* Investing in cold storage, logistics, and R&D can reduce food losses and enhance Pakistan’s potato competitiveness
Potato is one of the major cash and exportable crops in Pakistan. This crop yields significant economic returns to growers and traders and nutritive value to consumers, not only in Pakistan but all over the globe. In recent years, potatoes have emerged as a major food item consumed fresh and in processed forms such as fries and chips. Despite rising consumer preferences for processed potato products, more than 90% of the production is consumed fresh, and only a smaller percentage is processed. The per capita potato consumption in Pakistan is around 14.4 kg, reflecting its popularity as a staple and processed food item.
The potato industry in Pakistan significantly contributes to food security, rural livelihoods, and export earnings. During the 2023-24 period, potatoes were cultivated on 234.40 thousand hectares and the total production was 4.55 million tons. Figure 1 depicts the potato production, area, and exports in recent years. The Punjab province is the major producer with 86% of the total potato production followed by Khyber Pakhtunkhwa (9%), Balochistan (4.5%), and Sindh (0.5%). Okara district in Punjab is the leading potato-producing district. In 2021-22, Pakistan exported 402.10 thousand tons of potatoes, primarily to Afghanistan, Sri Lanka, Malaysia, Iran, the UAE, and Russia, demonstrating the crop’s significance in international markets.
Broadly, potato varieties in Pakistan are categorized into red and white varieties. These two varieties hold substantial commercial value. Notable red varieties such as Asterix and Santé are favored for their higher export potential, while white varieties like Kuroda, Lady Rosetta, and Mozika are prominent for domestic consumption and processing. The potato value chains in Pakistan involve many stakeholders such as input suppliers, growers, village buyers (beoparies), commission agents (aarhti), wholesalers, exporters, retailers, and consumers.
In the traditional marketing system, the middlemen dominate and play a key role in collecting potatoes from farmers and transporting them to wholesalers and processors. While these arrangements facilitate market access, they often limit growers’ bargaining power and reduce profitability. Although some organized buyers, such as exporters and food processors like PepsiCo’s Frito Lays, engage in production agreements with growers, the potato industry continues to face significant challenges. Inefficiencies in production, post-harvest handling, and value chain governance issues coupled with limited government intervention in infrastructure, research, and extension services have further hindered the industry’s growth.
Although Pakistan’s agronomic conditions support robust potato production, average yields remain at approximately twenty-six tons per hectare, significantly lower than the global benchmarks of over 40 tons per hectare in Europe, North America, and Australia. Weak forward and backward linkages among value chain actors exacerbate these inefficiencies, affecting growers’ profitability and sustainable practices. To unlock the full potential of the potato industry, addressing these structural and governance challenges is imperative, with an emphasis on enhancing sustainable performance and societal contributions by growers.
The potato industry has substantial untapped growth potential. Most farms are smallholdings practicing subsistence farming. They face numerous challenges, including low profitability, high production costs, lack of access to facilities (storage and transportation), and limited market opportunities. Smallholders often operate with limited financial resources and face post-harvest losses, which affect their economic and social well-being. Comparatively, large farmers have better financial investments and collaborative relationships with large processing firms that provide them with training, technical support, and better prices for high-quality produce.
In recent years, the entry of large-scale processors, particularly PepsiCo, has begun transforming the industry. These companies have established formal trading relationships with farmers and provide them with high-quality input, training, market information, and better marketing opportunities. Such initiatives have significantly contributed to improving the livelihood and business performance of potato farmers by enhancing their productivity, quality, and market linkages. Expanding such models to include smallholders is essential for addressing inequalities in the sector.
Formal grower-buyer trading relationships can offer a promising solution to the challenges faced by smallholders. Such relationships can enable farmers to collectively manage potato production, processing, and marketing. Collective strength and access to resources can offer them improved market opportunities. Promoting these formal trading relationships at the community or village level and gradually scaling them to higher levels (e.g., tehsil, district, and provincial) can significantly benefit smallholders.
Sustainable farming practices are critical for ensuring long-term productivity and reducing environmental degradation. Training and capacity-building programs for farmers, facilitated by public sector institutions and private industry, are essential for promoting sustainable potato farming. Adopting formal trading relationship mechanisms ensures the promotion of contemporary approaches including precision agriculture, integrated pest management, and water conservation techniques that can enhance overall productivity while minimizing environmental impact. Moreover, a contractual trading relationship with processors can provide growers with access to modern technologies, quality inputs, and guaranteed markets, fostering inclusive growth and resilience in the sector.
Thus, policy interventions must prioritize formal grower-buyer trading relationships, wholesale markets infrastructure development, and capacity building of growers. Government extension departments, research and development (R&D) institutions, and development agencies can play a major role in mobilizing and training farmers to become effective members of such formal trading relationships. Investments in cold storage, efficient or customized logistics, and research and development can reduce food losses and improve market competitiveness. Additionally, pooling resources and providing short-term loans to smallholders can improve farming practices and their overall well-being. Collaborative efforts between smallholders, large processors, and public institutions can ensure equitable value chain participation, sustainability, and enhanced livelihoods. Such efforts are essential for unlocking the industry’s full potential to enhance food security, and rural development, and improve the well-being of rural communities.
Dr. Azhar Rasool (azhar.rasool@namal.edu.pk) is a Senior Lecturer at the Department of Business Studies, Namal University, Mianwali.
Dr. Hammad Badar (hammad.badar@uaf.edu.pk) is an Associate Professor at the Institute of Business Management Sciences, University of Agriculture, Faisalabad.