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FPJ Exclusive: 'The Onionomics of India'- why onion prices have skyrocketed

FPJ Exclusive: 'The Onionomics of India'- why onion prices have skyrocketed

During the current year, the production of kharif and late kharif is estimated to be 52.06 Lakh Metric Tonnes (LMT) which is about 26% lower than previous year's production of kharif and late kharif production of 69.91 LMT. In 2019-20, there was a 3-4 weeks delay in sowing as well as decline in sown area of the kharif onion because of late arrival of monsoon.

Further, untimely prolonged rains in the major growing states of Karnataka, Maharashtra and Madhya Pradesh during the harvesting period, i.e., September to October, caused damage to the standing crops in these regions. All this adversely impacted production and quality of the kharif crop.

The rains during September and October also affected transportation of the crop from these regions to consuming areas. This led to limited availability of kharif onion in the market and has put pressure on its prices. Onion is a seasonal crop with harvesting period of rabi (March to June), kharif (October to December) and late kharif (January to March).

In the intervening period (July to October), the market is fed by stored rabi onions, revealed from the papers government tabled in parliament during the winter session on Onion price issue.

Ministry of Consumer Affairs, Food and Public Distribution accepted in parliament that there is no proposal to provide onions to the customers at uniform rate in all the states across the country. Minister informed the house that the government, on 29th September 2019, imposed stock limits on traders across the country – 100 quintals on retail traders and 500 quintals on wholesale traders under the Essential Commodities Act, 1955.

Further, Government of India has urged state governments to hold regular meetings with the traders of onions at state and district level to prevent hoarding, speculative trading and profiteering, unfair and illegal trade practices like cartelling, etc.

During the current year, total buffer stock of 57,372.90 MT onions was created under Price Stabilization Fund (PSF). Of this, procurement of 48,183.54 MT and 9,189.36 MT was from Maharashtra and Gujarat, respectively. From this buffer, 26,735 MT was distributed to various state governments, other agencies and also sold in various mandis through open auction.

The remaining stock is accounted by disposal of 11,408 MT of low quality onion in the local market and losses due to prolonged storage, driage, spoilage, etc., due to limited shelf-life. During April to September, 2019, the Government had requested all states/UTs to indicate their demand for onion from the aforesaid buffer stock under PSF at several forums/levels. Further, in November 2019, Government decided to procure/import onions. States/UTs were again requested to indicate their demand from these procured/imported stocks.

Government has, on 09th November, 2019, directed MMTC to import up to 1 LMT of onion from surplus countries. For wider participation, the Indian embassies in the major exporting countries of Iran, Afghanistan, Egypt have been requested to facilitate such imports.

Also, Government has directed NAFED to procure surplus onion from Rajasthan, Maharashtra for distribution in deficit States; however, the union government allowed export of Bangalore Rose Onion upto 9,000 MT through Chennai Port till 30th November, 2019 on the representations received from Karnataka to allow export of Bangalore Rose variety of onion.

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