Onion growers in tears

What Went Wrong

The downtrend in prices,according to observers,amongst other factors,is largely due to the increased production of onions in states other than traditional grower Maharashtra,which still remains the biggest onion producer in the country.

Equally destructive has been the governments wrong prediction about the kharif onion,which,in turn,prompted it to devise a policy discouraging exports. While the area under onion increased in the country,the government agencies continued to paint a dismal picture of onion production.

Last years good prices attracted more farmers towards cultivation of onions. States like Rajasthan,Andhra Pradesh and Madhya Pradesh,which are not traditional onion producing areas,began growing onions,and states like Karnataka and Gujarat,which already grew onion substantially,increased their acreage. Markets in these states (for instance,Alwar in Rajasthan) are also witnessing over 25,000 quintals arrival of onions everyday, said a senior official of the Maharashtra State Agriculture Marketing Board (MSAMB).

These markets have considerably eaten into Maharashtras market,forcing the growers here to look within the state. Also growers from the state,who had stocked the rabi produce hoping to sell once the market warmed up,started to sell it off after the Centre banned onion exports and increased the Minimum Export Price (MEP) that threatened to send prices further down.

Along with stock onions,the fresh kharif crop,too,started coming into the market from the first week of November. The prices,obviously,crashed, said Shriram Gadhave,president,All India Vegetable Growers Association.

Govt blow to exports

Alarmed by the increase in onion prices in August and the first two weeks of September,the Centre imposed a ban on export of onions on September 16 and increased the MEP from $300 to $475 a tonne so as to to avoid a situation like last year. The reaction was in the light of the the governments prediction that the kharif onion production would be less by 15 to 20 per cent than last year.

Following agitation by farmers associations,the ban on export was revoked. The MEP,however,remained $475 till mid-November,when it was brought down to $ 350 a tonne and eventually to $ 250 still high as compared to international markets.

A higher MEP makes the Indian onion costlier as compared to other countries which,of course,means fewer buyers.

The ban and the higher MEP policy which continued the ban-like situation even after being revoked harmed the onion farmers to a great extent. The rabi onion that was stocked and was of export quality,couldnt be exported and went at lower prices artificially brought down by the export discouraging policy, said Changdev Holkar,president,Agriculture Produce Market Committee (APMC) in Lasalgaon.

On Wednesday,the Centre brought MEP to $150,which will now help the Indian onion compete with those from China and Pakistan. Observers,however,say it could well take at least a week before the impact will be felt.

Estimates go awry

Last September,the government banned the exports to control the onion prices and avoid a repeat of the December 2010-January 2011 situation. The reason for the worry then was the forecast that this kharif season production would be worse than the last year.

Estimates suggest a shortfall of about 13 lakh tonnes of onion in the ongoing kharif season as compared to last kharif with a 15 to 20 per cent lower yield than last year Food Minister KV Thomas had said in September 2011.

But it turns out now that the yields are all right. They are either same as last year or in some areas in Maharashtra,Rajasthan and Gujarat even better.

Onion is a short-duration crop. As the weather forecast go wrong,which is so frequent that it has become the norm in the country,the production estimates also go off-target,said Shetty,

Instead of depending on the manual surveys carried out by government officials,the agriculture department should start using the satellite mapping of the crops areas. If done at a fortnights interval it would provide a fairly accurate estimate of the yield,which wasnt the case this year. The government failed to understand that even the per acre yield hasnt increased this year but the area under onion has has gone up increasing the overall production, said Shetty.

Add to this the fact that from March,the late-kharif crops would start coming in,which,farmers fear,would send the prices down. Late-kharif crops of onion are robust this year due to absence of October-November rains that adversely impact the crops.

Mounting Losses

Ambatatya Kadam,a grower from Katarni village at Nashiks Yeola tehsil,had to sell his crop for Rs 300 per quintal Rs 3 a kilo at Lasalgaon market. The input costs of an acre of onion field is Rs 35,000-Rs 40,000 if one takes the travel and marketing costs into account. At the prevailing price of Rs 300 to 500 per quintal for about 80 quintals,I have been able to make just about Rs 35,000, said Kadam.

Raju Shetty,president,Swambhimani Shetkari Sanghatna,says that for a farmer to earn a sustainable profit over his investment,the procurement price of onions should be at least Rs 9 to 10.

In the last three-four years,there has been a 40 per cent increase in agricultural input costs with prices of chemical fertilisers,labour,electricity and diesel having all gone up. A farmer cant sustain if he gets a price that is half his cost of production, said Shetty.