Monsoon vagaries, inconsistent policy behind spike in onion prices

The recent spike in onion prices across the country has hit household budgets as well as consumer habits hard. Metros like Delhi and Mumbai are recording five-year high rates of Rs 70-80 per kg as compared to Rs 40-60 per kg till a few days back.

The scenario is no different in other parts of the country, as onion prices continue to hit Rs 80 per kg. In Pune too, residents are feeling the heat with onion prices touching as high as Rs 90 per kg.

Sky-high rates

People have been forced to curtail onion consumption in view of its skyrocketing prices. “I used to purchase 4 to 5 kg of onions every month for my family of four, but now I have reduced it to mere 2 kg as the prices are too high,” Nilesh Ujjainkar, a Nagpur resident, told The Federal.

According to the Maharashtra State Agricultural Marketing Board, the arrival of onions could touch the 10,000 quintal mark only in the markets of Pune and Solapur on November 6.

The wholesale rate of onions hovered around Rs 3,000 per quintal in most of the markets, though it touched Rs 6,000 per quintal in 17 of the state’s markets. It sold at Rs 7,000 per quintal in Pune’s Shirur market.

Also read: Red vs White | Maharashtra farmers fume over 'pro-Gujarat' onion export ban

Delay in monsoon to blame

Talking to The Federal, Maharashtra Onion Growers’ Association president Bharat Dighole attributed the price rise to the fact that the stock from the previous season is depleting fast while the Kharif onion crop is yet to arrive in the market.

He said the sowing of onion crop got delayed as the monsoon arrived in the state in July instead of June. “It takes around 50 to 55 days to prepare the nursery for sowing onion crop and the entire process was delayed this time," he said.

He, nevertheless, expressed hope for a good crop going forward as onion cultivation has gone up in the state amid a good monsoon this year. However, he could not spell out the exact figures.

Untimely rains

Dighole also revealed that untimely rains in the fag-end of the monsoon also caused onion crop loss, which he estimated to be around 20 to 25 per cent in Maharashtra.

He flayed both the Centre and the Maharashtra government for not doing enough for the onion farmers. “The government forgets the farmers when the prices are low and doesn’t come to their rescue. They only wake up when the prices are high and they feel that it may affect their political interests,” he said.

He added that onion prices will witness a declining trend once the new crop reaches the market in December. Though onions will start arriving in the wholesale markets by November end, the impact on the ground will only be seen by mid-December, he added.

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Lack of consistent policy

“The fault lies with the government, as it doesn’t create buffer stock when the prices are low and they need to pitch in to help the farmers," farm activist Vijay Jawandhiya told The Federal. "The government only resorts to purchase of crops like wheat and paddy as the political parties know providing free ration to the people will bring them votes.”

He also felt that the government should use buffer stock not to control prices but to increase the availability of onions.

“Firstly, the government doesn’t buy onions from the farmers when the prices are significantly low. Later, it releases the buffer stock when the prices are high with an aim to control prices, resulting in losses to the farmers who hold back their stock, hoping to fetch good prices at the time of shortage,” he said, adding that the government doesn’t have a consistent policy.

He further said the political parties at the helm only have their interests in mind and often fail to protect those of the farmers and consumers.

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Flip-flop on onion exports

The lack of consistent policy, which Jawandhiya hinted at, was to some extent reflected in the government approach vis-à-vis onion exports over the past year.

The government banned overseas sales in December 2023 to boost local supplies after patchy rains in key states led to a 20 per cent fall in output, worsening seasonal shortages and leading to a price spike.

On May 4, during the 2024 Lok Sabha polls, the Centre lifted a ban on onion exports. However, it also imposed a minimum export price (MEP) of $550 per tonne plus 40 per cent tariff on outbound onion shipments.

Bans and elections

The ban was lifted taking into account reasonably comfortable Rabi 2024 production of 19.1 million tonnes, good Kharif prospects with above-normal monsoon forecast, international availability and current market situation. The country’s monthly consumption requirement is around 1.7 million tonnes.

Also read: Centre's recent onion-rice move could help BJP in Maharashtra, Haryana polls

However, ahead of the Assembly elections in Maharashtra, the government on September 14 decided to remove the MEP condition on export of onion. Notably, Maharashtra is the largest onion producing state in the country.

The BJP-led Mahayuti alliance had fared poorly in onion producing regions of Maharashtra in the 2024 Lok Sabha polls.

Bumper crop expected

Per Union Consumer Affairs Ministry data, there was a 27 per cent jump in the Kharif sowing area of onion, which will help improve its availability in the next few months and also bring down its prices.

The government said in a statement that data compiled by the Department of Agriculture, till August 26, revealed that 2,90,000 hectares have been covered under Kharif onion as against 1,94,000 hectares during the corresponding period last year.

The onion crop is harvested in three seasons: Rabi in March-May, Kharif in September-November and late Kharif in January-February. In terms of production, Rabi crop accounts for roughly 70 per cent of the total production while Kharif and late Kharif together constitute 30 per cent.