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Those pricey onions

A day in the life of Bhima Sangle, 35, onion farmer, Lasalgaon mandi, Maharashtra.

Updated: July 6, 2014 9:05 am
Sangle’s deal is fixed at Rs 1,910 a quintal. (Zeeshan Shaikh) Sangle’s deal is fixed at Rs 1,910 a quintal. (Zeeshan Shaikh)

By Zeeshan Shaikh

While onion prices are soaring, Bhima Sangle, a farmer who sells his produce at  Lasalgaon Mandi, Asia’s largest onion market, says he makes little money

It is spread over 17 acres on a rectangular plot of land in the heart of Lasalgaon, a town some 225 km from Mumbai. The small size of the Lasalgaon mandi belies its status as Asia’s largest onion market and the price setter of the vegetable in the country.

The Lasalgaon mandi, or APMC (Agricultural Produce Market Committee), was set up in May 1947 to regulate agricultural trade and ensure farmers get fair deals for their harvest. Some 67 years on, that objective seems only partly fulfilled, as the story of 35-year-old farmer Bhima Sangle portrays.

Sangle has travelled 70 km from Gondegaon, one of the 63 villages that come under the jurisdiction of the Lasalgaon APMC, to reach the mandi at 8.30 am. It’s a lucky day, as only a handful of other onion-laden trolleys have lined up at the mandi gate. A far cry from the chaotic scenes in the peak season of December-January when over 2,000 vehicles — tractors, trailers and trolleys — jostle for space in the narrow, two-lane road leading up to the APMC.

Though Lasalgaon APMC, by law, is allowed to trade in 36 agriculture products, onions are the hottest commodities here. In 2013-14, onions formed nearly 70 per cent of the 49.05 lakh quintals of agricultural products traded in the mandi.

Sangle, who has come with close to 30 quintals of onion, parks his tractor and trolley outside the mandi gate. An APMC employee makes a note of Sangle’s vehicle and hands him a receipt before letting him inside. Sangle then drives his tractor down the main auction yard where other trolleys are lined up.

The mandi is bare, with few amenities for farmers who travel long distances and wait quite a bit to get their deals through. For years, a 20×20-foot shed was the only shelter that waiting farmers had. Four years ago, the market officials constructed a sitting area for farmers. The shed also houses an eatery which provides a “full meal” for Rs 15 a plate. But many like Sangle prefer to wait under the shade of the few trees that line the mandi before the auction begins.

At 9 am, commissioning agents and traders, along with a member of the APMC, start the first of the day’s two auctions. Farmers throw a few onion bulbs on the ground next to the trolley as samples for the traders to inspect. Among APMC’s 200-plus listed traders and an equal number of commissioning agents, only about a dozen have come for the auction today. They move in a group along with a mandi official and inspect the onions. The APMC official calls out rates for different batches of onions and stops when a trader indicates his willingness to buy at that price. Sangle watches helplessly as within 15 seconds, the APMC stops at Rs 1,910 per quintal for his onions.

Trucks line up at the Lasalgaon mandi for the day’s auction. (Zeeshan Shaikh) Trucks line up at the Lasalgaon mandi for the day’s auction. (Zeeshan Shaikh)

APMC officials claim that the basic price is determined by the forces of demand and supply, but the system is prone to manipulation such as traders, instead of APMC employees, calling out the auction, collusion of traders in determining prices and sometimes under-reporting of prices by APMC officials.

“The agricultural market is the only one where the buyer, not the seller, sets the price. We are not happy with this system, but we have no choice but to stick to this,” says Sangle who has been coming to the mandi with his father since the ’80s to sell the onions they cultivate on their six-acre farm.

Sangle says there has been little change in the auction process over the years. “Traders have always manipulated the process, but technology has helped farmers. We can check rates in neighbouring mandis on our mobile phones. This has helped rein in exploitation to some extent,” he says.

The commissioning agent hands Sangle a receipt and asks him to get his onions weighed. Sangle pays Rs 30 to the labourers working in the yard to collect the strewn onions and put them back into the trolley. He pays another Rs 2.70 a quintal to get the onions weighed. He also has to pay four per cent of the total value of his goods to the commission agent. In all, Sangle who was to receive Rs 57,300 for the deal, has to pay Rs 2,400 before he can head home. At 3 pm, he takes his truck to the storage yard of the buyer outside the market, unloads his onions there and then heads back to his village.

“In lean months, the entire process is over in a couple of hours and I can leave for home. In peak season, we have to wait for almost two days before our turn comes to auction the goods,” Sangle says. The first phase of the auction ends by 2 pm, the second phase starts at 3 pm and goes on till 6 pm.

“It is not a fair system but I am assured of a buyer here and do not have to hunt around for one. I also get my money by the end of the day,” Sangle says.

Farmers unload most of the onions auctioned during the day at traders’ yards. The trader subsequently collects the day’s produce and sorts them into various grades, depending on their size and quality, before packing them into bags of 40 kg each. All this activity is done outside the mandi.

And it is perhaps here, outside the mandi, where the story of the recent price hike in onions lies. Experts blame traders for determining the price of the product, creating an artificial scarcity by hoarding the harvest and selling it after charging an unreasonable premium. Last week, when onion was being sold at Rs 18.50 a kg in the Lasalgaon market, the rate was nearly Rs 30 a kg in markets like Delhi. While Sangle was making Rs 19.1 a kg, the vegetable retailed at Rs 25-26 a kg in Mumbai.

In extreme cases, the traders and retailers have charged a margin of over 100 per cent on the produce. Traders, however, say that sorting, packaging and transportation of the produce costs money which they need to recover. “I will have to pay nearly Rs 1,000 to get these 30 quintals of onions sorted and graded. Packaging and transportation also incur cost. How do we recover all these,” says Sachin Khandelwal, a trader.

Farmers and traders of Lasalgaon believe that demand and supply should determine prices of agricultural commodities.

“There seems to be an unwritten code in the country that it is the responsibility of the farmer to sacrifice every time there is an agricultural crisis in the country. The rule of demand and supply should be applicable to the pricing of agricultural goods. The state does not interfere when the farmer gets Re 1 a kg for onions, why should it do so now when prices are on the higher side,” says Lasalgaon APMC chairman Nanasaheb Patil.

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