Introduction

The food processing sector in India is commonly called the sunrise sector and its importance is not just limited to the simple contribution towards increasing the national gross domestic product (GDP). Many important socio-economic benefits which this sector provides in the form of increased employment opportunities and improvement in income and lifestyle of the rural people leading to reduction of migration of rural masses to cities are generally not accounted for. Mitigation of huge post-harvest and storage losses of fruits and vegetables in a tropical/subtropical country like India is another national benefit which is not reflected in the balance sheets of the food processors. However, the efforts of policy makers to compensate the food processing industry with various inceptives have started showing results.

Potato processing, which is a very important component of the overall food processing industry in India, has shown a tremendous growth during the recent past (Rana et al. 2004; Pandey and Sarkar 2005; Pandey et al. 2006). Early anticipation of this growth and timely diversification into breeding processing varieties by the Central Potato Research Institute (CPRI), Shimla, in the year 1990, ensured the availability of processing quality potatoFootnote 1 tubers in India (Singh and Pandey 2003). As a result, many potato processors have ventured into this business and potato processing capacities have increased tremendously over less than one decade (Rana and Pandey 2007).

Transportation of potato—being a bulky and semi-perishable product—over longer distances is costly and inconvenient. Hence, the growth of the potato processing industry in any area depends to a very large extent on the availability of processing quality potatoes in nearby areas. An adequate supply of processing quality potatoes in commensuration with the industry’s demand requires well planned and concerted efforts with research and development organisations like CPRI to develop new processing varieties of potato.Footnote 2 Estimates of current and projected demands for processed potato products serve as crucial information for policy makers.

Maharashtra is one of the largest and socio-economically diversified states of India (Government of Maharashtra 2004; Directorate of Economics and Statistics 2005; Mishra and Panda 2006). On the one hand, Mumbai represents the metropolitan and modern lifestyle of India; on the other hand, the rural population of Maharashtra has deep rooted traditional socio-cultural values. The consumption pattern also differs to a great extent and even for the urban population of Maharashtrians, consumption habits are strongly influenced by tradition. The current study was carried out to estimate the demand of processed potato products and processing quality potatoes in the state Maharashtra. The state was assumed to represent India with regards to the consumption of potato products, with the objective to derive national estimates of the demand for processed potato products and processing quality potato through generalisation.

Materials and Methods

In the absence of data from the National Sample Survey Organisation on the consumption of processed potato products, a household consumption survey was conducted in this study. The survey was conducted during March 2007 and a total of 442 families were covered. The sample was derived from Mumbai city and four districts of the state Maharashtra viz. Ahmednagar, Akola, Parbhani and Ratanagiri. Mumbai was representative of a metropolitan consumption pattern while the urban areas of the four selected districts represented the urban population of Maharashtra (Table 1). The number of urban households sampled in the study was higher than the rural ones due to a higher variability in consumption pattern of the urban population compared to the rural one. However, the sampled averages of the categories were generalised for the state population with the help of the estimated number of families in the respective category taking census 1991 and 2001 data into account.

Table 1 Sample size, expenditure and income details of sampled households
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For selecting the sample households in Mumbai, four main regions out of the list of eight were randomly selected viz. Greater Mumbai, Panvel-Uran region, Navi Mumbai and Western region were the selected regions (Appendix 1). Out of each selected main region, one sub-region was selected at random. At least three wards were randomly selected from the list of wards in one urban area from each of the four selected districts. For selecting rural households, the selected district was stratified into three strata having distances from the nearest urban area of <5, 5–10 km, and >10 km. Finally, one village was selected from each of the three strata. This methodology was refined and standardised in an earlier study in the state Punjab (Rana et al. 2009). However Punjab’s per capita and per family consumption of processed potato products was much higher than the national average, hence, results were not incorporated in this study.

