NEW DELHI: The government plans to buy 50,000 tonnes of onion and create a buffer against a possible price rise due to drought conditions in states that produce most of it. Wholesale prices at Lasalgaon in Maharashtra, Asia’s largest wholesale market for onion, have shot up almost 30% from a year ago.
Problem with onions: Almost all of India consumes onion (908 of every 1,000 Indians, says government data) but it’s not grown across India – more than half of it is grown in just three states (Maharashtra, Karnataka and Madhya Pradesh) and 10 producing states account for almost 90% of the total production. Prices go up and down based on the supply from the three crop seasons in which onion is grown — April-Aug (rabi crop that accounts for 60% of production), Oct-Dec (early kharif crop that accounts for 20%) and Jan-Mar (late kharif crop that accounts for another 20%).
Problem with the market: A big reason for sharp increase in onion prices is also the way onion is sold. Half of India’s daily onion arrivals pass through 10 big markets, six of which are in Maharashtra and Karnataka. Plus, a small number of traders and exporters are very influential. This concentration makes it easier to manipulate prices.
Problem for farmers: High prices, at times, doesn’t mean the farmer benefits from it. Like for all vegetables, the Centre does not announce a minimum support price for onions as it does not procure them regularly. Last year, an onion-grower from Maharashtra who had to sell his produce for little over Rs 1 per kg had sent his earnings to the Prime Minister to mark his protest.
A rotten issue: Creating a buffer stock, however, doesn’t mean that all of the onions purchased at the taxpayer’s expense will help bring the price down for them. That’s because the government doesn’t have enough facilities to store the onions properly. Last year, TOI had reported that about 6,500 tonnes of onions (worth Rs 7 crore), part of the 13,000 tonnes of buffer stock that the Centre had created, were rotting in godowns.
And there’s politics: Governments don’t want to take chances as high onion prices have played a role in bringing down governments in the past. In 1980, Indira Gandhi stormed back to power on issue of rising onion prices. In 1998, BJP lost majority in major states due to onion prices. In 2010, the government was forced to ban export of onions to tackle rising prices.