. Agric. Economics
Research Review 10: 78-87.

10. GoI. 2007. Indian Horticulture Database, National

Horticulture Board, Ministry of Agriculture, New
Delhi, India.

18. Singh, M. and V.C. Mathur. 2008. Structural changes

in horticulture sector in India: Retrospect and
Prospect for XIth Five-Year Plan. Indian J. Agric.
Economics 63: 332-48.

11. Joshi, P.K., Laxmi Tewari and P.S. Brithal. 2006.

Diversification and its impact on smallholders:
Evidence from a study on vegetable production.

MS Received: 9-4-2009.

55