Case Study - Potato Value Chain

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LCA043
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POTATO VALUE CHAIN – A TALE OF TWO FARMERS IN OKARA
I took a loan last year. Unfortunately, at the end of the crop cycle, the price of a 120 kg potato
bag was only PKR 1,000, and I suffered a major loss. This year I was hoping to pay back my
loan as the price was good, but I had poor yield, leaving me with an unpaid loan of PKR 3.2
million.1
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Inayat Ali Kilchi
Sitting at his small dera (farmhouse) in early May 2014, Inayat Ali Kilchi despairingly reflected on his recently
harvested potato crop and wondered how he had incurred a loss even with unprecedented potato prices. His only
hope was that the price of maize, his next crop, would be high enough to earn a decent profit. Not too far from
Kilchi, another farmer, Abdul Jabbar, was also thinking about his most recent potato crop:
Although the previous year was the worst and I suffered a loss of PKR 300,000, I have earned
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a revenue of PKR 650,000 from the potato crop that I have just sold. I could have earned more
by selling the goli2 (baby) potatoes at PKR 1,200 per bag, which I later had to sell for PKR 850.
This loss was due to my younger brother who wanted to experiment with the seed business, but
he mismanaged the 100 bories3 of seed which I had to sell later for a lower price. Currently, I
have stored 275 bories of rashan4 potatoes and 250 bories of seed potatoes. I am expecting the
prices to increase over the coming weeks and intend to wait for the right moment to sell at a
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much higher price.

Abdul Jabbar
As Kilchi and Jabbar reflected on the events of the last potato season, they contemplated how they should plan
for their next potato crop.
POTATO CULTIVATION IN PAKISTAN

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After services, agriculture was the second largest contributor to the GDP of Pakistan and employed 45% of the
labour force. Both large-scale manufacturers and SMEs were directly affected by agriculture, as cotton-based
textile was one of the main industries of Pakistan, with 46% contribution in the manufacturing sector. Agriculture
1
From 2012-2014, the average exchange rate for the U.S Dollar to Pakistani Rupee was 98.58. Source: State Bank of Pakistan,
www.sbp.org.pk/ecodata/ibf_arch.xls, accessed April 2017.
2
Goli potatoes were very small potatoes and not preferred by the end user; they were also too small to be used as seed.
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3
Bori was a bag made of jute. In Okara region, this bag held 120 kg of potatoes.
4
Rashan potatoes were sold in the market for household cooking and consumption. These potatoes were relatively large in size.
This case was written by Dr Syed Zahoor Hassan, Jawwad Farid Khan and Fahim Ahmad at the Lahore University of Management Sciences
to serve as basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The field
work that enabled the writing of this case was supported by a research grant from Stanford Institute for Innovation in Developing Economies
(SEED). This material may not be quoted, photocopied or reproduced in any form without the prior written consent of the Lahore University
of Management Sciences.
© 2017 Suleman Dawood School of Business, Lahore University of Management Sciences
This document is authorized for educator review use only by ASAD ALI QAZI, Sukkur Institute of Business Administration until May 2021. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
Potato Value Chain – A Tale of Two Farmers in Okara LCA043
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also accounted for 16.5% of the exports in 2012; hence, in many aspects, it was the backbone of Pakistan’s
economy.5
Historically government attention and focus had been on wheat, cotton, sugarcane, and rice (see Exhibit 1 for top
agricultural commodities in Pakistan). Wheat was a staple food crop in Pakistan. Therefore, the government had
to ensure its availability. Sugarcane and cotton formed key inputs for the sugar and textile industries. These
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industries had invested in the requisite infrastructure, in collaboration with the government, to ensure that all
necessary resources were available to farmers. The government regulated the price of these main agriculture
commodities to ensure a balance between supply and demand. Even though potato was among the top ten
agricultural commodities of Pakistan, there was no large processing industry that used potato as a raw material.
According to an estimate of SUPARCO (Space and Upper Atmosphere Research Commission), a production of
4.8 million tons of potato was expected in 2012-13. At the end of the season, the actual production was 4.1 million
tons, with 301,594 tons exported at USD 83.66 million from Pakistan in 2012.6 There was a relatively small local
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industry for potatoes, primarily potato chips manufacturers, which needed special varieties of potatoes that
constituted only a small portion of the total potato production in Pakistan. As their requirement was small
compared to the total production, these entities were unable to develop a potato ecosystem and ensure price
stability by themselves.
Frito-Lay (PepsiCo Pakistan’s food business), a leader in the chips industry with almost 80% market share, was
working to ensure that the seed of its preferred variety was available to its farmers. Working with chips
manufacturers under a contractual binding, farmers were provided access to quality seed on deferred payment
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(farmers only paid for the seed when they sold their potatoes to Pepsi), technical advice on potato farming, and a
fixed price for the potatoes that met PepsiCo’s quality standards. PepsiCo was only offering this arrangement to
large farmers in the Okara region with a proven track record of producing good potatoes, whereas most farmers
in Pakistan had small landholdings and a major proportion of the cultivated area comprised farms of up to 25
acres7 (see Exhibit 2). PepsiCo (Frito-Lay) was trying to educate farmers that with a pre-contracted production,
the farmers were assured of good prices and only had to concentrate on improving the quality and yield to earn
more profits. The prices of potato not only varied widely (by a factor of four) within a year but also across years
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(see Figure 1).
Figure 1: Potato Production in Pakistan (2002-07)
Year Production ‘000 tons

2002-03 1946.3
2003-04 1938.1
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2004-05 2024.9
2005-06 1567.9
2006-07 2581.6
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Source: Pakistan and Pakistan Bureau of Statistics. 2010-11. “Potato Cluster Profile – Okara.” Small and Medium Enterprise
Development Authority (SMEDA).
5
Statistics mentioned in this section have been taken from Pakistan Economic Survey 2011-12 and Who Is the Arthi (2013), a report by the
International Growth Centre (IGC), Pakistan Microfinance Network and National Institute of Banking and Finance (NIBAF).
6
Trade Map-International Trade Centre. 2015. “List of supplying markets for a product imported by Pakistan.” International Trade Centre.
Accessed May 2016. http://www.trademap.org/tradestat/Country_SelProductCountry_TS.aspx
7
2.47 acres = 1 hectare.
2
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There were three seasons for growing potatoes across different regions in Pakistan. Out of these, autumn/winter
crop was the most widely used for potato production (see Table 1 for the potato production cycle). This crop
comprised a major proportion of the potatoes produced in Pakistan and was planted mostly in Punjab. The other
crop seasons were suitable for northern Pakistan. However, due to lack of quality farming practices and
mechanisation in those areas, the crops were not widely planted by farmers. The pricing of potatoes varied with
the change in season across regions.
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Table 1: Potato Growing Seasons in Pakistan
Crop Planting Harvesting Production Share

Spring January-February April-May 7.10 %
Summer March-May August-October 15-20 %
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Autumn September-October January-February 70-75 %
Source: “Potato Cultivation in Pakistan,” http://www.valleyirrigationpakistan.com/wp-content/uploads/2012/09/Potato-Cultivation-

in-Pakistan.pdf, accessed April 2017.
To ensure healthy crop, fertilisers were used by farmers at two stages of the cultivation cycle. Initially, they were
used while preparing the soil for potato seed plantation, to strengthen soil nutrients for sprouting of seeds. Farmers
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usually used DAP (Di-Ammonium Phosphate) at this stage, while some also used poultry feed and cow manure.
Cow manure was preferred by certain farmers due to its low cost and organic composition. The next usage of
fertilisers was during plant cultivation, to facilitate growth. A common practice of farmers in Pakistan was to use
three to five bags of urea at this stage, while others used bags of phosphorus and potash as fertiliser.
POTATO CULTIVATION IN OKARA

