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In fact: Let’s not cry over onions

Growers of the humble bulb have become victims of political expediency and the official commitment to ‘inflation targeting’.

Written by Harish Damodaran |
Updated: August 3, 2015 12:14:11 am
onions, onion, onion price, pyaaz, onion price rise, price of onion, Lasalgaon, Maharashtra, Lasalgaon Maharashtra, India’s largest wholesale market, india news, indian express news, Harish Damodaran, Harish Damodaran article, explained, explained news, indian express explained When it has come to onions, all the rules of free trade have been given the go-by.

Onion is yet again in the news. Not surprising, when it is retailing around Rs 45 per kg in the national capital. The fact that prices at Lasalgaon (Maharashtra), India’s largest wholesale market for the bulb, have soared from under Rs 15 to Rs 31-32/kg in just over a month makes it all the more newsworthy.

The increase cannot possibly be blamed on the Centre. The present government especially, unlike its predecessor, has been quite hawkish vis-à-vis onions — which may well have to do with memories of the BJP’s 1998 Delhi Assembly election loss attributed to pyaaz then touching Rs 60 a kg.

One of this government’s first moves, on June 17 last year, was to impose a minimum export price (MEP) of $ 300 per tonne on onions with a view to restricting shipments. It was further raised to $ 500 per tonne on July 2, the same day when onions — for the first time since 2004 — were also brought under the Essential Commodities Act to empower states to undertake de-hoarding operations and fix stockholding limits. Subsequently, the MEP was reduced to $ 300 on August 21, and $ 250 per tonne on April 17, only to be increased again to $ 425 with effect from June 26.

The NDA regime, in other words, cannot be accused of not being proactive. When it has come to onions, all the rules of free trade have been given the go-by. While states have been repeatedly reminded about reforming their agricultural produce market committee acts to allow barrier-free movement of crops from farm to fork, the Centre hasn’t seen its own actions on onion — virtually banning exports or telling traders how much they can buy and stock up — contradict this sage advice.

Why such double standards and obsession with a commodity that hardly qualifies as “essential” from a nutritional standpoint (think rice, milk, pulses or eggs)? Although classified as a vegetable, onions assume that form only in the odd pyaaz-tamaatar ki sabzi or chicken do pyaaza. More often, they only serve as a condiment or flavour enhancer to impart pungency to dishes. Given that, should we really be crying over onion prices?

Besides, to know why prices go up — that too, in certain months — a few facts about onion production merit consideration.

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First, out of India’s 185-190 lakh tonne (lt) annual output, roughly 60 per cent is the Rabi crop harvested during April-May. Another 20-25 per cent comes in late-Kharif (January-March) and the balance 15-20 per cent from Kharif (September-November). Thus, the period from late-June to August is when prices are most vulnerable to increases.

Second, about 30 per cent of the country’s onion production is accounted for by Maharashtra. This share is even more, at 40 per cent, for the Rabi crop. The stored onions from the Rabi harvest is what feeds the market during June-August, before the Kharif crop, mainly from Karnataka and Andhra Pradesh, starts arriving in September.

Third, a major development of the last 10 years, if not less, has been the creation of significant on-farm storage capacity in onions. Many farmers in Maharashtra’s onion belt of Nashik, Ahmednagar and Pune have built these structures, typically of 25-50 tonnes capacity, and costing a couple of lakhs or so.

Onions basically require a dry, heat-protected and well-ventilated environment to ensure no sprouting or rotting. The on-farm storage structures are constructed on raised platforms to prevent moisture ingress from direct contact of the bulbs with the soil. Roofs built with asbestos or heat-resistant Mangalore tiles, and side walls made of bamboo battens supported by iron angles to enable proper aeration, complete the structure. No great technology here.

Maharashtra growers were smart to exploit the opportunity of storing Rabi onions that, given their higher total soluble solids and dry matter content compared to the late-Kharif/Kharif crops, are amenable to it. Rather than sell their entire crop in April-May, these farmers saw how there was money to be made by simply storing the onions for 4-5 months and making staggered sales through the off-season. In 2013, an extended monsoon followed by Cyclone Phailin, delaying the harvesting of the kharif crop, led to prices in Lasalgaon averaging Rs 42-46 per kg in September-October (see chart). Not only traders, but even farmers made money from that.

Now, isn’t this — farmers learning to play the market — something to be celebrated? The creation of some 40 lt of on-farm onion storage capacity nationwide — 15 lt in Maharashtra alone — was a revolution of sorts, partially aided by capital subsidies from both the central and state governments.

Unfortunately, the powers that be today in Udyog Bhawan and Krishi Bhawan are engaged in sabotage. And they have a convenient excuse — the Centre’s and the Reserve Bank of India’s commitment towards “inflation targeting” — for it.

What else explains the move to hike MEPs (allowing Pakistani and Chinese onions to capture the international market) or imposing stockholding restrictions denying farmers the chance to benefit from higher prices during the off season? For Maharashtra’s farmers, already combating drought and a price crash in sugar, cotton and milk, this is tragedy compounded. Onion is one crop that gave decent returns — but not any more.

Yes, elections in Bihar are important. But so are the interests of onion growers in Lasalgaon and Pimpalgaon or even Shajapur, Ujjain and Ratlam in Madhya Pradesh, Sikar and Alwar in Rajasthan, and Dharwad, Gadag, Haveri and Davangere in Karnataka. Political expediency and inflation targeting should not come at farmers’ expense.

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