Data were collected on household income and expenditure with the help of a schedule in a personal interview with the head or representative of each selected household. In addition to the product-wise expenditure on processed potato products the quantity of the consumption was collected. Home-scale processed potato products are abundantly consumed in Maharashtra state during religious fasts. Therefore, also the quantity of various home-processed potato products was collected. Only those processed potato products were taken into consideration that has a shelf life of at least 1 month. Potato crisps, French fries,Footnote 3 alu bhujia Footnote 4, and other potato products (home processed potato products having exclusive or partial potato contents) were considered for this study. Simple arithmetic tools were used for analysis of the data.

Annual compound growth rates (ACGRs) of the number of rural and urban families during 1991 (Nanda 1994) to 2001 (Banthia 2004) were calculated. These ACGRs were used to estimate number of families during 2006–2007.Footnote 5 The ACGRs were computed with the help of the following expression:

$$ r = { \exp }\left[ {\left( {{ \ln }\frac{{{Y_1}}}{{{Y_0}}}} \right){/}t} \right] - {1} $$

The ACGR across 15-year potato production values (1994–1995 to 2008–2009) was calculated and used for projecting potato production in 2011–2012. The following procedure was adopted to estimate this ACGR:

$$ \begin{array}{*{20}{c}} {{Y_{\rm{t}}} = {Y_{\rm{o}}}{{\left( {1 + r} \right)}^t}} \hfill & {} \hfill \\{{\hbox{or 1n}}{{\hbox{Y}}_{\rm{t}}} = 1{\hbox{n}}{{\hbox{Y}}_0} + 1{\hbox{n}}\left( {1 + {\hbox{r}}} \right){\hbox{t}}} \hfill & {} \hfill \\{{\hbox{or }}{Y_t} = A{ + }B{*}t} \hfill & {\left[ {A{\hbox{ = 1n}}{{\hbox{Y}}_0}{\hbox{ and }}B{\hbox{ = 1n}}\left( {1 + r} \right)} \right]} \hfill \\{r = \exp \left( {\hbox{B}} \right) - 1} \hfill & {} \hfill \\\end{array} $$

In both the cases:

r :

annual compound growth rate;

Exp:

exponential value;

ln:

natural log;

Y1 or Y t :

value at end of the interval/period for which ACGRs are calculated;

Y 0 :

value at beginning of the interval/period for which ACGRs are calculated;

t :

length of time interval/period in years for which ACGRs are calculated.

B :

coefficient of t obtained after the application of “method of least square”

Values were forecasted/projected using the following expression:

$$ {Z_1} = {Z_0}{\left( {1 + r} \right)^t} $$

Where:

Z 1 :

value at end of the interval for which figures are forecasted/projected;

Z 0 :

value at beginning of the interval for which figures are forecasted;

t :

length of time interval in years for which figures are forecasted.

Results and Discussion

Expenditure on and Consumption of Processed Potato Products

The expenditure on processed potato products is highly influenced by the average family income of the household (Rana et al. 2005; Rana et al. 2008). The household income in urban areas of the state was nearly 85% higher than in the rural areas (Table 1). Similarly, the total expenditure,Footnote 6 food expenditure and expenditure on processed potato products in urban areas was, respectively, about 95%, 29% and 376% higher than in the rural areas. It can be concluded that due to higher proportionate cost of living in urban Maharashtra the proportionate saving on regular expenses was higher in rural areas of the state.

Processed potato products were divided for this study in four categories: potato crisps, alu bhujia, French fries and other potato products. Other potato products were mostly home-processed products like potato papad, chakli and kish.Footnote 7 Per family expenditure on potato crisps and other potato products in urban Maharashtra was, respectively, 198% and 629% higher than in rural areas (Table 2). Since alu bhujia and French fries are predominantly consumed in urban areas, the proportion of per family rural consumption of these products was negligible in comparison to the proportion consumed by urban families. The lower proportion of expenditure on alu bhujia and French fries by rural families was due to lack of popularity and un-availability of these products in rural areas. Rural households were spending about three quarters of their total processing potato products expenditure on potato crisps only while this proportion was less than half in urban families (Fig. 1). The proportionate expenditure on other potato products was higher in urban areas.

