Case Study: Punjab Potato Oversupply Crisis (2025) A Comparative Analysis of Pakistani and Indian Punjab

 🌾 Case Study: Punjab Potato Oversupply Crisis (2025)

A Comparative Analysis of Pakistani and Indian Punjab

 

Abstract

The potato markets of Indian Punjab and Pakistani Punjab entered a severe glut in early 2026, resulting in mandi prices falling far below production costs and triggering widespread farm distress. Despite operating in different national economies, both regions faced parallel issues of bumper harvests, expanded acreage, poor crop diversification, and weak post-harvest value addition. Indian Punjab’s crisis is softened slightly by national buffer markets, limited export access to South Asia, and partial price-gap compensation through the Bhavantar Bharpai Yojana. In contrast, Pakistani Punjab is experiencing deeper losses due to heavy dependence on cross-border exports—particularly to Afghanistan—whose closure has stranded surplus volumes and pushed farmers into distress sales. Official procurement remains limited, and cold-storage stocks risk becoming unsellable. Comparative analysis highlights shared vulnerabilities such as inadequate crop planning, forecasting failures, and low processing capacity, while also revealing structural differences in export reliance, state support intensity, and national buffer systems. Long-term solutions lie in building regional demand forecasting, incentivizing processing industries, and promoting diversification away from a single tuber crop.

 

Keywords

Punjab potato crisis; oversupply shock; Pakistan agriculture; India agriculture; mandi prices; farm distress; export disruption; Afghan border closure; Bhavantar Bharpai Yojana; crop diversification; cold storage; value addition; agricultural policy; food supply chain; price collapse; tuber markets; 2026 potato glut.

 

 

1. Introduction

In 2025, farmers across both sides of Punjab—Pakistan’s Okara, Sahiwal, Kasur, Khanewal, Vehari, and India’s Jalandhar, Hoshiarpur, and Ferozepur—experienced one of the sharpest price crashes in recent history. Potatoes, a high-capital crop often considered a relatively “safe” alternative to wheat, instead became a symbol of systemic failure:

• Production surged beyond demand,
• Market structures failed to absorb surplus,
• Exports collapsed in Pakistan,
• And farmers faced massive economic losses.

This case study examines the economic, social, and policy dimensions of the crisis, highlighting similarities and differences across the border.

 

2. Background

Punjab—both Pakistani and Indian—is:

• A core potato producing region in South Asia,
• Equipped with storage infrastructure,
• Supported by irrigation-dominated farming,
• And historically linked to inter-state and cross-border potato trade.

Yet despite agro-climatic advantages, potato farmers in 2025 were caught in a perfect storm triggered by simultaneous oversupply, rising input costs, and market dysfunction.

 

3. Drivers of Oversupply

3.1 Acreage Expansion

Farmers dramatically increased planting area by:

• Pakistan: +24% year-on-year
• Indian Punjab: Similar increases, reinforced by parallel production booms in UP & West Bengal

Cause of expansion:

• High 2023–24 prices,
• Farmer-to-farmer signalling (“If he earned big, I should plant too”),
• Lack of crop diversification incentives.

3.2 Production Outstripped Demand

Pakistan’s domestic consumption ceiling: ~62 million tonnes
2025 production nearly doubled that number.

India faced:

• High yields per acre (100–110 quintals),
• Inter-state supply from UP, WB, Bihar swamping markets.

3.3 External Shocks

Pakistani Punjab was hit harder due to:

• Afghanistan border closures blocking ~350,000 tonnes annual export
• Unviable alternative export corridors
• Ability to export tied directly to geopolitics

In India:

• Interstate surpluses flooded mandis
• Processing units and storage existed—but insufficient for glut volumes

 

4. Economics of Loss

4.1 Cost vs Return Mismatch

Region	Cost of Production	Market Price
Pakistan	Rs 270,000–300,000 per acre	Rs 10–25/kg
India	Rs 40,000–90,000 per acre	Rs 3–5/kg

Losses:

• Pakistan: ~Rs 235,000–250,000 per acre wiped out
• India: Total investment often unrecovered

At farmgate:

• 60kg sacks sold for Rs 600–700,
• Transport alone cost Rs 400 per sack,
• Meaning negative margins even before storage.

