Onion price rise: Who is happy?

While problems of consumers, as well as farmers who sell onions in the market below Rs 10/kg, are well-known, the revised Essential Commodities Act has hampered trading in APMCs.

Business Desk, ETV Bharat: Like in the last year, onion has breached Rs 100/kg level in major cities. High prices of this key kitchen staple have upset the households budget in the Dussehra-Diwali festive season.

While the recent floods across major growing regions of Maharashtra, Karnataka and Andhra Pradesh have spoiled crops in the fields, middlemen started betting big on the limited quantities available in warehouses resulting in high prices.

Ban on its exports and allowing imports have done little to calm the growing prices.

Farmers, Traders and Consumers – No one is happy

While problems of consumers, as well as farmers who sell onions in the market below Rs 10/kg, are well-known, the revised Essential Commodities Act has hampered trading in APMCs as witnessed in Nashik District of Maharashtra.

It may be recalled onion is no longer an essential commodity under the new rules, and the government intervenes in the market only under certain conditions.

Political Implications

Due to its popularity, any abrupt rise in onion prices would raise political barometers. In fact, many a time, it has become a major poll issue.

For instance, in 1998, Delhi-government led by Sushma Swaraj lost the Assembly elections as voters were angry with the growing onion prices. Ironically, BJP never came back to power since then.

Warehousing – Perennial Problem

For a perishable item like onion, storage plays an important role in maintaining stocks at a reasonable price throughout the year.

Unfortunately, not enough lessons learnt on this front.

Though the government launched the ‘Operations Greens’ Scheme to protect farmers from making distress sales, it has not taken off as expected.

The Way Forward

Since onions are high in water content, smart and sustainable solutions need to be explored to improve warehousing facilities.

In one of its reports released in 2019, Ficci suggested the government explore models adopted by Israel and Brazil to store onions.

“While in Israel, onions are stored in open ventilated warehouses with continuously forced air-ventilation through a stack of sets in bulk bins; in Brazil, a low-cost ventilated silo system is being used at the farm level,” pointed out the report.