Heavy rains hit onion crop; damage may keep inflation elevated for longer

Rohidas Sonavane was in too much pain to even talk over the phone about the unprecedented loss he has had at his onion farm in Osmanabad in southern Maharashtra this year because of sudden heavy rains.

A drought-prone and major onion producing region, Osmanabad received 190 mm of rains between October 1 and 25, against a normal of 70 mm, amongst the highest in the past several years. 

“I have seen heavy rains. But this time, the gushing water took away the soil with it. My field is full of stones and rubble now,” he said.

For thousands of farmers like Sonavane, the heavy rain has damaged the standing onion crop, which was ready for harvest. As a result, the retail price of onions has risen, affecting consumers bang in the middle of the festive season. The bulb is selling close to Rs 90 a kg at several retail markets in Mumbai, Delhi, and Kolkata.

Onion is cultivated three times a year — rabi season (March-May), kharif (October-December), and late kharif (January-March). The biggest onion crop is harvested during the rabi season, which is stored to last till October. India usually stores around 5-5.5 MT of rabi onions, as the country’s monthly consumption is around 1.2-1.5 MT.

However, because of the unprecedented rains this year, official sources said kharif onion production would be around 3.7 MT, about 14 per cent lower than last year.

State-run Nafed, which had around 100,000 tonnes of onion stock that it had purchased over the past few months is also fast running out of inventory because it has already sold around 42,000-43,000 tonnes since March, while around a quarter of the stock has been damaged, which is the norm.

“The rains have also impacted planting of the next crop, which is why traders are exploiting the situation to jack up prices and rates might moderate for a while after the new harvest comes. But prices won’t crash as the harvest is on the lower side,” the official explained.

Stock limits

The central had last week imposed stock limits to force traders to liquidate their inventories by invoking a provision in the newly amended Essential Commodities Act. However, sources said farmers, too, have been impacted by this.

To gauge the impact of the stock limits one need look no further than Asia’s biggest onion market in Lasalgaon in Maharashtra’s Nashik district. This market functions differently from others, as traders deal with open stocks and not in gunny bags, to offload and unload massive quantities of onion.

Now, though, an onion trader lifting 1,500-2,000 quintals a day and selling it as he receives orders, would have to limit his stock to 250 quintals.

“We cannot buy more onion from farmers now, until we sell the existing stock over and above the 250 quintals that we have. We deal with large volumes, and this limit is very small,” said Ashok Bora, a trader.

And this, naturally, has put limits on farmers’ ability to sell onion. Shrikant Kelhe, who grows onions in Satana, 40 miles from Lasalgaon, said.

“The period between the end of monsoon and Diwali is when market arrivals rise, and prices are good for the farmer. But prices may drop now.”

Other crops

Damage across other crops such as pulses and soybean could exacerbate food supply constraints and keep inflation elevated longer than expected.

In case of urad (black matpe), which is majorly harvested in the kharif season, trade sources said significant amount of standing crop has been damaged in Karnataka, Telangana, and Maharashtra, the main growing regions.

The central government expects urad production in 2020-21 to be around 2.1 MT, but trade sources are already factoring a 10 per cent decline in output.

“Last year, the central government estimated urad production at around 3 MT, while the final harvest was around 1.3 MT, drop of over 50 per cent, this year the fall might not be that steep but we are expecting some impact in the final harvest due to the rains,” Bimal Kothari, vice-chairman of Indian Pulses and Grains Association (IPGA) told Business Standard.

In case of soybeans, too, the rains have damaged the standing crop in Maharashtra, the second largest producer after Madhya Pradesh.

“Soybean seed testing did not happen this year due to the lockdown, it usually happens in March and April. Many farmers fell prey to the faulty seeds and have suffered productivity losses. Now, the heavy rains washed away the crop further,” said Vijay Deshmukh, a farmer from Akola district in the Vidarbha region.