Explained: What’s fanning onion price hike & why govt steps aren’t cooling it downhttps://indianexpress.com/article/explained/explained-whats-fanning-onion-price-hike-why-govt-steps-arent-cooling-it-down-6017324/

Explained: What’s fanning onion price hike & why govt steps aren’t cooling it down

With elections in Maharashtra and Haryana only a month away, the government has to walk the tightrope of not upsetting onion growers, who are part of the voter base in rural areas, and urban consumers who have to shell out more money for the bulb.

Explained: What’s fanning onion price hike & why govt steps aren’t cooling it down
Since May this year, prices in wholesale markets across the onion-growing districts of Maharashtra have been increasing. (Representational Image)

Onion has been making news, first for its shooting prices in wholesale markets and then for the many efforts by the central government to control the increasing price. A host of efforts, including the controversial tender to import onions from Pakistan, has not quite had the desired effect. With elections in Maharashtra and Haryana only a month away, the government has to walk the tightrope of not upsetting onion growers, who are part of the voter base in rural areas, and urban consumers who have to shell out more money for the bulb.

Prices going up

Since May this year, prices in wholesale markets across the onion-growing districts of Maharashtra have been increasing. Last week, the average trading price in Lasalgaon’s wholesale market increased by more than Rs 1,000 per quintal. The present wholesale rate of Rs 4,000 per quintal is the best the bulb has seen in the last four years.

The ripple effect can be seen in the retail markets of Pune and Mumbai, where the price of onion has crossed Rs 50 per kg.

According to data of the Price Monitoring Cell (PMC) of the Consumer Affairs department, the retail price of onion has increased by Rs 20-25 per kilo across the country in the last six months. Currently, the bulb is retailing at Rs 57 per kg in Delhi, Rs 56 per kg in Mumbai and Rs 55 per kg in Pune.

What the govt is doing

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On September 6, the state-run MMTC had floated contracts for importing 2,000 tonnes of onions from ‘Pakistan, Egypt, China, Afghanishtan and other countries of origin’. Following sharp criticism, MMTC dropped Pakistan from the list of countries. The Centre also tried to restrict exports by sharply hiking the Minimum Export Price (MEP) to $850 per tonne. Earlier, in June, the government had ended the 10 per cent export subsidy for the bulb. Anticipating a shortage, the central government had created a buffer stock of 57,000 tonnes, of which 18,000 tonnes have already been offloaded.

Why the price is rising

The price rise comes during months when onion consumption usually goes down. The nine days of Navratri are round the corner and lakhs of people in Maharashtra don’t have onions or non-vegetarian food in this period. Similar dietary restrictions are followed in the holy month of Shravan, which falls somewhere in July and August.

The current increase in onion prices is a fallout of last year’s drought and the delayed monsoon this year. To add to the woes, some onion-growing areas have reported excessive rain, and harvest period has been delayed by a week or so.

Maharashtra, Karnataka, Gujarat, Madhya Pradesh, Rajasthan, Bihar, Uttar Pradesh and West Bengal account for almost 90 per cent of onion production in the country. Maharashtra, with its onion-belt districts like Nashik, Pune, Ahmednagar and Aurangabad, contributes nearly one third of the country’s production of the vegetable.

Farmers across the country take three crops of onions and this ensures uninterrupted supply across the year. Of these, kharif (sown between May and July and harvested in October-December) and late kharif ( sown in August- September and harvested in January- March) are not amenable for storage as they have higher moisture content. The third, rabi crop (sown in October-November and harvested after April), can be stored for a long period.

Farmers usually store their produce in moisture-proof and dust-proof structures called kanda chawl to prevent the bulbs from sprouting green shoots. Depending on the price, farmers release their produce, enabling steady supply for retail markets.

A combination of factors has led to the increase in prices; while the cultivation area under rabi crop has decreased in Maharashtra, neighbouring Karnataka has received heavy rain during the harvest period for kharif crop.

Maharashtra had reported cultivation of onions across 2.66 lakh hectares in the 2018-19 rabi season, much lower than the 3.54 lakh hectares of 2017-18.

The arrival of kharif onions from Karnataka has also been delayed after heavy rain lashed the state a few weeks ago. While markets saw the arrival of 35,000 quintals per day in September last year, the amount has dropped to 25,000 quintals this year. The new onion crop in Maharashtra is not expected before the end of October and till then, the stored rabi crop will be supplied to the markets.

The imported onions are expected to arrive by the end of November, and even the new crop from Maharashtra would have arrived by then. But given that the total amount of produce from both Karnataka and Maharashtra has dropped, the price of the bulb is expected to stay high.