Long-term market strategies must to ease prices: CACP

Onion prices have risen fourfold in the past six months

With onion prices showing no signs of easing, the Commission for Agricultural Costs and Prices (CACP) has urged the Centre to draw a long-term market intervention plan to control prices of the essential commodity.

Talking on the sidelines of AgriCorp 2013, a two-day conference organised by the Bombay Chamber of Commerce and Industry, Ashok Gulati, chairman of the CACP, said, “There are two ways in which the government can intervene and bring prices under control of any commodity.”

According to Gulati, the government should first build buffer stocks, depending on onion production and storage capacity. For long shelf-life, the onion should be hydrogenated. During the lean season, it can be sold at a lower price. This has been found effective in the case of commodities like sugar, as the presence of buffer stocks discourage traders from hoarding.

Second, the government must import onion and sell it at a subsidised rate. This will bring down onion prices substantially in the open market and the hoarders will have no option but to sell it at the market rate.

When asked why the government should suffer losses in this exercise, Gulati told Business Standard, “Nothing comes without a price. The government will have to bear this if it wants onion prices to remain within certain limits.”

Anil Jain, managing director of Jain Irrigation Systems Ltd, said, “The wholesale price of onion had been in the range of Rs 2 to Rs 4 a kg for 25 years between 1971 and 1996. After that, the price started marginally moving up. In the last few years, the market price has reached up to Rs 100 a kg.”

Despite such high prices, farmers were forced to sell their produce at rock-bottom prices during the peak harvesting season, making cultivation unremunerative.

Currently, hydrogenated onion is being sold at Rs 15 a kg in certain markets as against the prevailing market price of Rs 100 a kg. Meanwhile, wholesale onion price in Delhi touched Rs 51.75 a kg on Thursday — a rise of Rs 1 a kg from the previous day.

Union Agriculture Minister Sharad Pawar, on Thursday, reiterated that heavy rainfall restricted the supplies in Karnataka and Maharashtra, resulting in spiralling of prices.

Onion prices have risen fourfold in six months. Data compiled by the Ministry of Consumer Affairs showed the retail onion price at Rs 60 a kg on Thursday in Chennai, Rs 66 a kg in Mumbai and Rs 60 a kg in Kolkata.

The government has asked National Agricultural Cooperative Marketing Federation of India Ltd to import onions from Pakistan and other countries. Of late, the focus of the government has been to raise cereal output to meet the food security Bill requirement. Experts said it should also focus on improving the production of fruits and vegetables.