 

5. Cold Storage & Market Breakdown

Cold storages in Okara, Sahiwal, Ludhiana and Hoshiarpur reported:

• Quick saturation,
• Delayed lifting by traders,
• Fear of decay and fungal infestation.

Cold storage cannot solve oversupply—it only delays it.
Without buyers, stored potatoes eventually re-enter markets at distressed prices.

 

6. Farmer Behaviour and Distress

With prices crashing:

• Farmers dumped potatoes in empty fields,
• Some reploughed crops back into soil,
• Others sold below cost simply to recover labour.

Pakistani farmers, lacking price-support schemes, reported:

“This is a catastrophic year. We may not plant potatoes again.”

Indian farmers expressed:

“Government support exists but is too little, too late.”

Many suffered:

• Debt spiral,
• Cash-flow collapse,
• Reduced ability to purchase inputs for next cycle.

 

7. Policy and Institutional Contrast

Pakistan Punjab

• No instant relief mechanism
• Export subsidies demanded by farmer groups
• Government considering emergency procurement
• Geopolitical reliance exposed as structural weakness

Indian Punjab

• Schemes like Bhavantar Bharpai Yojana compensate farmers ₹600/quintal
• Farmers demand ₹800/quintal
• Coverage excludes white potato varieties
• Support delayed + storage constraints remain

Common gaps:

• Poor forecasting
• Weak farmer-market linkage
• Underdeveloped processing sector

 

8. Long-Term Structural Lessons

The crisis shows that:

1. Oversupply is not prosperity without matching demand, processing, or trade.
2. Border-dependent agriculture is fragile.
3. Production planning must be data-driven, not herd-driven.
4. Value addition (chips, fries, starch, frozen foods) is essential.
5. Storage alone cannot replace stable market demand.
6. Both Punjabs require cropping diversification and farmer education.

 

9. Implications for the Future

If acreage falls sharply in 2026:

• Supply reduction could cause prices to spike again,
• Recreating the boom-bust cycle,
• Reinforcing instability.

Only steady solutions—forecasting, crop insurance, price floors, and exports—can break the cycle.

 

10. Conclusion

The 2025 Punjab Potato Oversupply Crisis is not a story of too many potatoes—it is a story of:

• Weak market signals,
• Inadequate risk management,
• Fragile trade corridors,
• And policy asymmetry between neighbouring regions.

Both Indian and Pakistani Punjab farmers endured similar pain, caused by shared climatic success but amplified by systemic failures.

Ultimately, this case highlights:

High yields mean nothing without high-value markets.

 

Punjab Potato Glut: India vs Pakistan (2026) — Comparison Table

Aspect	Indian Punjab / Haryana	Pakistani Punjab
Production Volume	~2.2 million tonnes from Punjab; national output over 50 million tonnes; yields around 100–110 quintals/acre (down from 150–160 norm)	~9.81 million tonnes (2024–25); output surpassing national consumption of ~62 million tonnes; ~26 tonnes/hectare
Cultivated Area	~1.1 lakh hectares under potatoes; acreage trimming due to weak returns	~373,000 hectares under cultivation; 14.8% year-on-year rise and ~24% expansion from herd planting and prior high prices
Current Market Prices	₹3–₹5/kg in mandis; ₹180–₹480 per quintal for white varieties	₹10–₹25/kg at farmgate; 50kg sacks fetching ₹600–₹700 while transport alone costs ~₹400
Cost of Production	₹40,000–₹90,000 per acre (~₹4–₹9/kg) plus land lease of ~₹25,000/acre	₹270,000–₹300,000 per acre (~₹6–₹7/kg) driven by imported seeds and costly fertilizers
Losses at Farm Level	Full input loss below ₹10/kg; farmers unable to recover variable costs	Estimated losses of ₹235,000–₹250,000 per acre; total damage running into billions without exports
Primary Crisis Drivers	Premature harvest to switch land to wheat; gluts from UP & West Bengal; weak seasonal demand; fungal incidents in some pockets	Closure of Afghan border (lost ~350,000 tonnes/year); poor access to global buyers; oversupply cycle
Export / Market Barriers	Limited scope—modest volumes to Bangladesh & Sri Lanka; inadequate cold chain and processing	Exports halted to Afghanistan; alternative markets commercially unviable without subsidy
Government Measures	Bhavantar Bharpai Yojana guarantees ₹6/kg (implementation delays noted); market linkage drives	Farmers demanding subsidies, state procurement, or alternate outbound corridors; policy yet to execute
Major Affected Districts	Jalandhar, Pipli, Shahbad, and Doaba potato belt	Okara, Kasur, Sahiwal, Khanewal, Vehari
Structural Risks Ahead	Farmers shifting acreage; volatility in fresh markets; low processing penetration	Farm bankruptcies; distressed dumping in storages; dependence on a single crop
Big Picture Insight	National scale and support schemes soften distress, though multi-state oversupply persists	Export shock magnifies crisis; absence of buyers leaves farmers exposed
Shared Weaknesses	Poor crop planning, limited processing, and weak price forecasting across both regions	Same challenges—magnified in Pakistan due to export dependence