Table 2 Average expenditure on potato products during 2006–2007 (INR per family)
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Fig. 1
figure 1

Contribution of different potato products in the total expenditure on potato products in rural and urban areas of Maharashtra in 2006–2007

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Physical consumption of processed potato products for an average Maharashtrian family was nearly six times more in urban areas than in rural areas (Table 3). The overall consumption of processed potato products in the state was nearly 1.4 kg per family per year. “Other” potato products were consumed in the highest quantity as compared to the remaining products categories. However, out of nearly 400 g per family potato products consumption in rural area, potato crisps constituted the highest followed by other products, French fries and alu bhujia (Fig. 2). In urban areas, the other products constituted the highest proportion of the nearly 2.3 kg annual potato products consumption of an average family.

Table 3 Average consumption (kg per family per year) of processed potato products in Maharashtra during 2006–2007
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Fig. 2
figure 2

Contribution of different potato products in the total consumption of potato products in rural and urban areas of Maharashtra in 2006–2007

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The total expenditure on processed potato products in the state was computed by multiplying the per family expenditure by the estimated number of households in 2006–2007 (Table 4). Based on the number of families in rural and urban areas of Maharashtra in 1991 (Nanda 1994) and 2001 (Banthia 2004), ACGRs were computed. The number of families in 2006–2007 was estimated using these ACGRs, assuming that number of families would increase at the same rate. As the state had a very high proportion of urban population (45% of the families), nearly 80% of the physical quantity of processed potato products was consumed in the urban areas.

Table 4 Estimates of expenditure on processed potato products in the state of Maharashtra during 2006–2007
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Depending upon the actual purchase made by the consumers for the packs of potato products carrying different pricesFootnote 8 and the quantity of product in a particular pack, the weighted average prices of different potato products were computed. The per kg prices for potato crisps, alu bhujia, French fries and other potato products were estimated to be Indian National Rupee (INR) 285 (€ 5.09)/kg; INR 125 (€ 2.23)/kg; INR 175 (€ 3.13)/kg and INR 120 (€ 2.14)/kg, respectively (Table 5). Using these prices, the annual physical quantity of potato products was calculated. The annual quantity of different potato products consumed by the people of Maharashtra was estimated to be highest for other potato products followed by potato crisps, French fries and alu bhujia. The annual demand for all potato products in the state thus was 28,148 Mg.

Table 5 Total consumption (Mg) of processed potato products during 2006–2007 in Maharashtra
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About 29% of the total consumption of potato crisps was incurred by the rural households of the state while urban households were the major contributors towards this consumption (Fig. 3a). Similarly, urban households contributed more than rural households to the expenditure on alu bhujia, French fries and other potato products (Fig. 3b,c,d). The contribution of the rural households in the total expenditure was negligible for alu bhujia and French fries, and less than 14% for other potato products.

Fig. 3
figure 3

Contribution (%) of urban and rural areas in the total consumption of crisps (a), alu bhujia (b), French fries (c), and other potato products (d) in Maharashtra

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The ACGRs of potato products’ consumption among sampled families were estimated to be 30% for potato crisps, 50% for alu bhujia and only 5% for other potato products. As other potato products are mostly home processed, they slowly but gradually get out of favour with the new generations; hence, this 5% ACGR estimate is quite realistic. For estimating the ACGR of French fries, the estimates of the McCain Food IndiaFootnote 9 were used. The estimated ACGR of French fries was 30%, and taking the expanding market for this product in India into consideration, it also seems to be quite realistic. With these ACGRs, the annual quantity of different potato products demanded after 5 years, i.e. in 2011–2012, was estimated (Table 6). The annual quantity demanded of all these potato products in the state Maharashtra in 2011–2012 was estimated to be 75,375 MgFootnote 10. Unlike the situation in 2006–2007 where more than half of the consumed processed potato products in the state are “other potato products”, this proportion is expected to be approximately one fourth in 2011–2012 (Fig. 4). Potato crisps will constitute the highest proportion (nearly half) of processed potato products by the year 2011–2012.

