U.S.-based, India-focused private equity firm Zephyr Peacock announced an early stage investment in potato seed company Utkal Tubers India Pvt. Ltd.
Noting a disparity in supply and demand for some key commodities, Pankaj Raina, vice president with Zephyr, states that the investment reflects Zephyr Peacock’s strategic plan to build a portfolio of food and beverage investments.
“Food and beverages dominates consumer spending in India,” Raina told Live Mint. “With rising income levels, there is evidence of slow transition towards a non-cereal based diet, leading to an increase in consumption of vegetables for carbohydrate nutrition.”
However, more than 60 percent of India’s farmland is being used to cultivate cereals, pointing to a future where there will be higher demand for vegetables, and particularly potatoes as demand for carbohydrates climbs over the coming decade.
“Shortages in food items could be potentially addressed through imports, but in the long run, India will need to become self-sufficient,” said Raina. “This can be addressed by improving yields of other commodities crops, establishing good supply chains to reduce food wastage, and finding other alternate ways to address carbohydrates and protein requirements.”
One Potato, Two Potato
The lowly potato has been drawing greater attention in both the agricultural production and investment spaces in recent years, particularly in regard to emerging markets due to a variety of factors.
The World Potato Congress believes potatoes are key to global food security and seeks to raise awareness about the features of the crop. Potatoes, for instance, pack more protein and energy per acre versus competing crops, according to David A. Thompson, president of the World Potato Congress, cited in AgWeek.
In addition, overexploitation of underground water by the farming community, including wheat farmers, has caused damage in some regions. In Hebei, China farmers are now prohibited from planting wheat in an attempt to preserve water and land after irrigation practices, such as digging, have triggered hazardous sinking and landslides.
In response, Chinese officials are looking to the potato to fill a void in the country’s diet caused by these interruptions to its grain production. The nation is looking to increase potato production from 95 million tons in 2015 to 130 tons by 2020.
“In China, the potato industry is no longer an industry for underdeveloped areas or the poor but highlights the country’s modern agricultural drive and enriches people’s dining tables,” Agriculture Minister Han Changfu said at the World Potato Congress held in Yanqing, Beijing last year.
Noting this trend, The Netherlands-based APH Group has partnered with China’s Inner Mongolia Linkage Potato Co. Ltd. for the construction of a potato handling and transport system, and a climate control system for a potato storage complex with the capacity of 140,000 tons of potatoes.
In other emerging economies, social impact agricultural investment firm, AgDevCo, has invested $4.5 million in partnership with Saise Farming Enterprises into a seed potato production project in the Northern Province of Zambia. As part of an economic diversification drive, France’s Vicampro Farm is partnering with the Nigerian state government of Kaduna in a joint venture to construct a $120 million potato and rice processing plant which will be the largest of its kind in West Africa.
Utkal’s Plan
Earlier this year Utkal signed a memorandum of understanding with Odisha for the establishment of a laboratory dedicated to tissue culture development and development farming sites to be used for the multiplication of seeds. In preparation for this project, the company has built up a team of experts with experience in potato tissue culture and cultivation, and had added retired members of the Central Potato Research Institute to its advisory panel to offer their guidance.
Ultimately, Utkal will be looking to specialize in the production of high-quality mini tubers through its laboratory, which it will then multiply on its own farms under a supervised contract farming system across the country.
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Lynda Kiernan