Government inaction may push up onion prices during peak demand, fear traders

Despite indications that the prices of onion may skyrocket after the onset of monsoon, the government is still waiting for the crisis to happen. According to sources, the Centre is yet to initiate procurement of the essential commodity, which had toppled several governments in the past.

The price surge could happen this year too despite a bumper crop. The huge harvest of the bulbous root has left farmers in tears as the price has fallen to Rs 4-5 per kg in the wholesale market, while in some mandis, it is reported to have sunk to 30 paise per kg.

Curiously, the government has still not stepped in and procured the politically sensitive commodity for introduction into the retail market during peak demand. Last year in October-November onion sold at Rs 2,500-Rs 5,000 per quinital.

A source in the Agriculture Ministry said, “Last year, procurement of onion was done by the Small Farmers’ Agribusiness Consortium (SFAC) and NAFED, but as of now nothing has been done.” He, however, added, “Since, production in comparison to previous year is very good, it is unlikely that there will be any crisis.”

Contrary to the Centre’s observations, Bangalore’s APMC Yard Merchant Association President BL Shankrappa said, “There is a bumper production of onion across the country, but in the absence of any government policy, farmers are left with the option of either selling their produce at below the cost of production price or dumping it.”

“The worrying fact is that farmers have started destroying onion as they are not even recovering the cost of production. In this scenario, the availability of onion would be less and when demand peaks, the prices will shoot through the roof,” a market expert cautioned.

Ganesh Nanote, a hapless farmer from Vidharbha in Maharashtra, said, “We are clueless on what to do. The best quality of onion is fetching Rs 5/kg, while inferior ones are going for Rs 2/kg, which means that all our efforts have gone in vain.”

“In an acre about 70-80 quintal of onion are produced at a total investment between Rs 20,000-Rs 30,000 and on an average we are selling our produce at Rs 14,000-Rs 16,000. We are suffering great losses,” said Nanote, who has grown onion on his four- acre plot.

A farmer from Madhya Pradesh’s Neemach said, “We are bound to destroy onion due to this heavy price crash. The situation is so bad that we cannot afford to bear the transportation cost of sending our produce to the mandis.”

In Neemach wholesale market, which is one of the largest onion markets, 5,000 bags of onion are being offloaded daily, but only 4,000 bags are being sold.