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The potato was cultivated in various parts of Pakistan at different times of the year. Okara in Sahiwal division,
Punjab, was the main area for potato cultivation by contributing significantly to the total production (see Table 2
for potato production by region). This area comprising Okara and adjoining districts had the most established
norms and cultivation technology standards as compared to any other place in Pakistan. The region followed the
autumn crop timeline for potatoes, so other small farmers in adjoining areas followed suit. According to the
Punjab Statistical Crop Reporting Department, the total forecasted production of potatoes in Punjab for the year
2012-13 was 3.6 million tons, out of which 2.3 million was expected to be from Sahiwal division, where Okara
district alone, considered to be the potato hub of Pakistan, would contribute 1.33 million tons. Different
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organisations quoted varying production estimates for potato production as SUPARCO provided an estimate of
4.86 million tons of potato production for the 2012-13 autumn season across main potato producing areas in
Pakistan, which were mostly located in the Punjab province.
Okara was located in a region that enjoyed all four seasons with periods of humidity and dry weather, monsoon
rains during July-September, and occasional rainfall in winter. Because of such diverse conditions, Okara offered
ideal conditions for many crops including potatoes, maize, rice paddy and wheat, and was also suitable for orange,
mango and guava farms.
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Table 2: Percentage Share of National Production by Provinces
Punjab Sindh KPK/GB Baluchistan

Major Potato Okara, Sahiwal, Kasur, Nowshera, Pishin, Killa Saifullah
Growing Districts Pakpattan, Vehari, Toba Dir, Swat, and Kalat from
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Tek Singh, Sialkot, Balakot, Baluchistan are
Sheikhupura, Jhang, Lahore, Gilgit, Skardu, important potato
Narowal, Gujranwala, and Diamer and growing districts
Khanewal Mansehra.
Percentage Area 86.0 0.5 9.0 4.5
Percentage 88.3 0.3 7.2 4.2
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Production
Source: Ch. Usman Ali and Marcos Arocha, “Potato-Value Chain Competitiveness Assessment,” USAID The Agribusiness Project
(TAP), January 27, 2014, [http://pdf.usaid.gov/pdf_docs/PA00KN2W.pdf], accessed April 2017.
Farms in the Okara region were on relatively flat and contiguous pieces of land in fertile plains. These conditions
enabled them to cultivate in larger areas and utilise heavy machinery to achieve economies of scale. In areas like
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Taxila and Mansehra, farms consisted of small cultivable strips on uneven and non-contiguous land.
Weather conditions were a key factor that influenced cultivation due to varying temperature and humidity levels.
Potato seeds required moderately warm temperatures when sowed to germinate, as high temperature damaged the
seed, while cold temperature resulted in frost which was harmful to the crop. In the Okara region, there was the
likelihood of very hot weather in September and frost in late December. Hence farmers usually planted the seed
in October and harvested the crop in the January (early crop) to March (late crop) time frame. With early planting,
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there was a risk of high-temperature damage in September, and the crop was more susceptible to frost damage
with late planting. It was not feasible to cultivate potatoes during summer due to high temperature; however, areas
in northern Pakistan were suited for potato cultivation during the spring and summer months.
POTATO CULTIVATION PROCESS
Typically, potato cultivation involved the following steps as shown in Figure 2:

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Figure 2: Potato Cultivation Process
Application of
Seed Purchase or Soil Preparation and
Seed Planting Chemicals &
procurement Fertilization
Pesticides
Seed and Produce Crop Harvesting and Crop Application of Urea &
Crop Sale
Storing (if applicable) Grading Weeding Water
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Source: Authors’ Notes.
Details of each cultivation stage are provided in Annexure A.
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Potato Seed
New potato seed started as a plant tissue that was nurtured in test tubes and later shifted to controlled sheds. The
joints of these tiny plants were then planted in small soil pots. The resulting plant’s roots formed the first form of
seed called mini-tubers, which were cultivated to produce the first year seed. This seed was then planted in
controlled farms on a relatively large scale to multiply the seed. Usually, seed imported from Holland was in its
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fifth generation and good only for another three or four cycles. This imported seed was expensive, costing PKR
8,000/50 kg bag. The process of cultivating seed potatoes required special care to ensure that they were of the
desired size and not affected by viruses and bacterial diseases, after which these seed potatoes were planted for
potato production (see Exhibit 3 for potato seed cultivation).
Okara farmers used the produce of a potato crop for 3-4 years as seed and then started the whole process again
with fresh seed imported from Europe. Farmers mostly used potatoes from their previous year’s crop as a seed
which they had kept in a cold storage facility. Each season, farmers separated seed potatoes which were usually
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smaller in size and not preferred by buyers. To be selected as seed, these potatoes needed to have a diameter
exceeding 3.5 centimetres. Potatoes below this size were weak and could not produce a healthy plant.
Figure 3: Some of the Issues Associated with Bacterial Diseases in Seeds8

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The potato seed became weak and vulnerable to viruses and diseases after 3-4 years of reproduction (generation
nine or ten), and farmers then had to shift to a new seed cycle (see Figure 3 for information on seed-related
bacterial diseases). In such a situation, the farmer either bought imported seed or obtained seed from other farmers.
Usually, farmers ran this practice of developing their own seed parallel to potato production fields, but on a
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smaller area. A lot of farmers in Okara purchased seed from other farmers who had fresh (younger) seed available,
as some farmers did not want the hassle of growing seed. Sometimes farmers also wanted to try new varieties of
potatoes for testing, or buyers suddenly preferred a new variety. In such a scenario, the farmer needed to purchase
seed. It was difficult to tell the age of the seed with the naked eye, i.e., whether it was generation six or ten. Hence
farmers had to rely on the reputation of the farmer selling the seed to be confident about its quality and age.
According to a report by the World Bank,9 only 2% of the total potato seed requirement for Pakistan in 2010
(372,725 tons) was being fulfilled.
Types of Potato Varieties Produced in Okara Region

