The Narendra Modi government has, since September 29, banned export of onions and imposed stock limits — wholesale traders cannot keep more than 500 quintals and retailers 100 quintals — under the Essential Commodities Act. On November 9, it also approved one lakh tonne (lt) imports of the bulb through the state-owned MMTC Ltd. If that wasn’t all, the Income Tax department, on November 11, conducted search and survey operations on traders in Maharashtra, Delhi and Madhya Pradesh to probe any possible hoarding or holding of unaccounted stocks.
But all these measures — the stocking limits were further reduced, to 250 quintals for wholesalers and 50 quintals for retailers, on December 3 — have had little impact. According to Department of Consumer Affairs data, the all-India modal retail price of onions has gone up from Rs 50 to Rs 75 per kg between September 30 and December 3. On December 3, the kitchen staple traded at a record average of Rs 71 per kg in Maharashtra’s Lasalgaon mandi. This increase — from Rs 30 in end-September at India’s largest wholesale market — despite every conceivable action taken by government agencies is proof that production shortfall, and not any so-called hoarding, is behind the current price spike.
Onion has three production seasons: Kharif (transplanting in July-August and harvesting in October-December), late-kharif (October-November and January-March) and rabi (December- January and April-May). In 2018-19, India’s estimated total onion output was 234.85 lt, of which the rabi crop contributed over 65%, with the rest from late-kharif (20%) and kharif (15%). This time, the kharif planted area was about 7% less than last year due to the southwest monsoon’s late arrival. Further, extended and untimely rains during September-October in Maharashtra, MP and Karnataka — the three states together account for roughly two-thirds of India’s production — caused substantial damage to the standing crop.
There’s no clarity as yet on the late-kharif onions that will start arriving in a month’s time. However, going by the Union Consumer Affairs Minister Ram Vilas Paswan’s reply to a Parliament question on November 19, the output of both the kharif and late-kharif crop this year is reckoned at 52.06 lt, 26% lower than the corresponding 69.91 lt for 2018-19. Such a magnitude of drop — almost 18 lt — cannot obviously be met through imports.
“We’ve had an unusual combination of a 3-4 weeks delay in sowings from drought-like conditions initially and, then, heavy rains towards the harvesting stage. Together, they have resulted in actual physical shortage, which is reflected in arrivals here falling to hardly a third of the normal for this time” points out Jaydutt Holkar, chairman of the agriculture produce market committee (APMC) at Lasalgaon.
Around 17,000 tonnes of imported onions — 11,000 tonnes from Turkey and the remaining from Egypt — are slated to land in the Mumbai port over the next few days. MMTC is expected to float more tenders for imports in the coming weeks. While the Modi government has also relaxed the requirements for fumigation against pests and diseases — which, in normal circumstances, has to be mandatorily done at the country from where exports are originating — that hasn’t, however, spurred private imports.
Suresh Deshmukh, a commission agent at the Dindori APMC of Maharashtra’s Nashik district, puts the total imports by private parties at 5,000 tonnes since September and does not foresee it going up much. “The landed cost of imported onions in September was Rs 30-35 per kg. The retail price, after adding grading, packing, transportation and other charges, would have come to Rs 45-50. But today, the landed cost itself has risen to Rs 50-60 and the retail price will work out to Rs 65-75 per kg, which is close to domestic levels. Nobody will want to risk imports based on today’s market prices,” he notes.
Vilas Bhujbal, a commission agent operating out of Pune’s APMC, claims that imported onions have a limited retail market, as they lack the pungency of the local produce. “The ones who will buy are mostly hotels, restaurants and other institutional customers,” he adds.
For now, the possibility of prices significantly cooling down seems remote. That may not be great news for the Modi government, especially in the context of the Assembly elections underway in Jharkhand. There’s already some talk of ‘pyaaz’ being a factor there, just as ‘dal’ was during the Bihar polls in October-November 2015.
What’s not as much in doubt is that the rabi crop, whose plantings are just about to start, would be a bumper one. Favourable soil moisture conditions, not to speak of prices, are likely to impel farmers to sow more area. The danger is if the current export and stocking restrictions continue beyond March, when the new rabi onions — which are amenable to storage due to their lower moisture content — are due for harvesting. Such restrictions in pulses, clamped when arhar dal prices scaled Rs 180-200/kg, were not lifted even after a record domestic production, on top of all-time-high imports, in 2016-17.
For the ruling Bharatiya Janata Party, a repeat of Bihar-2015 in Jharkhand-2019 would be bad. But for onion growers, there can be nothing worse if the policy response in dal post Bihar is replicated for pyaaz even after the Jharkhand elections.