Explained: Why Odisha will now sell onions at ‘fair’ prices

So why are onion prices going up and why did the state government have to step in?

Damage and delays of stock

The Odisha government says prices are high because the early variety onion, which arrives in the state from Andhra Pradesh and Karnataka, was damaged. According to officials, the damage was caused due to errors in managing surplus production. The expected arrival of onions from Maharashtra too has been delayed due to rainfall, states the letter.

The major onion-growing states in the country have been hit by unseasonal rain this kharif season, damaging standing as well as harvested crops. The flood in Maharashtra, a major producer of onion, has worsened the situation.

Odisha imported around 4 lakh metric tonnes of onion in 2017-18, according to officials in the food supplies and consumer welfare department. The state cultivates onions on a small scale in districts like Kalahandi, Boudh and Balangir. In April, Kalahandi onion farmers had reportedly resorted to distress sale to Chhattisgarh farmers at Rs 7-8 per kg due to lack of storage facilities and poor market linkage in the state.

The state government’s letter expresses apprehension that onion prices may be pushed up further due to hoarding by traders, resulting in an artificial scarcity.

Shortages not just in Odisha

It’s not Odisha alone that is struggling with steep onion prices. Retail prices of the vegetable have touched up to Rs 85/kg in Delhi, Rs 75/kg in Chennai, and Rs 67 per kg in Mumbai.

Onion traders in Maharashtra claim one reason for the price rise is the stock limits imposed on traders earlier this year. The cost of the “politically sensitive” vegetable had been soaring in September too, and the government, while banning the export of onions, had prescribed a stock limit of 500 quintals for wholesale traders and 100 quintals for retail traders.

Traders claim these stock limits are responsible for the current shortage of onion in the market, which is leading to their prices climbing. The government is now trying to make up for the shortage by importing onions from Egypt, Afghanistan and Turkey, and is even mulling allowing private traders to import the vegetable.

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