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Potatoes were primarily divided into two types — yellow and red. Buyers of Punjab and Khyber Pakhtunkhwa
preferred red varieties, while buyers from Sindh, Baluchistan, Europe, and Central Asia preferred yellow varieties.
Exhibit 4 provides a list of potatoes cultivated in Pakistan, with their characteristics and prices. Varieties
cultivated in a given season in Pakistan were influenced by the customers that purchased from the market. Food
8
Ad Toussaint, et al., eds. “The Inspection of Dutch Seed Potatoes and the Importance of Approval.” NIVAP, the Netherlands, 2005. Accessed
June 2017. http://www.aardappelpagina.nl/files/NIVAP_2005_England_def.pdf
9
Hussain, A. 2011. “Status of Seed Industry in Pakistan,” World Bank, 2011.
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processing companies like Frito-Lay Pakistan and other potato chips manufacturers had their own requirements
for buying potatoes. They dealt directly with farmers instead of buying from the mandi10 to ensure quality from
potato seed to crop cultivation. They needed special varieties like Lady Rosetta that possessed the characteristics
needed for making chips, while other varieties like Asterix and Kuroda were used for household consumption.
Potato Mandi of Okara
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As Okara was the largest potato cultivating region in Pakistan, the Okara potato mandi was the largest in the
country (see Exhibit 5 for details regarding Okara Mandi). This market only operated from November to April,
when the major portion of the potato crop in Pakistan was harvested. The mandi could stock more than 60,000
bories of potatoes on a given day. As it serviced such a high volume, it attracted buyers from both local and
foreign markets. Foreign market buyers included export companies looking for specific varieties and quality of
potatoes to meet the preferences of their target markets. In recent years, potatoes from Pakistan had been exported
to the Middle East, Central Asia, and Russia. Customers from Central Asia and Russia looked for yellow coloured
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potatoes with a long oval shape. They cared more about the quality of potatoes and were willing to pay a premium
for the highest quality available in the mandi. Local market buyers bought large quantities and purchased on the
basis of requirements of their regional customers.
A farmer who wanted to sell his produce brought it to his arthi11 in the mandi in the evening. Arthi was the
commission agent who provided space to showcase the produce and helped the farmer with selling activities.
Usually, the arthi played a bigger role, as many arthis provided end-to-end services to the farmer, from financing
crop inputs, purchasing of raw materials to storing the end produce in cold storage. In Okara, the government had
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fixed 3.15% as commission for the arthi, but if arthis provided other services, they charged a commission of 5-
10% depending on dealings with the farmer.12 If the arthi loaned money or purchased raw materials for the farmer,
then the latter would have to pay back the loan amount along with the commission at the end of the season. Many
arthis also charged extra commission if the farmer wanted the immediate provision of materials rather than having
to wait for a couple of weeks.
Usually, buyers came from other parts of Pakistan or other countries like Afghanistan. Some exporters used to
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repack, clean, and brand their potatoes in new bags (see Exhibit 6). As soon as they purchased the produce, they
hired transporters to move the produce to their warehouse. The transportation cost varied from PKR 60,000-
140,000 depending on the destination. Usually, buyers bought 500-800 bories of potatoes, so they hired big
transport trucks and loaders which would load the produce on trucks at PKR 10 per bori.13
Storage and Processing
In many cases, the next destination for the potato crop from the mandi was cold storage. It was not uncommon
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for traders to buy thousands of bags of potatoes during the peak season for storing, with the purpose of selling
when prices would be much higher after the season had ended. Exhibit 7 provides information on the two main
types of cold stores in Okara. In recent years, a few potato grading and packaging plants had also been set up on
a pilot basis. These plants provided the facilities to properly grade and package potatoes in large quantities to
meet the specific requirements of buyers in foreign markets (see Exhibit 8).
OVERALL EXPERIENCE OF POTATO FARMERS IN OKARA
Due to the high demand from Dubai, Central Asia, and Europe, the 2013-14 season was very profitable for Okara
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farmers as they received unprecedented high prices for their produce. At the same time, due to very cold weather,
crops were affected by extreme frost which caused loss of yield and an impression of scarcity. In previous years,
10
Mandi was a wholesale market of vegetables and fruits.
11
Arthi was the commission agent who was involved in the auction process in the vegetable market. He also provided financing to farmers
on the condition that they would sell their produce through him. According to government regulation, the arthi could only charge a
commission of 3.15% for his services but could charge up to 12% for providing financing to the farmer.
12
Interviews with Okara Auction Market Department, Government of Punjab.
13
Authors’ field visits.
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farmers had obtained an average potato yield of more than 100 bags per acre, which fell significantly during 2013-
14.
Although 2014 was profitable for farmers, it was a difficult year for consumers and potato chips manufacturers.
Due to the high demand for exports and international buyers willing to pay more, the price of potatoes rose. At
the time of harvest in January, the price of high-quality potatoes was PKR 3,000/bag while at the end of the
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season, the price for similar potatoes was PKR 6,000/bag. Potatoes were available to end consumers at PKR 80/kg
as compared to PKR 20-30/kg in previous years.
The manufacturers of potato chips that had made contractual arrangements with farmers at PKR 19/kg also faced
similar problems. Due to a shortage of potatoes, farmers started selling potatoes (Lady Rosetta) in the mandi as
they could easily fetch PKR 3,000/bag for these varieties (about PKR 25/kg). Therefore, some farmers preferred
selling the crop at the mandi rather than supplying their produce to chips manufacturers. Processors like PepsiCo
had to make a price adjustment and eventually were able to procure most of the targeted amount. Some processors
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had to import potatoes from India and Europe at a much higher price to ensure adequate supply for their plant.
Experience of Two Farmers in Okara during the 2013-14 Potato Season
Based on a study of some small farmers in Okara, two farmers were chosen for this analysis to reflect the situation
of farmers in the region. Both individuals had a similar family background, education, and years of experience
for comparison purposes (see Exhibit 9 for profiles of both farmers).
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Inayat Ali Kilchi
Inayat Ali Kilchi, a 33-year-old farmer from a village near Okara, passed his Bachelors exam before taking up
farming as a profession. He lived with his family of eight, comprising his parents, wife, three sons, and a brother.
Two of his sons were below school-going age, and the eldest was in pre-nursery. While he wanted his sons to
study, he was open to the idea of them joining him in farming after their education, if they so wanted.
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Kilchi’s father was uneducated and his younger brother had only studied till Grade 5 before taking up farming.
His father was also a farmer, but he had cultivated on a smaller area and maintained around 100 cattle to run a
dairy business parallel to his crop cultivation activities. When Kilchi took over from his father, he sold all his
cattle to concentrate only on crop farming.
While reflecting on his decision, he commented:
The dairy business provided steady income due to the stable demand and supply, and the price
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of milk usually remained uniform throughout the year. However, the returns were not good. In
the case of crop farming, fluctuations in demand and supply caused prices to rise, leading to
higher revenues. Therefore, I ended the dairy business and focused on farming to increase my
revenue.
Kilchi initially worked as an understudy to his father, but he gradually took over, and for the last ten years he had
been managing all the farming activities for his family. His younger brother also participated in farming with him,
while his father provided advice when needed. Kilchi managed the farm’s financials, inputs, and market-related
activities, while his brother did the farming. Usually, when input like pesticide was required, he would do the
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purchasing and instruct the labour on the usage, but he did not oversee what the labourers were doing; this aspect
was handled by his younger brother.
The Experience of Potato Season 2013-14
During the 2013-14 Rabi (winter) season, Kilchi had cultivated crops on a 25-acre area that had been leased at
PKR 22,000/acre. The preceding year, he had cultivated potatoes on all 25 acres and faced a huge loss as the price
of potato was very low, while this year he had grown potatoes on 4.5 acres. Apart from potato, he was cultivating
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wheat on 2 acres that was meant for his family’s consumption, with the excess produce to be sold in the market.
On 4 acres he was cultivating canola, while on the remaining 14.5 acres he planted an early maize crop in order
to have two maize crops.14 In Kharif (summer) season, he planned to cultivate maize on the 4.5 acres that would
be free from potatoes by then. Overall he planned to get three crops per year from the land. He had decided to
start cultivation relatively early, around 20 September 2013, to get an early harvest. Ideally, potato cultivation in
Okara started in early October when the weather was cooler. In late September, the soil was warm, and this could
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damage the early planted seeds. Therefore, the farmer needed to water the field as soon as the seed was sowed.
Kilchi had stored seed from the previous crop in a new cold storage built near his village the previous year. He
wanted to save time and transportation cost by utilising this cold storage. The cold storage cost was PKR 330/bag.
His experience with the cold storage had not been good15 as the seed got damaged and he was able to recover
only 59 bags of seed. He used his tractor to bring back the seed from cold storage to his farm, spending PKR
2,400 on fuel. Afterwards, Kilchi left the seed bags near his fields to warm them to room temperature.
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In parallel, Kilchi managed the preparation of soil with help from his brother. The process started on 22 September
2013, when he watered his field and left it to dry for four days. Afterwards, with the help of his tractor, Kilchi
prepared the soil for five days (soil preparation cost is provided in Exhibit 9). During the soil preparation process,
he spread DAP and potash fertiliser in his fields. The purpose of these soil preparation fertilisers was to increase
the strength of those nutrients in the soil which would help the seed germinate. The cost of DAP was PKR 3,900
per bag, and three bags of DAP were used per acre. The cost of potash was the same as DAP, and one bag was
used per acre.
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Afterwards, Kilchi hired 13 labourers at the rate of PKR 170/day for each labourer to plant the seeds for two days.
The seed planting process utilised a ridger which was mounted behind a tractor and used to make furrows in the
cultivated land. Although Kilchi owned the ridger and tractor, the cost of fuel amounted to PKR 750/acre.
The process of planting seeds, firstly, required driving a tractor over the land and making long furrows in the
fields with a ridger. Labourers followed the tractor and planted the seeds. Each seed was planted at a distance of
9 inches from other seeds. Kilchi did not ask an expert about the ideal distance between the seeds and went with
