Onion mafia

As the Centre and states continue to study factors responsible for the jump in onion and other food prices, one remains conspicuously absent...

As the Centre and states continue to study factors responsible for the jump in onion and other food prices, one remains conspicuously absent from the government8217;s mind. It should by now be clear to all but the determinedly blind that the contribution of hoarders and what might fairly be described as an onion mafia has been substantial. One by one, the weather, export policies, NAFED and the movement of goods at dockyards have come in for examination and rightly so. However that is patently not the whole story.

When the shortfall in the onion crop, for which the weather can be blamed, was estimated to be not much more than 15 per cent, onion prices rose 500 per cent. The government8217;s delayed fire-fighting, inefficiency in government agencies and transport bottlenecks had the effect of prolonging the regime of sky high prices but were not the original cause. As a report in this paper from one of the country8217;s major wholesale onion markets in Lasalgaon in Maharashtra shows, rain or shine, rabi or kharif,traders alone have done extraordinarily well out of onions this year. There is far more to this than windfall gains out of periodic supply-demand mismatches.

The facts point to hoarding and the manipulation of prices by a small coterie of large traders. In the first place, farmers have not gained anything close to the profits made by traders and stockists in this situation of short supplies. Indeed, the prices farmers received for the rabi onion crop last April were not very much higher than the year before.

For small farmers, with onion seed prices rising, there is the prospect of a worse season next year. Second, in one of the few raids of traders8217; warehouses in Maharashtra recently notably by the income tax department what tumbled out along with other undeclared assets were piles of hoarded rabi onions the kind with a shelf-life of five or six months. If more evidence is needed for the part speculators have played in pushing up food prices, the government should look at the whole range of fruit andvegetables and edible oils.

It could not be sheer coincidence that speculators ran amok just round the time the Essential Commodities ordinance lapsed and the government confessed to having no effective means of checking hoarding in food items. No doubt powerful traders8217; lobbies have ensured that successor legislation was stalled. It does appear that a traders8217; mafia has had a free run in many parts of the country.

Given that neither property markets nor stock markets promised poor returns who was going to miss the opportunity to push up yields in onions and other vegetables especially when there was little fear of getting caught for manipulating prices? Measures to prevent hoarding and profiteering in food items should have been put at the top of this government8217;s agenda long ago. Everyone but the speculators have been paying a high price for that failure.