Table 6 Projection of demand for processed potato products in Maharashtra in 2011–2012 (Mg)
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Fig. 4
figure 4

Contribution (%) of different potato products to the current (2007–2008) and projected (2011–2012) physical consumption of potato products in Maharashtra

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Demand of Processing Quality Tubers

Reliable estimates of the requirement of processing quality potato tubers for the Indian potato processing industry are not available. Some of the studies, though not based on analysis, assumed potato tubers processed in India to be less than 1% of the national production (Khurana 2002; Singh and Pandey 2003; Khurana 2006). However, due to the rapid growth of the potato processing industry and the availability of processing quality potato tubers in India (Rana et al. 2004), other researchers have the opinion that the actual potato processing in the country is much higher (Pandey and Sarkar 2005; Pandey et al. 2006). Based on secondary information and a survey of potato processing plants, Rana and Pandey (2007) reported the processing quality tuber demand in India during 2005–2006 to be 0.97 million Mg, which was 4.06% of the national potato production (23.91 million Mg) in the same year.

Based on the results of our survey the requirement of processing quality potato tubers for the production of processed potato products for Maharashtra was computed (Table 7). As potato crisps have 25% recovery (Kaur and Ghuman 2002), the processing quality potato requirement was calculated be to four times the potato crisps’ quantity demanded. The processing quality potato requirement for alu bhujia was estimated taking into consideration that it contains 35% potato and that the potato contents present in it has 25% recovery. Alu bhujia is a fried and salty product like potato crisps; hence, the recovery is equivalent. The recovery for French fries was assumed to be 40% of the raw material as the product is made exclusively from potatoes. The percentage recovery for French fries in India is lower than the world average of 52% due to smaller sized tubers produced in shorter crop growing period (about 100–110 days). The other potato products were assumed to contain 50% potato contents having 20% recovery from the raw material (processing quality potato). Other potato products are largely the dehydrated potato products where peeling losses are more or less compensated by the moisture retained in the final product. The estimates are based on personal observations and no studies were found in this area.

Table 7 Processing quality potato tuber requirement for the processed potato products in Maharashtra in 2006–2007 (Mg)
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The annual processing quality potato tuber demand in Maharashtra in 2006–2007 was estimated to be 38,564 Mg for potato crisps, 35,313 Mg for other potato products, 1,906 Mg for alu bhujia, and 7,551 Mg for French fries (Table 7). The annual requirement of processing quality potato tubers to meet the demand of processed potato products in Maharashtra was 0.38% of the national potato production during 2006–2007 (GOI 2010). As Maharashtra has been considered the representative of processing potato products’ consumption in the country, the requirement of processing quality potato tubers of India for processed potato products in 2006–2007 was estimatedFootnote 11 to be 4.04% of the national potato production (Table 8). This estimate is slightly below, but quite close to the 4.06% processing quality tuber requirement, a supply side estimate for the Indian potato processing industry, made for in 2005–2006 by Rana and Pandey (2007) using secondary information and a survey of potato processing plants.

Based on processing quality potato tuber requirement estimates of 2005–2006 (0.97 million Mg) and 2011–2012 (2.68 million Mg) the ACGR was estimated to be 18.46%. Using this ACGR, the estimated figure for 2006–2007 processing quality potato tubers requirement was 1.15 million Mg which was 5.21% of national potato production in the year (22.09 million Mg). However, the supply side estimate does include the demand for processing quality potato tubers for potato products exported from India. Some traditional products like alu bhujia, dehydrated potato crisps and other dehydrated potato products have considerable demand from non-resident Indians, which results in export of these products from India (Singh and Rana 2005). Hence, these two estimates derived from two different approaches tend to agree and it can be concluded that Maharashtra state is a right representative of India in case of the consumption of processed potato products.