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the normal practice of planting at 9-inch distances. The labourers planted the seeds based on their own perception
without using any measuring tools. After planting them, Kilchi wanted to water the fields but found out that the
water pump at his tube well was not working. Hence he could not water the fields immediately.
Later while recollecting, he confessed:
I had been interested in getting an office job as I had completed my graduation recently. During
this time, I was pursuing an opportunity and was not able to devote the needed attention to
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farming. Hence it took us more than a week to get the water pump fixed; by that time the
temperature had risen, and the seed was damaged.
After the seed plantation process, Kilchi used chemicals and pesticides four times throughout the cultivation cycle
to ensure that his crop did not get attacked by pests, fungus, and viruses. For pesticides and chemicals, he took a
loan of PKR 9,300 which was paid back when he sold his potato crop.
During the cultivation cycle, Kilchi watered his crop five times, out of which he had to use the tube well four
times. His cost of tube well usage was PKR 2,250 per iteration and it took one day to water the fields. He used
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urea thrice while watering the crop. Kilchi used three bags of urea per acre as plant fertiliser, costing PKR 1,850
per bag. He had bought fertiliser from fertiliser shops with the promise to pay at the time of selling his potato
14
A farmer could have 2 maize crops in a year if he left some of the land unused in the Rabi season. In January, the farmer started planting
maize crop on free land. This delivered the crop at the end of April or start of May. At the same time, when the land occupied with the
Rabi crop got free by late February or early May, maize was also cultivated on that land. The produce from that crop was obtained at the
end of June or early July. With this process, farmers got two crops of the same vegetable in a year.
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Pakistan was facing a severe electricity crisis at that time and power cuts of several hours were not uncommon. The cold storages that did
not monitor the temperatures and did not have their own power generators caused damage to the stored goods.
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crop. For this deferred payment facility, he paid an extra amount of PKR 15,561 for soil fertiliser and PKR
389/bag for urea.
Kilchi used two bottles of weeding spray, each costing PKR 1,300, for his 4.5-acre potato crop. Around the end
of January, his crop was ready for harvesting. Kilchi employed 15 labourers whom he paid PKR 80/bag to harvest
and grade the potatoes and purchased empty bories himself. The labourers used shovels to dig out the potatoes,
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then graded and packed them in bories. This whole process took four days. Kilchi was expecting good yield from
his field. Therefore he bought 205 bories at PKR 105/bori (including the cost of thread used in packing). After
four days of harvesting, he only got 50 bories of potato seed and 105 bories of ration potatoes (see Exhibit 10 for
a timeline of Kilchi’s potato cultivation cycle).
Due to the extreme cold in December potatoes in the field were damaged. The cold weather produced frost which
froze the pores of leaves, stopping the evaporation process. Evaporation was necessary to regulate crop
temperature. When the pores froze, water in the plant started to freeze, and gradually the whole plant died. As the
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plant died, further growth of potato tubers stopped. Usually, a fully developed plant had 6-8 well-grown tubers.
Due to frost, the crop resulted in fewer and smaller sized potatoes per plant, causing the quality and yield per acre
to drop significantly.
Kilchi stored all his potato seed in the cold storage for the next season, for which he would have to pay PKR
400/bag. He sold ration potatoes at the Okara mandi at PKR 160/bag. Usually, farmers had to pay a commission
to an arthi for his services in selling the crop. However, Kilchi did not take any loan from the arthi this year as he
already had an outstanding loan from previous years. The arthi did not charge him any commission considering
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the huge losses faced by him this year. Kilchi had to pay back the shopkeepers as he needed to get new stock from
them each season. He borrowed money from friends and relatives, consequently increasing his long-term debt
(see Exhibit 11 for his financial performance in the 2013-14 potato season).
Abdul Jabbar
Abdul Jabbar had completed his graduation before taking up farming. He had been cultivating on 25 acres of land
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for the last 20 years, of which 10 acres were owned by his father. His brothers were currently under his
apprenticeship and would take over their portion of land in future. He lived in a joint family consisting of 15
members, including his wife and three children, and his parents and siblings. His eldest son was in Grade 5.
Jabbar was the most educated person in his family and had been farming for the last 25 years. He did not seek
anyone's advice on day-to-day matters but would consult with his father on important decisions. He tried to find
new and innovative techniques that could improve his crop and reduce his cost. He kept in touch with people
from the University of Agriculture and Potato Research Institutes to stay apprised of improved farming
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techniques. In case of the potato crop, he used the crop rotation technique (did not grow potatoes on the same
land during consecutive years) to avoid spreading harmful bacteria from one potato crop to another through the
soil and did not plant all of his potatoes concurrently.
On some of his land, he planted before the natural planting time (end of September) and planted with a delay (in
mid-week of October) on some parts, while most of his land was planted at the normal planting time (first week
of October). This approach allowed him to have his crop ready at three different times, enabling him to take
advantage of high prices at the beginning of the potato harvest season.
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Out of the 25 acres of land that Jabbar cultivated, 15 acres were leased on rent at PKR 40,000 per acre. In a year,
Jabbar cultivated potatoes, maize, rice, and animal feed. Usually, he grew maize in Kharif (summer) and potatoes
in Rabi (winter) season. During the 2013-14 Rabi season, he cultivated potatoes on 10 acres, animal fodder on a
few acres, and kept the rest of the land unutilised. The uncultivated land enabled him to plant an early maize crop.
After the potato was harvested, he grew maize on the 10-acre land as well. After his early maize crop was
harvested in May, he was ready to cultivate rice paddy on that land. Similarly, when he was harvesting rice paddy,
he would be ready to harvest his second maize crop. In this way, he obtained two crops of maize and one crop
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each of potato, rice and animal fodder. Jabbar also owned 20 cattle which provided milk for sale and household
consumption.
He explained the reasons for owning cattle:
Cattle is an important part of my livelihood, as thirty percent of my income comes from it. I
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can sell an animal in no time and raise money for short-term liquidity. The animals also serve
in preparing my crop since I use their manure as fertiliser. It is natural and powerful, therefore
it has a positive impact on my crop.
Jabbar developed his own potato seed too. He would buy imported seed for sowing on one kanal16 of land, and
the process took place every two years. The seed planted on one kanal of land would provide seed for four kanals
of land for the next season, which would then provide seed for six kanals for the following year along with some
extra potatoes. He could re-use the seed potatoes from this crop for the next two years. These four kanals produced
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enough seed quantity for Jabbar to sell some to other farmers as well. He also owned a tractor, plougher, and
disks. Apart from two permanent employees, he hired additional part-time labour when needed.
The Experience of Potato Season 2013-14
Jabbar had faced a loss of PKR 300,000 from the potato crop of the 2012-13 season as the price of potatoes was
very low due to excess supply in the market. Resultantly, he started the soil preparation process earlier this year
by watering his fields on 15 September 2013. After a gap of 15 days, he started preparing the land with machinery.
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Jabbar used soil fertilisers during the preparation process, and at the same time collected seed from the cold
storage. He paid PKR 400/bori for his 130 bags of seed.
Using a ridger and six labourers, Jabbar planted his seeds in three days. The labour cost was PKR 1,000/acre, and
tractor fuel cost was PKR 850/acre. Once the seeds had been planted, the fields were watered ten times at a total
cost of PKR 41,000. To protect his crop from pests, viruses, and fungus, Jabbar used five types of chemicals
which were spread at different times during the cultivation season. He used four bags of urea per acre bought for
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PKR 1,800/bag and spread weeding chemical at 500 grams/acre to stop weed growth, for which he paid PKR
2,000/kg. This chemical was spread by a labourer who charged PKR 150/acre for the service.
As Jabbar had planted the crop in phases, his initial crop was ready to be harvested relatively early, on 20 February
2014. He hired ten labourers at a rate of PKR 3,000/acre for harvesting and grading 5 acres of land in 5 days for
his potato crop. Jabbar used a harvester connected to a tractor to dig out the potatoes (typically a digger moved
along the furrows and dug out plants from the soil while labourers collected the potatoes). Jabbar again hired ten
labourers on 27 February 2014 at PKR 5,000/acre. This time the labourers used trowels to dig out the potatoes
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and took 11 days in the process. Afterwards, labourers graded and packed the potatoes in bags, for which they
charged PKR 35/bag (see Exhibit 10 for a timeline of Jabbar’s potato cultivation cycle). Although Jabbar’s crop
was also affected by frost, his average was 10,200 kg/acre (10 tons).
He said:
My crop was hit by strong frost, and some of the areas got damaged. I watered my fields during
the strong frost to reduce the damage. As the temperature of the water was above freezing point,
doing so raised the soil temperature, thus improving the temperature for the plants.
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Jabbar obtained a total of 275 bories of seed, 475 bories of ration potatoes and 100 bags of goli potatoes. He went
to the mandi twice to sell his potatoes. In his first visit, he sold 100 bories of ration potatoes at PKR 2,800/bag
and 50 bories of goli potatoes at PKR 850/bag. He had to spend PKR 1,200 on the transportation of potatoes and
paid 3.12% of the selling price to the arthi as a commission, but did not have to take any loan. On his second visit,
16
8 kanals = 1 acre.
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Jabbar sold 175 bories of ration potatoes at PKR 2,500/bori and 50 bags of goli potatoes for PKR 850/bori. He
again gave the arthi 3.12% of his revenue as commission.
Jabbar added:
I could have gotten a better price for the goli potatoes, but my younger brother wanted to
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experiment with them. Due to his mishandling, the goli potatoes in my second visit got
damaged. Otherwise, I would have sold them for PKR 1,200 per bori as prices in the market
were increasing.
Jabbar stored 275 bags of seed and 200 bags of sellable potatoes at nearby storage for PKR 400 per bag. It required
four visits to take the whole stock to cold storage, and for each visit, he incurred a fuel expense of PKR 1,200
(see Exhibit 11 for a list of Jabbar’s expenses).
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This year was bad if you only consider yield, but if you consider price, then this year has been
the best for the last 50 years. I have stored ration potatoes because market prices are increasing
and I believe they will rise further. I will wait and determine the right time for selling. I feel
that the prices will go up to around PKR 5,000 per bori, and I will be able to sell for that much
as my produce is good. Therefore, I will have to wait patiently.
DECISION AND FUTURE OPTIONS

