Onion prices have been rising for almost a month throughout the country touching even Rs 80-100/kg in some cities. Heavy rains damaging the crop coupled with supply crunch have pushed wholesale prices of onion to a 4-year high. Onion, a key kitchen staple, consumed by a majority of population enhances the taste of several dishes. So a rise in prices of onion is always debated and discussed not only by the common man, but also by politicos and economists.
India is the second largest producer of onion after China and has nearly 19 per cent share of the world onion production. Karnataka and Maharashtra are the main onion producing states and they contribute around 45 per cent of the total production of onion in the country. Traders blame the government for not taking remedial action when farmers faced losses for last three years.
National Agricultural Cooperative Marketing Federation of India (Nafed), however, says the harvest has been low this season. Heavy rain in Uttar Pradesh, Gujarat and Madhya Pradesh, Maharashtra and southern states has damaged the crops. Besides, onions that usually come in September have been delayed and so people may have to put up with price rise till November.
Also, largest wholesale markets at Lasalgaon and Pimpalgaon, Nasik district, have witnessed a decline in the arrival of onions in the last few months. The two markets play a key role in influencing the price situation which in turn has a cascading effect on all markets in other states.
The country had faced a similar onion crisis in 2010. Owing to to skyrocketing prices, the Centre then banned exports and permitted imports from Pakistan. People took to streets and triggered political unrest and stress.
Hoarding, poor management of onion supply chain involving farmers, wholesale dealers, retailers, consumers, and poor infrastructure for storing and transporting onions are also some of the reasons behind soaring prices.
Meanwhile, in Tamil Nadu, onion prices fluctuate between Rs 40-60 in shops.
The state government has said it would procure onions from Andhra Pradesh at Rs 30 a kg and make it available for Rs 33/kg to consumers through ration shops.
While the Central government wants to impose stock limits on traders, it is also worried that it will affect farmers, especially those in poll-bound Maharashtra and Haryana.
The situation is likely to ease soon with Nafed and NCCF (National Cooperative Consumers Federation of India) releasing stock from the Central buffer at controlled rates. Export of onions has been discouraged and black marketeers are under scanner.
It is time the government strengthened and expanded Public Distribution System and provided food security to the poor and also help farmers. Besides, a unified domestic market will prevent the produce from rotting in godowns before reaching markets. Such measures may help in controlling the recurring price volatility of this spicy bulb.
