(Photo by Amber Engle on Unsplash)
With onion prices bringing tears to eyes of consumers in a large part of India with the price of onions increasing manifold during the past few days the question which comes to mind is why can’t our rulers check the hike in its price and help consumers by ensuring supply of onions at a reasonable price in the retail market?
The price of onions has suddenly increased ranging from Rs 70 to Rs 100 per kg in the market with consumers feeling the brunt as their kitchen budgets have soared. Even small businesses in the food industry are feeling a pinch of the onion prices very badly, while consumers are fretting.
Pradeep Singh, who is in the food industry for a very long time said, “The high price of onions is eating our margins considerably and with an increase in the onion price our budget always increases 8 to 10 percent since we cannot afford to reduce the consumption .”
This is not for the first time the prices of onion are skyrocketing; it is now becoming a perennial problem with onion prices jacking up after every two or three years, raising questions.
More so, since the sudden increase of onion price becomes a handy tool for opposition parties to target the government and the ruling party of the time. And this issue is exploited to its hilt by political parties.
Wearing garlands of onions or selling onions on a rehri is a common method of protests by political parties to oppose the steep price to en-cash public anger.
High price of onions was one of the reasons for the return of power for Late Prime Minister Indira Gandhi after the 1980 General election. Even BJP leaders were left fuming when manifold increase in price of onions led to their defeat during 1998 Delhi state Assembly election.
Though many factors are attributed for the spike in the onion price but manipulation by certain people can’t be ruled out in “this game” as this has been happening after every third year for many decades, despite the fact India is the second largest producer of onions in the world after China.
India is producing nearly 22.5 million tonnes of onions annually and it consumes nearly 15.5 million tonnes, while rest crops are exported. There is monthly demand of 13 lakh tonnes in the consumer market.
Though Congress and BJP, who have been ruling the country for long claim to have taken several measures to check ‘black-marketing” stated to be the main reason behind the price hike but nothing seems to have worked .
A gap between onion production and demand due to one reason or the other is stated to be the main cause of rising price but successive governments have failed to find a long term solution to bridge the gap.
This year untimely heavy rains in major onion growing areas in Maharashtra, Andhra Pradesh , Karnataka, Gujarat , Telangana and other onion growing states is stated to be the reason for the short supply in the market leading to price increase.
The Central government has fixed a stock limit of 25 metric tonnes for wholesale traders and 2.5 metric tonnes for retail sellers to check hoarding and black-marketing of onions.
Measures like putting a ban on export, importing onions and announcing steps to check hoarding and black-marketing etc have proved inadequate in providing relief to consumers.
Blaming successive governments for failing to check onion prices Food and Agriculture Expert Devinder Sharma tells, “Basically onion prices are jacked up frequently by creating an artificial shortage of onions through big traders in major producing areas and political parties lack willpower to act against them because they get huge money for election or party funds.”
“While government agencies have failed to break artificial scarcity created in the market by improving supply chain and storage capacity, their failures to act against hoarders have left common man at the mercy of an onion cartel,” he adds.
“If government shows determination to act as it did in 2011 when then Finance Minister Pranab Mukherji ordered the conduct of income tax raids at Nasik and Lasalgaon onion traders after which onion prices came down by 50 percent within a few days, the cartel can be broken,” Sharma opines.
The onion lobby of Nasik and Lasalgaon is so strong they had resorted to strike and stopped supply after the government effected storage limits to check hoardings.
There is another aspect of the issue; the onions growers have to suffer huge losses frequently after every bumper crop creating glut in the market. During 2019 the farmers sold their crop at Rs one kg and threw onions on roads to protest the low price.
At present India has approximately 20 percent of total onion crop, while 30 percent crop perishes.
Going into crux of the problem, former Director of National Institute of Agriculture Marketing Dr Madhusudan Jairath said, “It is a fact, 80 percent storage capacity of onions in major producing area of the country at Nasik and Lasalgaon is controlled by few people who act as a cartel to create an artificial shortage disrupting supply chain to hike prices and mint money.”
“How much money people make through this practice can be gauged from the fact that many new vehicles can be seen inscribing piaj kripa (by the grace of onions) in that area after sudden price rise every time ”, he adds.
As a long term measure to check unscrupulous onion traders Dr Jairath suggests, “The government agencies and every state government should build alternative storage capacity in all onion growing areas; besides taking strong actions against the hoarders.”
“The government should be vigilant to any shortage and short supply in the market, ensure timely import, improve storage and supply chain to check loss of onions by effective storage and value addition to stop the glut in the market and supply it in dried form through dehydration , which is in great demand in Gulf countries, ” Dr Jairath suggests.
India needs on an average about 13 lakh tonnes of onions every month for domestic consumption and if government agencies maintain the supply from buffer stock in the time of shortage, the onion price would stabilize. Helping farmers and giving support price for the onion crop through a market intervention scheme would also save them from distress sale.