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In early May 2014, both Kilchi and Jabbar were contemplating the decisions that they had to make in the next
few weeks:
I have stored stock of maize. The price of maize is increasing because it is required by many
manufacturers. Currently, the price is PKR 900/bag, but I will wait until May, as I feel that the
price will be PKR 1,500/bag by then. If I can sell at that price, I will have some profit.
– Kilchi
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I will look at the market very closely. As the price of potatoes is increasing, I will either wait
until September or sell the crop by the end of May.
– Jabbar
As Inayat Ali Kilchi and Abdul Jabbar reviewed their experiences during the 2013-14 potato crop season, they
were aware that this was an unprecedented year (see Exhibits 11 and 12 for the comparative financial
performance of both farmers). Due to unusual demand from export markets of Central Asia and Russia, prices
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had been unusually high during the period February-May 2014. Consequently, the government of Pakistan had
allowed the import of potatoes from India without any duty, and imposed a duty of 15% on potato exports,
resulting in price stability. Both farmers were wondering about the situation for the next potato season and were
concerned about the expected increase in the price of seed and fertilisers. It was expected that given the high price
of potato and export opportunities this year, more farmers would be growing potatoes on a greater area the
following year.
The previous year, frost had caused total potato production to be reduced by almost thirty percent in some areas,
contributing to the increase in price. What would be the weather pattern in the 2014-15 potato season? Would
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there be frost, and if so, during which part of winter (early or late)? Should they plan on sowing early to enable
plants to grow to a certain level and avoid yield loss by the time frost came? What would happen if the summer
season was stretched and temperatures in late September turned out to be unusually high, adversely affecting the
seed germination process for the crops that were planted earlier? How should they go about analysing this
situation and getting ready for the next potato season? Should they continue planting the same variety, or switch
to another variety that might fetch a higher price, especially if exported? The thought of switching to more stable
crops like wheat and maize had occurred to them, but they were reluctant to miss out on the potential to make a
good profit that was only possible with a high return crop like potato.
11
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Exhibit 1: Top 10 Agriculture Commodities with Respect to Production and Exports
Top Ten Commodities’ Top Ten Commodities’
Production Quantity Export Value
2012 2011
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Commodity Quantity (million tons) Commodity Value (million USD)
1 Sugar Cane 58.4 1 Wheat 674.4
Milk, whole fresh
2 buffalo 23.7 2 Cotton lint 359.3
3 Wheat 23.5 3 Flour of Wheat 352.0
4 Milk, whole fresh cow 13.4 4 Tangerines, mandarins 120.9
5 Rice, paddy 9.4 5 Potatoes 102.2
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6 Maize 4.6 6 Cattle meat 71.7
7 Cottonseed 4.1 7 Maize 70.0
8 Potatoes 3.4 8 Cotton Waste 65.7
9 Cotton lint 2.2 9 Dates 64.1
10 Mangoes, guavas, etc. 2.0 10 Vegetables fresh 53.1
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Source: Food and Agriculture Organisation Statistical Division. Accessed May 2017.
http://www.fao.org/faostat/en/#rankings/commodities_by_country
Exhibit 2: Distribution of Farm Size in Pakistan17
Number of Farms
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Farm Area (Hectares)

