Business Desk, ETV Bharat: Onion prices spike in the country, time and again, mainly due to manipulation by middlemen and traders and not just because of climatic disruptions or supply side problems according to Dr. A. Narayanamoorthy, former member of the Commission for Agricultural Costs and Prices (CACP), an expert body which recommends minimum support prices (MSPs) to the government.
In a chat with ETV Bharat, Narayanamoorthy explained in detail the role of hoarders in the onion price game and the policy actions that can be taken to reduce their overall influence in the retail market.
Hoarding is the main challenge
Onion prices have jumped sharply in the last few weeks, hovering around Rs 100-110 per kg compared with Rs 20-30 levels in the first week of October, after heavy rainfall in parts of key onion-producing states like Maharashtra and Andhra Pradesh.
However, Narayanamoorthy believes climate variation has played only a small role in the surge of onion prices and it’s rather the hoarders that use excess rainfall as an opportunity to stock onions and artificially raise the prices.
“Climate-related reason is only about 30%, remaining 70% happens because of hoarding,” said Narayanamoorthy.
He added that there might be up to 20% reduction in overall supply in the yearly Kharif onion crop that usually arrives in October and November because of weather disruption, but that cannot lead to such a price rise.
“This all is happening because of brokers and pseudo farmers (brokers who call themselves farmers)…they stock the onions. And they wait for slightly excess rain or drought in any of the key regions and as soon as that happens, they stop sending the produce to the market (to create artificial scarcity),” he explained.
“Farmers are not earning any money at all. Even now when onion is being sold at Rs 110 per kg, they are still getting Rs 25.”
Citing an example, he said that from the Lasalgaon market (considered to be one of the largest onion markets in the country) to the Pune city, one can travel in three-and-a-half to four hours. But the price of the same quality of onion changes from a maximum Rs 44 per kg in Lasalgaon to Rs 110 per kg in Pune.
Modification in Essential Commodities Act not responsible
The Parliament in September passed the Essential Commodities (Amendment) Bill, 2020, which removed onions from the list of essential commodities, thereby giving farmers and traders the freedom to produce, hold, move, distribute and supply onions as per market dynamics.