Govt to auction rotting onions

The Government’s move in auctioning the stocks might end up as a futile exercise as the new summer crop (Rabi onions of Gavthi/Unhal variety) has started flooding the markets. The acquired stock harvested three to four months ago has outlived its shelf life and much of it is not fit for human consumption. Besides, the Government had bought the 34 lakh quintals of onions from January at higher than the market prices between Rs 300 and Rs 350 per quintal, when the market prices were ranging from Rs 150 to Rs 200 per quintal. The auctions might fetch a meagre rate of Rs 50 to Rs 100 per quintal, according to market sources.

The Government would suffer heavy losses as a result of its populist gesture of buying onions at higher than the market prices. Initially, the Government planned to export the commodity and also distribute it through the public distribution system. However, the plan of exporting the crop failed as the minimum export price fixed in January was US $ 205 per tonne for the Gulf countries, where Pakistani and Chinese onions were available for US $ 150 per tonne. The plan to distribute the onions through the PDS, too, failed as the commodity (which was acquired at higher than the market prices) was available cheaper in the open market than at the ration shops.

The Government, which has bought onions worth Rs 110 crore from the farmers, is yet to disburse payment. The district cooperative banks of Nashik and Pune have been asked to lend money for the purpose. The outstandings to be cleared are to the tune of Rs 90 crore.

The onion production during the current year is estimated to touch 47 lakh tonnes in the country, as against the normal production of about 42 lakh tonnes. The domestic consumption of the commodity is about 38 lakh tonnes and about four to five lakh tonnes are exported per annum.

However, due to the ban on exports imposed last year following the skyrocketing of onion prices to an all time high of up to Rs 4,000 per quintal after the failure of the kharif crop, the exports suffered and private exporters as well as agencies like NAFED lost their traditional buyers overseas to competitors from Pakistan and China.

In view of a possible glut of onions yet again as the forthcoming bumper summer crop, the Central Government has further relaxed the ban to allow exports up to 50,000 tonnes. Earlier this year, the ban had been relaxed to allow 2 lakh tonnes of exports. However, the Union Government’s gesture might not make any difference as the minimum export price fixed for Indian exporters is US $140 to US $175 per tonne for the Gulf markets, as against the price of below US $130 per tonne offered by Pakistani exporters.

The Union Government has also brought the Bangalore Rose and Krishnapuram varieties of onions on the OGL (open general licence) list to encourage exports. However, market sources pointed out that it was too late and too little, considering the prices in the international markets. They pointed out that the Government ought to have allowed three to four lakh tonnes of exports immediately and fix the minimum export prices competitively.