Why Onion Prices Continue To Sky Rocket Even When Farmers Are Selling At Low Cost
It has been quite some time that the onions – a staple food have been grabbing the headlines of newspapers. The sky-rocketing price of these onions have not only been grabbing the headlines of newspapers but are also making people cry.
The cost of onions is now as high as Rs 200 for one kilogram in Bangalore, appalling the locals. Two weeks back the onion prices crossed the century mark in West Bengal.
With such a shocking price, bizarre incidents were reported all over the country. In West Bengal’s East Midnapore district, thieves stole onions worth ₹50,000. They did not touch the cash box.
Onions worth ₹22 lakh was stolen from a transport truck while on its way from Maharashtra to Uttar Pradesh. The cops recovered the truck after investigation, but the onions were missing.
In a funny and peculiar way, the officials at the Bihar State Cooperative Marketing Union Limited wore helmets while selling onions at ₹35 per kg. The reason behind wearing helmets threw the passerby in a tizzy. The officials said that they wore helmets to avoid stampedes and stone-pelting.
Indian onion distributors wearing helmets, fearing public outrage, have begun selling onions in eastern Bihar state, Saturday, November 30.
People have been standing in long queues to buy onions, which cost 35 rupees per kilogram. (Reuters) pic.twitter.com/F5wyIsX97n
— The Voice of America (@VOANews) December 1, 2019
The politicians too expressed their dissent against the central government’s inaction in bringing down the onion price. The opposition leaders from various states wore onion garlands to express their dissatisfaction.
Delhi: Congress workers protest wearing garlands made of onions, at the Delhi Secretariat against the state government, over the issue of increase in onion prices. pic.twitter.com/3G3RAkFAwy
— ANI (@ANI) November 7, 2019
Reasons Behind Surging Prices
The prices of the onion have been rising since May this year due to delay in monsoon and then incessant rain damaging Rabi crop in the state of Maharashtra, Karnataka, and Madhya Pradesh. These states produce onions extensively.
This year, during the rabi crop cycle, the cultivation of onion were truncated from 3.54 lakh hectares in 2017-18 to 2.66 lakh hectares in 2018-19 in Maharashtra. Heavy rains during the harvest period of the onion grown in Kharif season in Karnataka further plunged the onion production.
The latest rise in the price of onion is attributed to damage to the ready crop in Madhya Pradesh, Rajasthan, and Gujarat due to unseasonal rainfall in these states in September.
However, it can be noticed that the farmers are not taking advantage on the surged price. It is the merchant and the middle who are making the most of the situation.
The unbelievable hike is understood to be the nexus of middlemen and hoarders, who store onions in godowns and create an artificial scarcity in order to increase demand and sell items at higher prices. This has resulted in the multiple farmer suicides.
Another reason behind farmers selling onions at the cheaper price but consumers are burning whole while buying them is the fear ingrained among farmers about the demand and fluctuating prices. According to an India Today report, an onion farmer in Maharashtra sold off his yield two months ago at Rs 15 per kilo. The farmer revealed that he spent Rs 80,000 for growing onions on his land. After disbursing 200 sacks, the farmer got a payment of just Rs 1,50,000. He could have made at least two-three times the amount had he waited for onion price to rise. The report revealed that the merchants and the retailers were trading with commission agents for onion. The doubt about demand and fluctuating prices have compelled farmers to sell their products at a much lower price.
What Is Govt Doing?
The Central government on December 1 announced that it will be importing 11,000 tonnes of the staple vegetable from Turkey to bring down the onion prices in the nation.
This decision transforms India from onion exporter to an onion importing country. This is the second time Metals and Minerals Trading Corporation of India (MMTC) is importing onions to balance the domestic supply and cap the soaring prices. The public sector firm is already importing 6,090 tonnes from Egypt. The onions from Egypt will arrive in India in Mid December.
Last month, the Union Cabinet approved importing 1.2 lakh tonnes of onion to improve the domestic supply and control prices that have skyrocketed to Rs 75-120 per kg across major cities now. The Centre has also curbed the exports and imposed stock holding limit on wholesalers and retailers for an indefinite period.