Price crash: Onions bring tears, this time to farmers

Lower rabi plantings from drought and govt export curbs may hurt consumers too.

Written by Partha Sarathi Biswas | Updated: December 24, 2015 5:59 am
Lasalgaon, Asia’s largest onion market, has seen a steady fall in the prices in the last few days. Express Lasalgaon, Asia’s largest onion market, has seen a steady fall in the prices in the last few days. Express

For the last few years, Ashok Shinde had been steadily increasing the area under onion in his 15-acre holding, thanks to the remunerative prices fetched by the bulb.

But in the current rabi season, this farmer from Tandulwadi village of Nashik district’s Baglan taluka has dedicated just five acres to onion, as against almost 10 acres last year.

“There will be no water in this area after January. I’m not sure I would be able to keep alive even the crop that has been planted,” notes Shinde. His predicament is reflective of that of most farmers in Maharashtra, which, between June and now, has received roughly 30 per cent less rainfall relative to the normal average for this period.

The impact of the drought — one of the worst in recent times — is being felt now when sowing for the season is nearly complete. There are three crops in onion — kharif (sowing in June and harvesting from early-October), late-kharif (sowing in September and harvesting in December-January) and rabi (sowing from mid-October to mid-December and harvesting in March-May).

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Of the three, the rabi onions are the highest-yielding, while also being amenable to storage unlike the kharif/late-kharif crops that have more moisture. The stored onions from the rabi harvest is what feeds the market until the next kharif crop starts arriving in October. Maharashtra produces about 30 per cent of India’s total production, with the share even more at 40 per cent for rabi crop.

Last time, the damage to the standing rabi onion crop from unseasonal rains in March led to wholesale prices firming up. These crossed Rs 1,500 per quintal in early-June at Lasalgaon, country’s biggest market for onions. By end-July, prices had gone past Rs 3,000, before peaking at Rs 5,500-5,700 per quintal towards August third week.

onionThis time around the threat is coming from severe moisture stress owing to lack of rains, making it difficult for farmers like Shinde to even sow the rabi crop.

As on December 20, only around 60,000 hectares was recorded to have come under rabi onion cultivation in Maharashtra, against 342,610 hectares in the last season. The Nashik division comprising Nashik, Dhule, Nandurbar, and Jalgaon districts has reported coverage of just 37,196 hectares, compared to 177,410 hectares in rabi 2014-15. There has been no sowing reported as yet in Ahmednagar and Solapur. These two districts last year had seen plantings in 59,779 and 29,228 hectares respectively. It’s no different in Pune, where the area under rabi onion has dropped to a mere 1,250 hectares from the 36,920 hectares for 2014-15.

In all, achieving coverage of even 100,000 hectares in the current rabi season is going to be a stretch, admit state government officials. While sowing can technically go on till the end of December, that is remote this time considering the severe water shortage, especially so in the main onion belt of Nashik, where the irrigation department has taken a decision to reserve water from already-depleted reservoirs for drinking purposes.

Mohan Kharat, a farmer from Pimpalgaon Pisa village in Ahmednagar’s Shrigonda taluka, says he had initially planned to grow rabi onion on four acres, but eventually chose not to “because there will be no water available after January when the crop is at its crucial growth phase”.

Ironically, this huge decline in rabi plantings is taking place even as onion prices have crashed. On Wednesday, the modal price of onion at Lasalgaon was Rs 1,125 per quintal, below the Rs 1,900 level a month ago and Rs 1,575 at this time last year.

The price slide is being ascribed to two reasons. The first is the near-simultaneous arrival of both kharif and late-kharif crops. This year, the poor monsoon rains, more so till August, resulted in a decline in Maharashtra’s kharif onion sowing area to 35,258 hectares from 59,494 hectares in 2014. But the mild rainfall revival in September, coupled with price realisations topping Rs 5,000 per quintal the previous month, resulted in farmers substantially expanding their late-kharif acreage to 107,698 hectares, from 54,986 hectares last year.

Shinde alone planted 7 acres under the late-kharif crop, having himself got Rs 4,000 per quintal for the stored rabi onion that he sold in August at Pimpalgaon, a market around 30 km from Lasalgaon. But today, with the late-kharif crop (which was sown relatively early) being harvested alongside the arrival of the kharif crop (whose sowing was delayed), onion is trading in Pimpalgaon at Rs 950 per quintal.

But the glut from the kharif and late-kharif crops arriving almost the same time isn’t the only reason for the price crash. Equally important is a second factor, for which farmers and traders both are blaming the Centre. The latter, on August 22, raised the minimum export price (MEP) for onion — below which no shipments are permitted — to $ 700 per tonne, on top of an earlier increase from $ 250 to $ 425 per tonne undertaken on June 26.

Although the MEP was subsequently reduced to $ 400 per tonne on December 11 — following farmer protests over plunging prices, extending to shutting down of the mandis in Lasalgaon and Manmad — Nanasaheb Patil, chairman of Lasalgaon’s agriculture produce market committee believes that it came too little too late. “Due to the high MEP, we have lost valuable markets for Indian onions such as Sri Lanka and Dubai to Egypt,” he points out. Even the present MEP of Rs 2,650 per quintal is way above the Rs 1,000-1,100 rates that farmers are realising from selling in the domestic market.

India exported 12.39 lakh tonnes (lt) of onions in 2014-15 and 14.03 lt in the preceding fiscal, with these valued at Rs 2,301.58 crore and Rs 3,177.29 crore respectively. During April-September this year, only 4.88 lt valued at Rs 1,156.30 crore got shipped out.

However, the current respite to consumers from lower prices may only be temporary. Given the poor prospects for the all-important rabi crop, one could well expect a fresh spike in the months ahead. But for farmers, there has been no respite either way. Most of them hardly made any money while consumers were paying through the roof. Right now, they are bearing the brunt of a price crash, no less courtesy the Centre’s clampdown on exports.

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