Recurring onion crisis

Incentivise storage to ensure steady availability

Onion prices, which have quite frequently seen a steep increase in the post-monsoon season in recent years, normally subside by November. But this year, the high prices linger on and there is no sign of normalisation anytime soon. Though this can partly be attributed to the monsoon-driven delay in the sowing and harvesting of the kharif onion crop, the alarm and scarcity psychosis created by the government through its ill-advised and mistimed market interventions are also to blame. Measures like barring onion exports, ordering emergency imports with relaxed phytosanitary and fumigation norms and imposition of stockholding limits were clear signs of the government’s nervousness. To exacerbate the shortage phobia, Food and Consumer Affairs Minister Ram Vilas Paswan projected the likely crop loss due to untimely rains and cyclones to be as high as 30 to 40 per cent. This, obviously, is shoddy management of a politically sensitive issue that is known to have caused the downfall of some governments in the past. 

In fact, the root cause of the recurring onion crisis is the disregard of the reality that while the demand for onions persists the year-round, its supply is seasonal. India, in a way, is fortunate to be able to grow onions thrice a year — in the early kharif, late kharif and rabi seasons. The produce of these crops feeds the market between November and June. The period from July to October is usually the lean season when fresh supplies are not available and the market needs to be fed from the stored stocks. Therefore, the most critical aspect of supply management is the safe upkeep of the surplus produce for the lean period. Unfortunately, this is generally disallowed as storage is viewed negatively as hoarding for profiteering. There is, no doubt, only a thin line between storage and hoarding but this distinction needs to be realised at least in the case of onions. The government’s ill-advised actions like imposition of stock limits under the Essential Commodities Act and raids on those maintaining large inventories deter traders as well as farmers from retaining the surplus produce for subsequent release. Such misguided measures were initiated rather early this year, resulting in worsening the supply crunch and escalating onion prices. 

Thus, the need really is to incentivise onion storage to ensure their steady availability. The warehousing of onions is neither difficult nor cost-intensive, though the losses are relatively high because of their semi-perishable nature. They can be stored in open ventilated structures fabricated with locally available materials like bamboos to protect them from rain. A long-term strategy to stave off seasonal price spirals also needs to focus on the preservation of onions through processing to enhance their shelf life. The most simple and cost-effective techniques of onion preservation are dehydration and conversion into onion paste. These products can come in handy to augment the off-season supplies. Consumers can use these products to circumvent high prices of fresh or stored onions. Hopefully, the present onion crisis, which the government is finding hard to surmount, would force it to learn from the past mistakes and look for storage and processing based long-term solutions .