New Delhi, Oct 31 : After tomato, now onion is on fire—a situation that has all the potential to evolve into a political situation, yet again, especially now that parties are campaigning in elections to five key states.
Interestingly, while in Madhya Pradesh the opposition Congress is using onion prices to target the BJP government, in neighbouring Rajasthan it is the other way round. “Onion is bringing tears to everyone's eyes,” senior Congress leader Kamal Nath told the media there.
Meanwhile, in Rajasthan where the Congress is in power, opposition BJP is making onion prices a political issue against the Ashok Gehlot government.
BJP's Alka Gurjar alleged that inflation was increasing in the state due to mismanagement and wrong policies of Gehlot. “The situation is such that the onion that was once a staple food item for a poor man is now elusive even to the common man,” Gurjar was quoted as saying.
Onion—the issue
According to reports from Lasalgaon (Asia's largest onion trading hub), the wholesale price jumped more than 50% at the benchmark Maharashtra APMC in the second half of October due to a drop in the total sown area.
The average price of onion at Lasalgaon was reported at Rs 38 a kg last week, up 58% from Rs 24 a kg a fortnight back. In retail the essential kitchen item was selling anywhere between Rs 70 and Rs 80 a kg, including in Delhi and Chandigarh.
While the all-India average was said to be around Rs 50 to Rs 60 a kg, onion was ruling at the maximum above Rs 80 a kg in big cities, leading the Centre to impose Minimum Export Price (MEP) of $800 per tonne on exports to boost its availability in the domestic market.
$800 per tonne MEP means around Rs 67 a kg.
Rise or fall, onion is a political issue
The Centre said it is vigilantly monitoring onion exports and prices to ensure stability in the domestic market.
However, this is also not the first time the onion issue is being reported.
Rise or fall, the price of onion is always a political issue.
Earlier this year around March, the Maharashtra assembly witnessed a chaos over falling onion prices. While farmers put their crop on fire and traders protested, the Consumer Affairs Ministry asked NAFED to purchase surplus and sell it in non-onion-growing states to maintain the demand-supply equilibrium.
But while farmers were selling the crop at around Rs 400 to Rs 500 a quintal against previous year's Rs 2,000 to Rs 2,500 at Lasalgaon, onion was selling around Rs 25 a kg in retail in Chandigarh.
“Even when there is an increase in prices, it is the farmer who suffers while middle men make the cut,” say experts.
Even when surplus onion was available in India, some traders were still importing from Bangladesh, they add.
Onion politics
Onion is prone to volatility, primarily due to harvesting cycles.
Whether an increase or a decrease, onion ends up becoming a political issue, forcing the government to step in.
Apart from the most commonly cited example of the fall of the BJP government in Delhi due to an increase in onion prices around 1998, apparently former PM Indira Gandhi also benefited in 1980 because of rising onion prices under Charan Singh's caretaker government at the Centre.
Rabi and kharif onion
The current increase is yet another example of climate change and increase in temperatures in India.
The reason for the current increase is being attributed to a delay in sowing of the kharif onion due to weather conditions.
Kharif crops are sown during the onset of the monsoon around June/July and harvested at the end of this season during September/October and kharif onion should have started appearing in markets.
However, due to delay in sowing the harvest of kharif onion has been delayed and the market is currently depending upon stored rabi crop.
Dependence on the stored rabi onion is leading to a demand-supply situation, resulting in price increases in both wholesale and retail markets, explain experts.
Major portion of rabi onion is stored for domestic markets and used for export from May to October.
Side-effects
Bangladesh, Bhutan and Nepal have again been hit hard by India's decision to impose MEP.
According to officials, the measure has been taken to maintain sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored onion from the 2023 crop season is declining.
For Bangladesh, it is a repeat of the situation in 2020 when the government had banned onion exports due to excessive rainfall.
Centre's response
According to the Consumer Affairs Ministry, the MEP of $800/tonne has been “successful in capping prices” to some degree.
“This has shown an immediate impact of price correction in Maharashtra markets, where prices recorded a decline of 5% to 9% from the highest price registered during last week.
“The weighted average price of onion in Maharashtra across all the markets has declined by 4.5% and similar decline was observed in consumption centres as well,” it said, adding that the government was monitoring exports and prices on daily basis to ensure stable domestic prices and availability to consumers,” it said.
The government is releasing buffer stock through mandi sale and discounted sale to retail consumers at centres of high prices.
Meanwhile, NAFED and NCCF have also started procuring additional 2 LMT of kharif harvest.
This is over and above the 5 lakh tonnes already procured of which about 1.7 lakh tonnes has been disposed of in the market.
“The continuous procurement and disposal of onion from the buffer are undertaken to moderate the prices for consumers while ensuring remunerative prices to the onion farmers,” as per officials.