5% 1% Under 1.0
11% 6% Under 1.0
1.0 to under
36%
1.0 to under 10.0
26% 10.0 58% 10.0 to under
57% 40.0
10.0 to under 40.0 and
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40.0 above
Potato Cultivation (Acres)

13% 1% 13%
Under 1.0
28%
27% 1.0 to under
5.0
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18%
Source: Agricultural Statistics of Pakistan. Pakistan Bureau of Statistics, 2010-11.
17
1 hectare = 2.47 acres.
12
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Exhibit 3: Seed Production Process
Potato Seed Production used in Holland
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Source: Ad Toussaint, et al., eds. “The Inspection of Dutch Seed Potatoes and the Importance of
Approval.” NIVAP, the Netherlands, 2005. Accessed June 2017.
http://www.aardappelpagina.nl/files/NIVAP_2005_England_def.pdf
Potato Seed Production Stages

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The first batch of seed was planted in a closed test tube environment and treated to remove any diseases. The
resulting potato was planted in a monitored sunroom to get bigger and larger potato seed called mini-tuber.
Resulting output potato from the planting of tissue culture produced small potatoes
called mini-tubers. This potato was bigger and would serve as a seed for the next cycle.
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Freshly harvested potatoes from the crop where the smaller ones were used as seed.
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Source: Authors’ Field Visits.
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Exhibit 4: Major Varieties and Characteristics of Potatoes Grown in Pakistan
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Source: Agrico, Netherlands (Supplier of Potato Seeds), 2000.
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Varieties Cultivated in Okara and Their Prices
Max. Price per bori

Sr # Variety Min. Price per bori (PKR) Images
(PKR)
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1 Sante 1,200 5,000
2 Musica 2,800 6,000
3 Kuroda 1,200 2,400

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4 Asterix 1,200 2,100
5 Lady Rosetta 1,300 1,900

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14
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Exhibit 5: Activities at the Okara Potato Mandi (p1 of 3)
Okara Mandi Activities
A view of the Okara Mandi.
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A vegetable and fruit transporter at Okara Mandi. His
truck, after being loaded with potatoes, would be
transported to Chaman on the Pakistan-Afghanistan
border.
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Different Farmers Branding their Produce to Make Buyers Aware of Them
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Potato Varieties
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In both pictures, the farmers have cut open one bag for display. Left: yellow variety; Right: red variety.
15
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Checking Quality
Buyer cuts open the seed from the displayed potato produce to check the quality.
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All potatoes had similar colour, were properly cleaned with no
damaged piece, and had a uniform size. They were sold for PKR
3,200/bori.
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The potatoes were of different colours, muddy, uneven in size, and
some were damaged as well. These were for just PKR 1,500/bori.
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Mandi Process
Farmers brought their crop to the mandi starting from the evening, and the inflow of trucks continued through
most of the night during peak harvest season. Potatoes were brought to the mandi in standard PKR 120/ kg bags
and stacked at different places in the main area. Early next morning farmers would cut open one bori (bag) of
their lot and spread the produce open for display. Various buyers visited the lots early in the morning to check
the quality of potatoes and decide which lots they would bid on. These buyers cut open one of the potatoes to
ensure it was not affected by any disease internally. At around 10:00 a.m., the bidding process officially kicked
off. One of the arthis was given the responsibility of conducting the auction on a given day. He would start from
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one side of the mandi and visit each stall to conduct the auction; the whole bidding process for all stalls (usually
up to 200 in peak season) would be completed within 2-3 hours. Different prices were offered by buyers for
various qualities and varieties of potatoes on any specific day. As soon as the bidding process was over, buyers
started moving their purchased lots out of the mandi on the way to their final destinations — that could be cold
storage, local vendors/stores, food processors, or export markets. Usually, the potatoes that were bought for export
were cleaned again, re-sorted and repackaged in new bags reflecting the name of the brand under which they were
to be exported; this process usually took place at the mandi.
16
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By late afternoon, the old lots of potato would disappear from the mandi and a new row of trucks loaded with
potatoes would be streaming into the area. At its peak, the mandi processed 60,000-70,000 bags (each of PKR
120/ kg) on a given day.
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Bidding Process
When the bidder visited the stall, he quoted a price after seeing the potatoes that were displayed. People who were
interested in buying used hand gestures to indicate how much they wanted to bid. If a person had his hand in front
of his neck with the inside of the hand towards his neck, he would move his hand towards the outside indicating
that he wanted to raise the price by PKR 100. If the person raised his finger in front of his mouth, this meant that
he wanted to raise the price by PKR 50. A raise by PKR 50 was usually for the purpose of winning the bid. At
the time of payment, the farmer reduced the price by PKR 50. The price of a given variety of potato could vary
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by almost fifty percent depending on the size and quality of the produce. Some farmers used branded bories to
pack their produce. This not only made their produce look more presentable but also made the buyer aware of the
actual seller, which was not the norm in the Okara mandi.
Exhibit 6: Exporter Repacking Potatoes at the Mandi

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No

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Exhibit 7: Cold Storages of Different Qualities
This was a low-cost cold storage, where the quality of potatoes

degraded over time; mostly used for storing potatoes.
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This was a new and expensive kind of cold storage where the potato quality did
not degrade; used for storing seed potatoes.
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Exhibit 8: Potato Grading & Packaging Plant

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No
The exporter brought the potatoes purchased from the mandi to his cleaning plant. He then graded them with the
grading and polishing machine, weighed them using an industrial grade scale, and repacked them in his branded
packaging.

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Exhibit 9: Farmer Profiles (p1 of 2)
Inayat Ali Kilchi Abdul Jabbar Tahir

Age 35 years 45 years
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Education 14th Grade 14th Grade
Years of Farming Experience 15 years 25 years
Total Land being Cultivated 25 acres 25 acres
Land Owned None 10 acres
Land Rented 25 acres 15 acres
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Potato Cultivated Area 4.5 acres 10 acres
Land Rent PKR 22,000 per acre PKR 40,000 per acre
Total Number of Family Members 8 15
Children 3 3
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Inayat Ali Kilchi
According to Kilchi, “Potato is a very risky crop. It has the ability to deliver very high
profits, but at the same time, there is an equal risk of not even getting enough returns
to offset the cost of potato cultivation. Sometimes it is the market that affects the
farmer, and at other times, it is factors like frost, pests and fungus during cultivation
that affect the farmer.” During 2012-13, he was getting PKR 100 per bori for selling
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potatoes while the price of a single potato bag (bori) was PKR 105. During 2013-14,
he got an average of PKR 1,800 per bori but his yield was too low. His average yield
was 40 bories per acre.
In his opinion, maize was very profitable, had a short cultivation cycle compared to
potatoes, and the profits were more stable as well. If the cost of cultivating maze on 1-
acre land was PKR 30,000, the minimum revenue he could get would be PKR 60,000,
even when there was an excess supply of maize in the mandi. But maize could not provide margins as high as
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those of potatoes.
Currently, Kilchi had a loan of PKR 3200,000 to pay to the arthi. In his opinion, his arthi was very cooperative.
He had been dealing with the same arthi for many years. Usually, when he needed some input and did not have
the money, he contacted his arthi. There was a general understanding in the market that if you did not have money
and wanted to buy an input with the promise to pay back when you got the money from the crop, you would have
to pay a premium. But his arthi, knowing him and working with him for the last few years, tried to charge a lower
premium.
When asked about his loan from the arthi and why he did not go to the bank, Kilchi stated that banks were not
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facilitating in these words, “If you don’t pay the loan, they humiliate you and don’t care about your
circumstances.” The arthi understood his problem, knew that the crop took a hit, and therefore adjusted payment
terms according to the situation. Even with such a big loan, the arthi had told him not to worry and pay as he
received the money.
19
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Exhibit 9: Farmer Profiles (p2 of 2)
For cultivation, Kilchi owned a tractor, trolley, rotavator, disks, and plougher. The equipment reduced his cost
and time as compared to if he had loaned from outside. A representative from Sun Crop, Mr Nadeem, frequently
visited him to guide him regarding agriculture.
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According to him, Sun Crop helpline also called to check if someone from their company had paid him a visit.
Kilchi did not take any loan; if he did not have money, he bought urea or pesticide on the terms that he would pay
after the crop was sold.
Kilchi also grew his own seed and bought imported seed from Holland. This process was repeated every 2 years.
If the seed was planted on 1 acre of land, the output from this was actually seeded for a larger area of land like 2
acres. This seed was stored till the next season and then planted on 2 acres. The output of these 2 acres was 4
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acres, which would then be used for the next 2-3 years as actual crop seed. If he felt the seed life would be 3
years, then he did not buy imported seed for a year but if the seed would only last 2 years, then he bought imported
seed to start the multiplication process in parallel. This year he sold some of the seed in the market that came out
of his actual crop as well. For the next season, instead of buying imported seed and multiplying it, he bought
already multiplied seed from a relative. He had full faith in the relative, who had bought high quality imported
seed in front of him.
Abdul Jabbar Tahir

