The price of onions is a politically sensitive subject and that itself is a cause of consternation among growers of the crop in Maharashtra. In Lasalgaon mandi, Asia’s largest wholesale market for onions, prices have crossed Rs 25 per kg, nearly two-thirds higher than the levels at the start of this month.
Maharashtra produces roughly 30 per cent of India’s onion and nearly twice that of Karnataka. While the next big elections may be in the distant state, the very fact of onions being a political hot potato makes any price increase at Lasalgaon a matter of for policymakers in New Delhi.
“Yes, prices have risen last month, and will continue to rise for a while. But how much higher are they compared to last year?” asks Nanasaheb Patil, chairman of the Lasalgaon APMC (agriculture produce marketing committee) and himself a representative of the area’s onion growers. He’s right, it turns out. Average modal prices in Lasalgaon last July were Rs 18.86 per kg. This July, they have so far ruled lower at Rs 18.47. For the first two weeks of this month, onion prices were below last July’s levels almost every single day. The spurt, if any, has taken place only in the last one week.
Moreover, Maharashtra’s onion growers — mainly concentrated in the northern districts of the state — say that the rising prices do not reflect the gradual impoverishment amongst them over the past couple of years.
For this, they primarily blame the government for including onions in the list of essential commodities and fixing high minimum export prices, apart from maintaining inaccurate data on crop area, yields, production and domestic requirement. These, together with crop damages from recurring hailstorms, have thrown Maharashtra’s onion growers into a cycle of low output and sub-optimal price for their produce.
On June 26, the Centre sharply raised the MEP on onions by $175 to $425 per tonne. The ostensible reason was a lower crop of 18.92 million tonnes (mt) in 2014-15, compared to the previous year’s production of 19.40 mt. “We are now edged out of the international market, which will now be captured by Pakistan’s onions at $350 per tonne,” says Patil. Right now, not a single onion is going out,” confirms Ajit Shah, president of the Onion Exporters Association of India, adding that the government’s move would totally curb shipments when onions from Karachi are selling at $350-375 per tonne and from Egypt and China at $320. The quality of the new crop that is currently being dispatched from these countries is comparable to the Indian produce. Even though Indian exports at this time comprises stored stock from the rabi crop, the pungent onions here have a good market, especially in the Middle East as well as in Malaysia, Singapore, Seychelles and Bangladesh.
Onion farmers across the Nashik-Chandwad-Lasalgaon belt complain that the MEP mechanism, aimed at protecting urban consumers from price rise, is a body blow to them. “As it is, yields are low due to the unpredictable weather patterns. On top of it, they want to overcompensate for any possible price increase by ensuring the farmer’s produce is not exported. In the end, the farmer takes a hit twice,” says Shirishkumar Kotwal, a former MLA from Chandwad who lost the October 2014 Assembly election after contesting on a Congress ticket.
“It is understandable that the government wants farm commodity prices to be controlled for the city consumer. But why not do that by controlling costs on account of transportation, middlemen and storage? Not allowing foreign exchange earnings from export of onions makes no sense for either the farmer or the city consumer, who any way does not buy at the Rs 20-25/kg rate as Lasalgaon,” noted Kotwal, who is also president of the Chandwad APMC.
India’s onion exports last year fell both in quantity as well as value terms — to 1.24 mt and Rs 2,300.54 crore respectively — compared to in 2013-14 (see chart). They are set to drop further in the current year, thanks to the government’s strong anti-inflationary stance. Shah believes it’s too early to write off this year’s export numbers. If the rains revive and if the onion crop turns out normal, exports can revive with some tweaking to the MEP, he says.
Most farmers, including Patil, have managed to protect their nurseries with water from wells and farm ponds despite the current three-week dry spell. The last two days saw some rains in Nashik, but none in Chandwad yet. “A normal monsoon has to return by Nag Panchami,” says Patil, referring to the mid-August season by when transplantation is usually completed. “If not, we will have a failed onion crop to add to our worries.”