A slight increase in Maharashtra’s share in the total onion supply of the country over the past three months led to a near doubling of wholesale onion prices in the country, leading to Income Tax raids that were conducted on the country’s established onion traders who are based in Nashik. While the move is seen as an attempt by the Central government to ensure onion prices are kept under check in the country’s cities, farmers have blamed the Centre for interfering in a free market and not allowing farmers to get good prices for their produce.
The onions which are now being sold in the market is a rabi crop which is called gavthi in local parlance. It is a high-yield variant and unlike other variants can be stored for close to six months. The crop is sown in December-January and is out in the market by April. Due to its high yield and storage capacity, farmers tend to store it in their sheds and sell it in batches till October. Maharashtra presently accounts for close to 30 per cent of India’s onion production. However, with fluctuation in the weather, the onion crop in states such as Madhya Pradesh, Gujarat and Karnataka had been affected to a certain extent.
Last year in July, Maharashtra contributed only 40 per cent of all the onions that had reached various APMCs across the country. This year, Maharashtra’s share in July shot up to 56 per cent of the total onions sent in the market as supplies from other states was affected. The increased share of Maharashtra in the supply chain meant that the prices of onions rose by nearly 100 per cent between July and August. According to data from the Department of Consumer Affairs, the average wholesale price of onion in India increased from Rs 1,079 per quintal in July to Rs 2,023 per quintal in August. This hike was greater in Nashik, the country’s main onion market where onion prices increased from an average Rs 782 to Rs 1,617.
A section of the government reckons that the prices were manipulated by traders who had hoarded onions and were sitting on huge stocks whose release was being regulated to manipulate prices. Last month, a delegation from the Central government, led by top officials of the Union ministry of Consumer Affairs, Food and Public Distribution was in Laslagaon to ascertain the reasons behind the massive fluctuation of onion prices in the APMCs. Subsequently, the local administration had been keeping a close eye on the onion stocks in godowns of traders to ensure that there was no hoarding taking place. Local traders have, however, stated that the hoarding of gavthi onions at this stage when the new kharif crop was about to come into the market did not make sense for traders. They also claimed that the raids seemed to have been undertaken to artificially regulate the price of onions.
“These raids will act as a deterrent for farmers to get good prices for their produce. They have stored onion in their sheds for close to five months, hoping that they would get a decent price. However, these raids have created a situation where farmers will be shortchanged. The traders, because of the raids, will buy the produce at a lesser price and the farmer will be hit. If the government really wants to ensure that people in cities get onions at affordable rates, it should purchase them from the open market from farmers and then sell them at a subsidized rate to the public,” Changdeorao Holkar, former vice chairman of NAFED, said. Interestingly, the prices of onion in Lasalgaon on Tuesday, when it resumed operations for the first time after the raids, fell by Rs 250 to Rs 1,250. Only 5,000 quintal of produce came to the market. A day before the raids were conducted, the rate stood at Rs 1,500 and 15,665 quintals of onion had come to the market, nearly thrice of what was seen on Monday. “People do not have problems shelling out a few hundreds when they want to eat mutton or chicken. However, if onion prices increase by 10 or 20 rupee, then the government steps in,” Keshav Kakad, an onion farmer and activist from Nashik district, said.
The onion conundrum
Onions are produced thrice every year in Maharashtra with crops being harvested from October till April. The three types of onions that you eat:
1) Pol: It is the kharif onion crop known by farmers in Maharashtra as Pol, which is presently being sold in the market. The produce is, however, of inferior quality. It has a low yield and cannot be stored for long. It represents 20 per cent of the total onion crop in the state. Planted in May-June and harvested in October-November, it has been affected by the drought which has caused the price rise.
2) Rangda: It is the late kharif crop known by farmers in the state as Rangda. Some of it has already started entering the market. It is a little better in quality and represents 20 per cent of the total onion crop in the state. It is planted in August-September and harvested in January-February. This crop has not been affected much by the rains and its entry into the market by February 15 will put a brake on high onion prices.
3) Gavthi: It is the rabi onion crop and is of the best quality. It has a high yield and can be stored for close to six months. This crop represents 60 per cent of all total onion production. The crop is sown in December-January and is out in the market by April. Due to its high yield and storage capacity, the prices are generally in control when this produce enters the market.