Policy options for sustainability and resilience in potato value chains in Bihar: a system dynamics approach

NUPI Working Paper

Potatoes are an important crop for food security in Bihar, providing significant income generating activities for participating farmers and an additional source of diet diversification for consumers. Recent reforms to

the Agriculture Production Market Committee (APMC) Act and improvements in state-wide governance have provided further incentives for investment in the potato sector, particularly in cold storage facilities that can mitigate seasonal price fluctuations and improve the availability of potatoes. At the same time, climate change could have severe ramifications on the potato sector in Bihar, with some forecasts redicting a decline in yields of over 20 percent in the coming decades. In this paper, we look at the quantitative impacts over time of different investment, trade, and policy scenarios in the potato value chain, particularly those that can mitigate climate change effects, using a system dynamics model

of the potato value chain that builds on previous qualitative studies (e.g. Minten et al. 2011). Preliminary results highlight that reducing storage costs, either through subsidies or increased competition, could reduce the price variability inherent with climatic shocks. On the other hand, encouraging conventional types of cold storage could have additional feedback effects that exacerbate climatic shocks, suggesting a need to consider “climate-smart” investments.