Double whammy: From Rs 55 to Rs 7.5 per kg, onion growers feel the heat

Prices of the bulb crash even in the midst of an unprecedented drought in Maharashtra.

Written by Partha Sarahti Biswas | Lasalgaon (maharashtra) | Updated: April 28, 2016 7:05:37 am
Onion price, india onion crash, onion price india, Onion price Maharashtra, Maharashtra onion productiopn, Maharashtra farmers, business news, onion export price, minimum export price, india news Vishwanath Nagare, a farmer from a village near Lasalgaon, with his stored rabi onion crop. (Express Photo: Partha Sarathi Biswas)

It’s roughly a month since Vishwanath Nagare harvested his rabi onion crop, but he is yet to take it to the market.

“Prices are now just Rs 800 per quintal. I won’t sell until they at least cross Rs 1,000”, says this farmer from Sarole Thadi, a village in Nashik district’s Niphad taluka just about 18 km Lasalgaon that houses India’s largest wholesale onion market.

Last year, Nagare, who grows onion in one out of his total five-acre holding, realised an average rate of Rs 1,300 per quintal. But he could sell only six tonnes, as the crop itself suffered damage from unseasonal rains in March. This time, he has produced 11 tonnes, but prices are lower: “If they don’t improve soon, I will lose money yet again”.

There are many farmers like Nagare, who are unable to fathom the wild fluctuation in onion prices over the last year and more. Between April and September, the average modal price — the rate at which the maximum number of trades happen — in Lasalgaon soared from Rs 1,093 to Rs 4,130 per quintal. For a brief period, during the third week of August, they even hit Rs 5,000-5,000/quintal levels. That was, of course, the time when pyaaz was all over the newspapers and TV channels. The price spiral was partly a result of India’s onion output dropping to 189.28 lakh tonnes (lt) in 2014-15, from the preceding year’s 194.02 lt, and also average monthly exports of over one lt per month during January-July 2015.

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But since December — with the arrival of the 2015-16 kharif and late-kharif crops — prices have been on a downward slope, falling below Rs 1,000 per quintal by early February. The new rabi onion crop hitting the market after harvesting during March-May has taken prices even lower; they fell to Rs 600 per quintal levels in mid-March, before recovering a tad thereafter. The resultant distress to farmers is hardly making headlines.

What farmers here are unable to comprehend is how prices have crashed, that too in the midst of a drought of the kind Maharashtra is currently seeing. Rabi onion area in the state, in fact, has dipped to around 1,90,000 hectares this year, as against over 3,42,000 hectares in 2014-15. According to Nanasaheb Patil, chairman of Lasalgaon’s agriculture produce market committee, the decline would have steeper but for some extra area being sown under the crop in Ahmednagar and Aurangabad. “Towards November-end, water from the Gangapur dam in Nashik was released for Marathwada. As this water passed through Ahmednagar and Aurangabad, farmers along the canal uprooted their ratoon sugarcane and planted onion in its place,” he points out.

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The sugar commissionerate’s data shows a 40 per cent acreage reduction under ratoon cane — which grows from the stubble of the harvested plant crop — this time in Maharashtra. Kashinath Sanap from Baktarpur village of Ahmednagar’s Kopargaon taluka is among those who decided to divert four acres of his cane area to onion. “There was no water to sustain a 12-month ratoon cane crop. So, I went for rabi onion”, he says. But he, too, is disappointed that the crop is selling in Kopargaon at below Rs 700 per quintal.

Patil believes that the Lasalgaon market is now witnessing a heavy influx of onions from Ahmednagar and Aurangabad — which is also the reason for prices plunging. “These farmers, unlike the ones in the traditional onion belt of Nashik, Pune and Dhule, have no facilities for on-field storage. So, they have no option but sell at the earliest,” he notes.

Farmers in the main onion belt have the capacity to hold back their crop a little longer. But even they, Patil admits, cannot expect prices to go up much, especially with onion acreages in other states like Madhya Pradesh, Gujarat and Rajasthan rising significantly. The Nashik-based National Horticultural Research & Development Foundation (NHRDF) has estimated this year’s rabi onion crop to be 15-20 per cent higher, with overall production for 2015-16 pegged at 203 lt.

Rabi onions have longer shelf life and are amenable to storage. NHRDF has projected that around 45 lt of rabi onions would be stored by farmers and traders in the current marketing season due to availability of good quality bulbs. This is more than the 40 lt from last year’s rain and hail-damaged crop.

Farmers in Nashik, Pune and Dhule alone have constructed storage capacities aggregating some 14 lt. Such on-farm structures, typically of 25-30 tonnes capacity and costing a couple of lakhs, have been built through special subsidies from NABARD and the state agriculture department. But farmers’ hopes of making money from stored onions, this time, have been dashed by crashing prices, for which they largely blame the

Centre’s move to impose minimum export price (MEP) restrictions on onion. During the price surge in August, the MEP was hiked to $700 per tonne, putting a virtual halt on shipments.

As domestic prices went into free fall, the MEP was eventually scrapped on December 23. But for farmers, who were harvesting their kharif onions, it was too late.

Omprakash Raka, a trader-cum-exporter from Nashik, recalls that till about 6-7 years back, NAFED used to have monthly meetings with all concerned stakeholders to take regular stock of the onion supply position. “These interactions allowed informed decisions, including that on MEP, to be taken. But that practice has been replaced by fixing of MEPs in an ad hoc manner,” he claims. The main beneficiaries of India’s MEP restrictions have been exporters in China, Egypt and Pakistan. They have all reported good crops this year, even as India is struggling to regain its lost market share from these players.

The Centre has now directed NAFED and other state agencies to procure 15,000 tonnes. NAFED is expected to start procurement from April 18, with the Maharashtra State Agricultural Marketing Board and others to wade in towards May. This, it is hoped, would help push up realisations above Rs 1,000 per quintal. But unlike last year, the chances of any price spiral seem remote.

While that may be good news for urban consumers, for Maharashtra’s farmers this would translate into yet another cycle of losses. Santosh Gorade from Takli village in Niphad taluka has stored around 6.5 tonnes of his produce in anticipation of higher prices. He sums up the situation best: “Temperatures here have already crossed 40 degrees Celsius. If they continue at this level, the bulbs will start rotting, forcing us to go for distress sale. There was no acche din for us last year and we don’t see it this season as well”.

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