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Abdul Jabbar Tahir was an educated farmer who utilised the analytical skills he had
gained via education in his agriculture profession as well. He had been cultivating on
25 acres of land for the last 20 years, which was his father’s property and would be
divided amongst the siblings in future.
Although his setup looked stable, Jabbar had suffered a loss of PKR 300,000 from
the preceding year’s potato crop. This loss was due to two factors, i.e., the high cost
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of inputs like chemicals and fertilisers, and excess supply of potatoes in the region.
As his land was in a warm region of Pakistan, different types of organisms affected
the crop which made the use of a lot of medicine mandatory. Okara region was the
largest potato producing region in Pakistan. When it was his time to sell the crop, the market was already flooded
with a high supply of potatoes. Due to higher supply than demand, the selling price went down, and at times it
dropped even below the cost. Jabbar tried to mitigate this factor by dividing his potato production into phases. He
started growing some of the crop early, which when harvested to be sold, was sent to the market early when there
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was less supply. The other crop, which was planted at the usual time, was sold and harvested in phases. Some of
it was sold on time, while the rest was harvested as late as possible to get more nourished potatoes. If the market
price was good at that time, some of it was sold; otherwise, it was stored in the cold storage to be sold over the
year when potato prices were high.

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20
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Exhibit 10: Crop Timelines of Okara Farmers
The charts below depict a graphical timeline of all steps involved in potato cultivation for both Okara farmers.
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No
Inayat Ali Abdul Jabbar

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21
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Exhibit 11: Profit and Loss Account for 2013-14 Potato Crop
Inayat Ali Kilchi Abdul Jabbar

(PKR)18 (PKR)
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Total Land Rent19 (33,000) (133,333)
Soil Preparation (17,550) (57,100)
Soil Fertiliser (74,100) (160,800)
Seeds (97,350) (217,750)
Planting (7,795) (18,500)
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Chemical Treatment (9,300) (43,950)
Watering (9,000) (41,000)
Crop Fertiliser (27,750) (76,000)
Weeding (2,600) (11,500)
Harvesting (41,925) (158,000)
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Grading20 - (18,375)
Selling Expense (2,500) (23,538)
Total Cost (289,870) (826,513)
Total Cost including Rent (322,870) (959,846)
Total Revenue from Sale PKR 165,500 PKR 677,500
tC
Value of Stored Stock** 80,000 1,391,250

Total Revenue PKR 245,500 PKR 2,068,750
Profit Excluding Rent (44,370) 1,242,237
Net Profit with Rent included PKR (77,370) PKR 1,108,904
No
Total Potatoes Sold (bags) 105 325

Total Potatoes Stored (bags) 50 525
21
Average Selling Price PKR 1,600 PKR 2,650
Value of Stored Stock22 PKR 80,000 PKR 1,391,250

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18
From 2012-2014, the average exchange rate for the U.S Dollar to Pakistani Rupee was 98.58. Source: State Bank of Pakistan,
www.sbp.org.pk/ecodata/ibf_arch.xls, accessed April 2017.
19
Land rent = (total potato area x rent per acre/) total seasons in a year.
20
Grading cost for Inayat Ali Kilchi was included in the harvesting cost as he paid once to acquire both services.
21
The average selling price was the average of all the prices the farmer got when he went to sell his stock. This price was used to calculate
the value of the stock which hadn't been sold yet.
22
Value of the stock is equal to total bags of stock multiplied by the average sale price.
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Exhibit 12: Soil Preparation23
Specific Rental/Fuel Cost Equipment Time (per

Sr. # Duration (days)
Activity (PKR/acre) acre)
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IA AJ IA AJ IA AJ
1 Watering24 1 2 0 1000 2 hours 2 hours
--- --- ---

2 Blade 1 500 1 hour
3 1st Ploughing 1 1 360 450 15 minutes 1 hour
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4 1st Planking 1 1 200 200 6 minutes 6 minutes
1 450 15 minutes
5 2nd Ploughing 1 360 15 minutes
6 2nd Planking 1 1 200 360 6 minutes 15 minutes
7 1st Rotavator --- 1 --- 1000 --- 6 minutes
--- 1 --- 1000 --- 15 minutes

2nd Rotavator
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8
9 3rd Ploughing 1 1 360 200 15 minutes 6 minutes
--- --- ---

10 3rd Planking 1 200 6 minutes
11 4th Ploughing 1 1 360 360 15 minutes 15 minutes

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12 4th Planking 1 --- 200 --- 6 minutes ---
1 200 6 minutes
13 5th Ploughing 1 360 15 minutes
15 6th Ploughing 1 --- 360 --- 15 minutes ---

