"A government that cannot control prices has no business to rule." This was the slogan that ultimately dethroned the Janata Party. The year was 1980. The Janata Party ruled at the Centre and the Congress was in opposition. The prices of onion were skyrocketing. Indira Gandhi campaigned all over the country for the parliamentary elections with a garland of onions around her neck and asked people for votes on the slogan.
This was the first time when the prices of onion became a major election issue. The Janata Party lost the polls and once again the Congress formed the government at the Centre. After that, many occasions came when onions made leaders in the saddle teary-eyed.
It was 1998 and once again the prices of onion were shooting up. The BJP had to bring in three chief ministers but it could not save itself from the wrath of the onion. Madan Lal Khurana, Sahib Singh Verma and then Sushma Swaraj were all made CM of Delhi one by one but the price of onion could not be controlled and the party lost Delhi when assembly elections were held.
Rajasthan’s then chief minister Bhairon Singh Shekhawat once said after he lost the election that the onion was behind his defeat. Now, India's third most populous state, Bihar, is going to vote and the onion price is headed north. The question that many are asking is, will this have a bearing on the outcome of the polls?
In most of the region, the retail price of onion is hovering between ₹70 and ₹100. According to experts, the price may soon reach ₹120 to ₹150 per kilo. Till a week ago, rates were around ₹30-40 a kg. But suddenly one day the wholesale price of the onion increased by ₹2,000 per quintal which led to a rise in its retail rates.
Last Monday, the rate of onion in the country's largest wholesale market at Lasalgaon, Nasik, reached a peak of ₹7,100 per quintal. Any increase in the rate at Lasalgaon mandi leads to an increase in retail prices all over the country.
Why did onion prices increase?
The price of any item increases only when either its production is less or demand is high. In the case of the onion, both these things happened.
To understand the increase in the prices of the onion, first, we will have to understand which are the areas where onion is grown. According to the Directorate of Onion and Garlic Research, Maharashtra is the largest producer of the kitchen staple. Nasik, Ahmednagar, Pune, Dhule and Sholapur in Maharashtra are the largest producers of onion in the country. Karnataka, Gujarat, Bihar, Madhya Pradesh and Andhra Pradesh come next, where onions are produced in huge quantities.
Out of these, onion crops on thousands of acres in Maharashtra, Karnataka and Andhra Pradesh were destroyed due to heavy rain. The region in Maharashtra where onion is chiefly grown, received heavy rain in September which was very uncommon. Andhra Pradesh and Telangana received record rain in October in about 100 years. Many areas of Karnataka are facing a flood-like situation even now.
Due to continuous rain and flooding, the onion crop in many states has been destroyed. As if this was not enough, the rising prices of onion has led to its hoarding also.
Increase in demand
During the lockdown, hotels, restaurants and dhabas were closed all over the country and due to this the demand of onion was subdued and so was the price. After unlock 5, eateries have opened and this has led to a sudden surge in demand.
The heavy rain in many areas has not only affected the onion crop but also the supply. The demand of onion is more than earlier in the market which has led to an increase in its rate.
Where are prices headed?
According to people who know about the onion business, the rate may touch ₹120 per kilo because excessive rain has affected its production in the main growing states. The new crop of onion will hit the market only in February next year. Presently, the wholesale price of onion has touched ₹7,000 a quintal in the largest mandi of the country and it is expected that it’s retail price in different parts of the country may see an increase of ₹30-40. And on this basis, experts say that the price of onion may touch ₹120 a kilo.
Now let us understand what is the onion situation in different parts of the country.
A week ago, onion was selling at a rate of ₹20-25 per kilo, but now it has reached ₹75 to ₹90 a kilo. The small onion, called shallot, is being sold at ₹100 which was earlier priced at ₹70-85.
Andhra Pradesh and Telangana
The onion crop was destroyed due to heavy rain in Andhra and Telangana and this has also affected the supply chain. Due to this, the traders have increased the price of the onion. Presently the onion is being sold at ₹100 per kilo in retail while its wholesale price is ₹70 to ₹85 per kilo.
The Andhra Pradesh government is planning to sell 1,000 tonnes of onion at reduced rates through Rythu Bazars. During the monsoon season the area under onion cultivation was 15,000 acre in Andhra while it's 5,500 acre in Telangana. But production was not as good as expected.
Onion is selling at a rate of ₹100 per kilo in the retail market. Tamil Nadu is selling onions at a reduced rate of ₹45 per kilo through Amma Farm Fresh. To make enough onion available in the state, the government has placed orders in Egypt and Iran. It is the second year in a row that the state is buying onions from Egypt.
Apart from Nasik in Maharashtra, Dhule, Pune, Satara, Solapur are also very famous for cultivation of onions. But all these areas have received more than normal rain this year which has affected production.
At Lasalgaon mandi, the price of onion was ₹7,100 per quintal at the beginning of this week. This price of onion has been the highest in the past one year and the retail rate may cross ₹100 per kilo soon. Presently, the price is ₹80 per kilo.
Experts say that this year onions will bring more tears to the eyes of the consumers and the phase of record prices may last longer. The excess rain in the production area is supposed to be the main culprit. It is expected that prices will not come down before the mandi starts getting a new crop in February next year.
After Maharashtra, Karnataka is the largest producer of onion in the country. Due to heavy rain, the total crop in the northern part of the state has been destroyed. In Bagalkot alone, the crop on 90,000 acres has been ruined. According to officials, the onion crop on 2 lakh acres in the state has been affected due to rain. In the retail market, the onion is selling at ₹80 to ₹100 per kilo.
Bihar and Jharkhand
Bihar and Jharkhand get their share of onion from Madhya Pradesh. In the mandi of Madhya Pradesh, the wholesale rate of onion is ₹5,500-6,000 per quintal. Due to this, the retail price in both these states is hovering around ₹60-70 per kilo. Since assembly elections are approaching in Bihar, if onion prices keep rising in the state, this may become a major poll issue. In the previous election, when Lalu Yadav was out of jail, he had made the rising prices of pulses and onions an election agenda.
Other parts of the country
In Odisha, the rate of onion in September was ₹30-35 per kilo which has now gone up to ₹70-75 per kilo. The president of Odisha Traders Association, Sudhakar Panda, said that presently the wholesale rate of onion in the mandi is ₹6,500 per quintal. In Assam, onion is selling at the rate of ₹60-70 per kilo.