Growers are now in tears as onion prices have dropped to a five-year low.
This has led to growers’ organisations such as the Shetkari Sanghatana urging the Centre to refrain from intervening in the market by imposing stock restrictions, minimum export prices, or prohibiting shipments in order to allow fundamentals to define market terms rather than regulations.
Lowest in 5 years
The weighted average modal price (the rate at which most trades occur) is currently ₹1,100 per quintal, the lowest since 2018 when it was ₹837.
‘Government actions over the last 10-20 years are to blame for the current low prices farmers are receiving for onions. Farmers are unable to recoup their output costs,’ stated Anil Ghanwat, President of Shetkhari Sanghatana.
Onion production costs ₹15 per kilogramme, plus ₹5 for storage. ‘It is unlikely that onion prices would soar above ₹20 this year. The Centre can assist farmers by obtaining onion at ₹30,’ he said.
Also Read | SBP demands Govt to permit exporting onion, tomato to Pakistan.
Lack of export demand
According to Ajit Shah, President of the Horticultural Produce Exporters’ Association (HPEA), one of the reasons for current low onion prices is a lack of demand, particularly in the export market.
‘Fears of a recession are dampening export demand for onions. There are further causes, including India’s intermittent ban on bulb exports,’ he noted.
India has prohibited onion exports at least twice in the last five years. Shipments were prohibited in 2019 and 2020 as domestic pricing in retail outlets above ₹100 per kg.
Prices had risen both years as the onion crop, notably in Maharashtra, was harmed by unseasonal rainfall.
‘For example, Bangladesh used to import a lot of Indian onions. Because of the bans in 2019 and 2020, Dhaka has turned to nations such as Turkey and Egypt,’ Shah explained.
‘Bangladesh is currently encouraging its producers to produce more onion. It has begun to import onion seeds,’ Ghanwat stated. However, there is some hope for Indian onions because floods in Pakistan have impacted the crop, which may lead to export demand.
‘There is demand from Pakistan for Indian onion after floods destroyed damage, but we do not trade with the neighbouring countries,’ Shah explained.
According to Vikas Chaudhary, an onion trader-cum-exporter in Nashik, some Indian onions are making their way into Pakistan. ‘In reality, prices have improved marginally as a result of this,’ he remarked.
According to the Nashik-based trader-cum-exporter, there were adequate inventories of onion in the country, and demand was low in comparison. ‘Prices usually surge after Ganesh Chathurthi and might reach ₹20-25 per kg. They will not go above ₹40 a kg like last year,’ Chaudhary said.
The Centre has constructed a record 2.5 lakh tonnes of onion reserve, ensuring better prices for growers and protecting consumers from any sudden rise.
‘In addition to periodic prohibitions, farmers have been impacted by raids conducted on dealers by income tax and enforcement directorate officers when prices rise, as well as stock declaration enforcement,’ Ghanwat said.
These policies have an impact on investments, particularly in the construction of storage facilities. ‘Right now, whatever storage facilities we have for onion are all owned by growers,’ he explained.
This year, there are reports of some farmers switching from onion to other crops, although statistics to provide a clear picture are currently unavailable. However, there have been no reports of significant crop damage as a result of monsoon rains.
‘Rain will be absolutely good for the crop. Any agricultural damage has been minimal,’ Chaudhary added. Also Read | Congress demands the Centre stop taking back money from farmers.
‘The Kharif onion harvest is looking good. It is nearly complete in Karnataka and Andhra Pradesh. The arrivals have begun. Prices could stay at their present lows of ₹1,000 to ₹1,300 per quintal,’ according to Shah.
Onion output was predicted to be a record 31.70 million tonnes (mt) during the 2021-22 crop year, which concluded in June, up from 26.6 mt the previous year.
‘At the very least, the Centre should guarantee that there would be no meddling from its side in the onion market in order for growers to earn a good price,’ Ghanwat added.