Soaring Onion Prices: Govt Action is Too Little, Too Late

Soaring onion prices will continue to bring tears to Indian consumers for at least the next five to six weeks for the simple reason that there is no ready availability of the commodity in the market at affordable prices. Imported supplies are not expected until late next month to ease the situation.

Whatever domestic stocks that are coming out are a trickle and priced hugely, at up to Rs 165 per kg.

In Mumbai, the onion on Friday was selling in the retail market at around Rs 120 per kg. In Vidarbha, it was priced at Rs 150 per kg. In Chennai and Kolkata, it was selling at Rs 140 per kg and in Thrissur at Rs 150 per kg, as per official data. The prices on an average are exorbitant in consuming northeast and southern parts of the country.

The commodity has altogether disappeared from government outlets like the National Agriculture Cooperative Marketing Federation of India (NAFED), the National Cooperative Consumers Federation of India (NCCF) and Mother Dairy, among others.

Clearly those who have stocks -- and stocks are visible in mega stores, supermarkets and hyper stores -- are out to make a killing.

So far there is no news of state governments cracking the whip on intermediaries and stockists for profiteering despite imposition of stock limits on wholesalers and retailers.

“Stocks are visible in the market but stockists are selling them at high costs to make huge profits,” said a farmer leader from Karnataka.

The buffer stock of onions created in July has dwindled but, worse, about 19,000 tonnes of the bulb was damaged from prolonged storage as states took their time to lift stocks.

The central government says it has taken steps like ban on exports, stock limits, etc., to augment supplies of onion and control prices but frankly, it is “too little and too late”.

Farmers bemoan that the belated decision taken two days ago to import up to 1.2 tonnes of onion from a consortium of countries or onion-producing countries will result in the imported onions landing at Indian shores when the farmers will be ready to harvest the late onion kharif crop by January 2020.

Many farmers fear this will create a glut situation as in 2017, when Madhya Pradesh farmers threw their produce on the streets leading to huge agitation and a shootout in Mandsour district.

Moreover, even though India is in the market to buy from foreign countries, the global production cycle is on the wane for this season. There is a big question mark on the price and the quality that will arrive on Indian shores for consumers. In any case, the price at which imported onions will be available will not be less that Rs 60 to Rs 80 per kg -- a far cry from the onion prices of Rs 16 per kg in April-May before the crisis erupted.

Moreover, the government decision to relax certain quality norms in imported onions, giving rise to apprehensions about contamination of domestic onion varieties.

Only Egypt, The Netherlands and Turkey may be able to provide some stocks, sources said. To quickly augment supplies, India is seeking country-to-country imports from Egypt, Iran and Afghanistan through their embassies.

The government initially said domestic onion production in 2018-19 was 234.85 lakh tonnes, 2.23 tonnes higher than in 2017-18.

The government now says that about 26% of the Kharif crop was damaged and destroyed in the large-scale floods that hit parts of the country, particularly the onion-producing states of Maharashtra, Karnataka, Andhra Pradesh, Telangana, Madhya Pradesh, Gujarat and east Rajasthan, which has exacerbated the situation.

During the current year, only 52.06 tonnes of Kharif and late Kharif output was received as against the 69.91 tonnes produced in the previous year.

Onion is a seasonal crop with a harvesting period of Rabi (March to June), Kharif (October to December) and late Kharif (January to March). In the in-between period (July to October), the market is serviced by Rabi onions stored by traders and stockists. Multinational and national companies with deep pockets, who are running mega stores, have recently entered the market and become new stockists, said a progressive farmer in the know of things.

That the onion production will be hit became clear when the southwest monsoon was delayed by nearly three weeks, affecting the area sown under the Kharif crop.

Alarm bells should have rung in government circles then itself for advance action.

Secondly, prolonged unseasonal rains in September-October brought devastating floods in Maharashtra, Karnataka, Andhra Pradesh, Telangana, Gujarat, Madhya Pradesh and Rajasthan and hit the quantity and quality of onion output. Inundated areas prevented the transportation of the fresh harvest to consuming areas.

Even then the various arms of the government “waited” for estimates of damage losses to travel from states to the corridors of power in Delhi. Union Home Minister Amit Shah on Thursday chaired an inter-ministerial meeting to assess the ground reality.

Earlier, after indications of delayed monsoon adversely affecting onion saplings in June, the central government procured certain quantities from Maharashtra and Gujarat to create a buffer stock of 57,372.90 tonnes.

But even then, the government had fallen short of its procurement target (of 60,000 tonnes), which should have warned the Centre of the impending crisis, and corrective measures should have been taken.

However, even as consumers were crying for relief from onion prices that had already hit Rs 80 per kg in the retail market, the government could only sell less than half of the buffer stock (26,735 tonnes) at Rs 24 per kg through government outlets.

According to official sources, out of the remaining 30,637 tonnes, 11,408 tonnes of low quality stock was sold in local markets. (Remember how Mother Dairy sellers would not let consumers sort out the damaged bulbs.) The rest of the 19,229 tonnes was damaged and became unfit for human consumption due to prolonged storage and spoilage and limited shelf life of the commodity.

This, while all the time government officials said the situation was being monitored closely at various levels of bureaucracy and polity.

Despite onion prices becoming an issue almost every second year, the government has not been able to create cold storages to store the commodity while retaining its quality. For small and medium farmers, sophisticated storage is a pipe dream; that is why they are forced to sell at whatever price they can and as quickly as they can after harvest, leaving them as well as the consumers to the mercy of stockists and intermediary traders.

But many people are questioning the lack of action against intermediaries when a commodity that provides only a few rupees per kilogram to the grower comes to be sold at an exorbitant price in the retail market.

In April, onion was selling at Rs 16 per kg on an average. By June, the price jumped to Rs 25 per kg and steadily spiralled to an average of Rs 80 and Rs 150 per kg. Along with onion, the price of tomato, potato, tur and moong dals also showed an upward trend.

(Gargi Parsai is an award-winning senior journalist.)