Teaching Notes

Title

Punjab Potato Oversupply Crisis (2025): A Cross-Border Case Comparison

Course Fit

• Agricultural Economics
• Rural Development
• Public Policy & Governance
• Supply Chain Management
• International Trade & Geopolitics

Learning Objectives

By the end of the session, students should be able to:

1. Explain how agricultural oversupply can lead to farmer distress rather than prosperity.
2. Analyse the role of price signals, export dependencies, and geopolitics in agricultural markets.
3. Compare institutional responses across Pakistani Punjab and Indian Punjab.
4. Propose short-term relief and long-term structural reforms.
5. Understand how policy asymmetry influences identical crises across borders.

Central Themes

• Market failure in agriculture
• Behavioural economics: herd planting
• Dependence on a single marketing outlet (exports to Afghanistan)
• Structural differences in subsidy frameworks
• Processing and value addition as stabilisers

Key Concepts to Reinforce

• Cobweb Theory – high prices → overplanting → supply glut → price crash
• Price band mechanisms – MSP, Bhavantar (price deficiency payments)
• Storage economics – storage buys time, not markets
• Trade vulnerability – border closures instantly change farm income
• Diversification – mono-crop dependence compounds risk

Suggested Teaching Flow (75–90 minutes)

Time	Activity
10 min	Case overview & crisis numbers
15 min	Group discussion: “Why did everyone plant potatoes?”
15 min	Instructor mini-lecture: Cobweb cycle + trade exposure
20 min	Small-group debate: India vs Pakistan—whose policy worked better & why?
10 min	Solutions brainstorm—processing, forecasting, subsidies
10 min	Wrap-up reflections + takeaway message

Classroom Discussion Prompts

1. Why does storage not solve oversupply?
2. Should governments guarantee prices for vegetables like potatoes?
3. If you were Agriculture Minister, what three actions would you take immediately?
4. How do geopolitical risks shape domestic food markets?
5. Compare:
• Pakistan: No safety net + export shock
• India: Safety net too small + interstate glut
  What does this say about agricultural policy design?

Takeaways for Students

• High output ≠ high income unless markets, processing, storage and exports align.
• Farmer decisions are often collective and emotional, not rational.
• Government policy can buffer shocks, but cannot replace structural reforms.
• The future lies in planning based on data, not imitation.

 

📚 References

·         Dawn. (2025). Punjab potato farmers face severe crisis amid price crash and export blocks. Dawn News.

·         FAO. (2024). Global potato market dynamics and price volatility. Food and Agriculture Organization of the United Nations.

·         Government of Haryana. (2024). Bhavantar Bharpai Yojana: Operational guidelines and support structure for vegetable farmers. Department of Agriculture & Farmers’ Welfare.

·         The Express Tribune. (2025). Farmers warn of crop loss catastrophe as Afghan border closure halts exports. The Express Tribune.

·         The Hindu Business Line. (2025). Potato prices crash in mandis; farmers demand higher compensation. Business Line.

·         Tribune India. (2025). Cold storages fill up as potato glut sweeps Punjab and Haryana. The Tribune.

·         World Bank. (2023). South Asian agricultural risk and diversification patterns. Washington, DC.