No

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23
IA: Inayat Ali Kilchi, AJ: Abdul Jabbar.
24
Abdul Jabbar watered his crop with help from a labourer, who took eight hours and charged PKR 300 for a day. Kilchi used water from a
nearby canal, resulting in zero watering cost.
23
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Annexure A: Potato Cultivation Process25 (p1 of 3)
Seed Purchase/Recollection from Cold Storage: This was the most important phase as seed significantly
influenced yield and quality, and hence profits. The farmer had to decide himself which variety of potato would
generate better returns. Farmers in Okara usually relied on historical experience, personal observations,
availability of seed from the last potato crop, and guidance from their friends or the arthi,26 as he also provided
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seed at times. Usually, the buyer’s preference for a specific potato variety remained constant over the years. But
in the case of Okara, the market preference for a variety could suddenly change. As Okara produced the bulk of
potatoes in Pakistan, buyers came here from different regions of the country. If the buyer preferred a specific
variety and offered a higher price, farmers were interested in cultivating that variety the following year. In the
autumn of 2013-14, Sante variety was in high demand locally. But international buyers (who bought potatoes for
export to other countries) were willing to pay a premium price for Musica variety. Therefore, some farmers
wanted to shift to cultivating Musica.
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In Okara, farmers multiplied imported seed and then used this seed for potato cultivation for the next four years.
Therefore, farmers did not have to buy seed in a given season unless they wanted to change the variety or had not
produced their own seed in the last season. Farmers usually stored seed from the harvest of one season at a cold
storage and retrieved it before planting the crop for the next season. As seed was stored at low temperatures, it
was left at room temperature for some time before sowing so that the natural germination process could resume.
Soil Preparation and Fertilisation: The purpose of this process was to soften the soil and spread fertilisers to
increase the amount of required nutrients in the soil that had been used up by previously cultivated crop. Farmers
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also made furrows in the soil so that the plants could be watered through flood irrigation during cultivation.
Seed Planting: After soil preparation, the farmer planted the seed. The aim was to plant as many seeds as possible
while keeping a sufficient distance between them so that maximum soil was utilised to generate a high level of
crop output. But the farmer also needed to ensure that there was sufficient distance between adjacent plants to
allow for proper nourishment and growth. When the seed germinated, 6-8 tubers (that formed the roots of the
plant) conjoined and eventually became the potato produce. These tubers needed sufficient space and required
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water and nutrients to grow. If the seeds were planted too close, tubers from adjoining plants would compete for
the same space and nutrition resources, suppressing growth. On the other hand, if seeds were planted too far apart,
some of the available soil and related nutrients would go unutilised. In Okara, farmers usually planted seeds 9
inches apart, in rows that were separated by a distance of two and a half feet, through a mechanical planting drill
attached to a tractor.
Application of Chemicals and Pesticides: Chemicals and pesticides were applied to the plant in specific
No
intervals from planting till harvesting. The purpose was to ensure that the plant did not get attacked by pests and
fungi. This application of chemicals was a preventive measure. Sometimes pests, fungus, or viruses attacked the
crop due to adverse weather conditions (unusually wet conditions attracted fungal attack, while a viral attack
could be caused by prior contamination in soil or weak seed — the older the seed, the more susceptible it was to
such attacks). In order to take remedial actions in such situations, farmers used additional chemicals to limit the
damage. A periodic spray of chemicals was the best way to minimise the risk of such attacks, but small farmers
sometimes avoided this extra cost and only used chemicals when they saw evidence of an attack. For this purpose,
they needed to check the plants on a regular basis to detect such outbreaks early and start applying chemicals to
limit the damage.
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25
Based on interviews and field visits conducted by the authors.
26
Arthi was the commission agent who was involved in the auction process in the vegetable market. He also provided financing to farmers
on the condition that farmers would sell their produce through him. According to government regulation, the Arthi could only charge a
3.15% commission but could charge commissions of up to 12% if they had provided financing to the farmer.
24
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Annexure A: Potato Cultivation Process (p2 of 3)
Urea & Water: Urea was a source of nutrition for plant leaves and stems, which were usually given urea 3-4
times during the cultivation cycle. This ensured that the plant’s resistance to pest attack remained high, and an
enhanced production quantity was achieved. In Okara, urea was usually applied by mixing it with water while the
fields were being irrigated. This ensured that urea reached all parts of the field evenly. In case of frost, farmers
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tried to quickly water the crop to increase crop temperature to above freezing point and prevent the plants from
freezing.
Weeding: The oil was conducive to the growth of weeds that consumed soil nutrients, and hence stunted plant
growth. To ensure a weed-free crop, farmers in Okara usually applied herbicide chemicals.
Harvesting and Grading: When the crop was ready for harvesting, farmers either hired labour to dig out tubers
from the soil manually, or used a tractor and harvester (a special kind of plough) for this purpose. The produce
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was graded and cleaned so that it would look attractive, and then sorted to separate large potatoes from smaller
ones (see Figure A1 for mechanised harvesting and grading processes). Large potatoes were sold at a good price
in the mandi, while smaller ones were sold at a much lower price. If the size of the small potato was around 35
mm, it was considered fit to be used as seed for the next year’s crop. While grading, damaged potatoes were
filtered out as their presence lowered the price of the produce.
Figure A1: Harvesting and Grading Using Mechanised Equipment

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Potato Storage
Potatoes selected as seed were stored at cold storages at a temperature of 4 oC to prevent germination. At the start
of the next potato season, these seed potatoes were taken out from the cold storage and brought to room
temperature before being planted.
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If the farmer felt that current market price was low and he could get a better price for his potatoes later in the year,
he stored his potatoes in cold storage. Most small farmers needed to sell potatoes to recover the money for paying
off their loans and did not opt to keep potatoes in cold storage. Given the significant variations in the price of
potatoes during the year due to fluctuation in supply, many investors and food processors bought potatoes at a
low price during peak harvest season and stored them in cold storage as a speculative investment.
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Annexure A: Potato Cultivation Process (p3 of 3)
Selling Potatoes
The farmer took his produce to the mandi for sale in bags called bories, with each bori weighing 120 kilograms.
The selling process was handled by the arthi who took his commission (around 20%) for providing his services.
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The buyers usually looked at the quality of the produce to determine the price. Some buyers were more concerned
with lower price and high volume as they used potatoes as a raw material in low-cost potato products.
In many cases, the arthi also acted as a financing agent and an unofficial bank for the farmers. If the arthi provided
a loan, he charged a premium over the government prescribed commission of 3.15% for the Okara mandi. In some
cases, the commission could even be more than 10%.
Source: Based on interviews and field visits conducted by the authors.
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much higher price.

POTATO CULTIVATION IN PAKISTAN

© 2017 Suleman Dawood School of Business, Lahore University of Management Sciences

(see Figure 1).

Figure 1: Potato Production in Pakistan (2002-07)

Year Production ‘000 tons

Crop Planting Harvesting Production Share

Source: “Potato Cultivation in Pakistan,” http://www.valleyirrigationpakistan.com/wp-content/uploads/2012/09/Potato-Cultivation-

POTATO CULTIVATION IN OKARA

Punjab Sindh KPK/GB Baluchistan

Percentage 88.3 0.3 7.2 4.2

POTATO CULTIVATION PROCESS

Typically, potato cultivation involved the following steps as shown in Figure 2:

Figure 2: Potato Cultivation Process

Source: Authors’ Notes.

Details of each cultivation stage are provided in Annexure A.

Figure 3: Some of the Issues Associated with Bacterial Diseases in Seeds8

Types of Potato Varieties Produced in Okara Region

Potato Mandi of Okara

Storage and Processing

OVERALL EXPERIENCE OF POTATO FARMERS IN OKARA

Experience of Two Farmers in Okara during the 2013-14 Potato Season

While reflecting on his decision, he commented:

The Experience of Potato Season 2013-14

Later while recollecting, he confessed:

He explained the reasons for owning cattle:

The Experience of Potato Season 2013-14

DECISION AND FUTURE OPTIONS

Exhibit 2: Distribution of Farm Size in Pakistan17

Farm Area (Hectares)

Potato Cultivation (Acres)

Source: Agricultural Statistics of Pakistan. Pakistan Bureau of Statistics, 2010-11.

Potato Seed Production Stages

Source: Authors’ Field Visits.

Max. Price per bori

1 Sante 1,200 5,000

2 Musica 2,800 6,000

3 Kuroda 1,200 2,400

4 Asterix 1,200 2,100

5 Lady Rosetta 1,300 1,900

Source: Authors’ Field Visits.

A view of the Okara Mandi.

Source: Authors’ Notes.

Source: Authors’ Field Visits.

Exhibit 6: Exporter Repacking Potatoes at the Mandi

Source: Authors’ Notes.

This was a low-cost cold storage, where the quality of potatoes

Exhibit 8: Potato Grading & Packaging Plant

Source: Authors’ Notes.

Inayat Ali Kilchi Abdul Jabbar Tahir

Abdul Jabbar Tahir

Source: Authors’ Notes.

Inayat Ali Abdul Jabbar

Source: Authors’ Notes.

Inayat Ali Kilchi Abdul Jabbar

Value of Stored Stock** 80,000 1,391,250

Total Potatoes Sold (bags) 105 325

Source: Authors’ Notes.

Specific Rental/Fuel Cost Equipment Time (per

1 Watering24 1 2 0 1000 2 hours 2 hours

--- --- ---

3 1st Ploughing 1 1 360 450 15 minutes 1 hour

6 2nd Planking 1 1 200 360 6 minutes 15 minutes