Using the ACGRs, the demand for processing quality potato in Maharashtra in 2011–2012 was projected to be 230,760 Mg (Table 9), which is 0.75% of the estimated Indian potato production in 2011–2012. Assuming that the ratio of the population of Maharashtra to India in 2011–2012 will remain the same as it was in 2006–2007, the generalisation of results at national level suggests that 8% of the estimated Indian potato production in 2011–2012 will be needed as raw material for potato processing in 2011–2012 (Table 8). The projected estimate for processing quality potato tubers in 2011–2012 in the current study (only the domestic demand) is 2.47 million Mg. Taking into consideration the exports of potato products from India (Singh and Rana 2005), this estimate is consistent with the supply side estimate of 2.68 million Mg processing quality potato tubers requirement in 2011–2012 in India (Rana and Pandey 2007).

Table 8 Generalisation of Maharashtra estimates to the whole India
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Table 9 Projections of processing quality potato tuber requirement for processed potato products in Maharashtra during 2011–2012 (Mg)
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Conclusions

In addition to the established players in the field of Indian potato processing like Frito Lay, Haldiram, McCain Foods India and Balaji Wafers; new entrants like ITC, Gee Pee Foods, Merino group, Satnam Agro, Parle Agro and Vimal Oil & Foods Limited have also joined the race to chasing important business opportunities in the field of potato processing during the last few years. In addition, the huge expansion of the capacity and establishment of new plants by the existing players, confirms the rapid growth of this industry in the recent past and near future in India. Not every potato tuber available on the market is fit for processing, and the availability of processing quality tubers is an important and decisive factor of success for a potato processing plant manager. The development and release of processing potato varietiesFootnote 12 by the CPRI has induced confidence of raw material availability among potato processors. However, most of the developments in the potato processing field are still based on personal judgements of the entrepreneurs and available examples in the industry due to the absence of any published, scientific estimate of the demand of processed potato products and processing quality tubers. Some private companies are carrying out studies on demand of potato products, but the results are kept highly confidential.

This study is a unique attempt to assess the demand of processed potato products using household consumption data in Maharashtra, which is one of the largest states of India. Maharashtra was found to be a highly representative state of India as far as consumption of potato products in the country is concerned. Consumers in the state spent highest amount of potato products’ expenditure on potato crisps as compared to other categories of processed potato products viz. French fries, alu bhujia and other potato products. It was estimated that the people in the state were annually spending INR 5,254 million (€ 93.82 million) on processed potato products. This expenditure was equivalent to 28,148 Mg in terms of physical quantity of potato products, which required 83,333 Mg of processing quality potato tubers. This raw material demand was equal to 0.38% of the potato production in India during the season 2006–2007.

When generalised at a national level, the estimated processing quality potato tuber requirement of India for processed potato products during 2006–2007 was 4.04% of the national potato production. This estimate is consistent with the estimate by Rana and Pandey (2007), using supply side estimation. With the help of ACGRs of different categories of processed potato products, i.e. potato crisps, alu bhujia, French fries and other potato products, the demand of processed potato products and their processing quality tuber requirement after 5 years was estimated. For the season 2011–2012, the forecasted figure of potato products’ annual demand for the state of Maharashtra was 75,375 Mg requiring 230,760 Mg of processing quality potato tubers which was equal to 0.75% of the estimated Indian potato production during 2011–2012. When generalised at the country level, 8% of estimated Indian potato production in 2011–2012 is expected to be required as raw material requirement for the potato processing industry in 2011–2012. The projected figure of the potato tuber requirement of the industry is 2.47 million Mg which is again consistent with the estimates (2.68 million Mg) of Rana and Pandey (2007). The latter figure was derived from supply side estimation and includes the possible exports of processed potato products while the former estimates only the domestic consumption.

More than 8% of potato area in the country is expected to come under processing varieties of potato by 2011–2012. The country currently has six processing quality potato varieties out of the 47 varieties released by the CPRIFootnote 13 so far. Taking into consideration the rapidly rising trend of processed potato products in India, there is need of more processing quality varieties having a higher dry matter concentration, lower reducing sugar concentrations and shorter time to maturityFootnote 14 in India. Hence, the national potato research and development institutes like CPRI need to further expedite their efforts in this area of urgent attention.