Onions without tears

Policy missteps responsible for rising prices

The chronic volatility of onion prices is evident once again though there is hardly any pressing reason for it barring inept mismanagement of available supplies. The wholesale prices have nearly doubled in the past week or so in the country’s biggest onion market at Lasalgaon in Maharashtra. The retail prices in many parts of the country have soared by even higher margins. This is in contrast to the situation a couple of years ago when the growers had to dump their produce on roads because of dismally low returns. Market sources attribute the current price flare-up to crop loss in Maharashtra due to poor rains though the onion crop elsewhere is in good shape. The agriculture ministry has projected the 2017-18 harvest to be above average, thanks to larger plantings. Fresh stocks are expected to arrive in about a week. But, with the elections for assemblies of a few key states around the corner, the Centre has lost little time to order parastatal organisations such as National Agricultural Cooperative Marketing Federation of India (Nafed) and Mother Dairy to sell onions at discounted rates. This move, however, is likely to hurt the interests of the farmers, dissuading them to raise production.

Incidentally, onion is one of those few crops which have made spectacular advances in recent years. Its annual output has spurted from just around 5 million tonnes in 2000 to around 22 million tonnes now. Yet, price instability continues to be a problem due to unsupportive government policies and the mismanagement as well as poor distribution of available supplies. The bane of this sector is the government’s knee-jerk reactions to contingencies by way of stock-holding curbs, raids on traders, sudden changes in export-import regulations and other arbitrary actions, which create needless panic in the market.

A point often overlooked is that the supply shocks are mostly short-lived as onion is grown in both rabi and kharif seasons. However, since the demand is spread almost evenly throughout the year, a part of each season’s output has necessarily to be preserved to meet the requirement during the intervening period. Unfortunately, this much-needed storage is invariably discouraged by treating it as hoarding. There is a need to distinguish between retaining the produce for future sale and hoarding for profiteering. Short-term storage of onions is neither too difficult nor too costly. Value-addition and shelf-life enhancement through dehydration and conversion into onion paste are among other cost-effective means to ensure better off-season availability.

Moreover, onion farming needs to be expanded to more areas outside the few states where it is concentrated now. The bulk of the supplies comes at present from Maharashtra, Karnataka, Madhya Pradesh, Tamil Nadu, Gujarat and Rajasthan though onions can be grown in most states. Spreading the cultivation of onion wider would help reduce over-dependence on the present onion-growing hubs to ensure easier availability across the country. Besides, reliable arrangements need to be put in place to generate market intelligence in terms of production prospects and likely price trends. Only a multi-pronged strategy that addresses most of these issues can help stabilise onion production and prices to protect the interests of both producers and consumers.