The onion problem needs three basic fixes
Putting a stop on the onion export is nothing but a panic reaction—an irrational, and sub-optimal solution. Instead, efforts should be channelised to address the low yield per hectare and scientific storage & processing facilities that will help augment supplies during a crisis.
It might sound funny, but onion—the humble cooking ingredient of Indian kitchens—has a way of dictating the electoral narrative.
And that’s an unnecessary problem that needs a fix before we get into our three basic solutions.
Indira Gandhi was the first to peel the political layers of onions in the 1980 elections as an effective campaign tool on her comeback trail. A sharp rise in onion prices in 1998 is said to be the cause of the downfall of the Sushma Swaraj-led state government.
No way BJP was going to repeat that mistake!
With Maharashtra and Haryana going to the polls in less than a month, the last thing the central government wants is to face any potential backlash from voters due to high onion prices.
And therefore, they announced an immediate ban on the export of all varieties of onion and imposed a stock limit on traders. This comes a fortnight after they slapped a steep Minimum Export Price (MEP) of $850 per tonne on onions.
This is clearly a panic reaction, and doesn’t address the fundamental problem that need fixing.
The analysis of government data reveals that the onion production in the month of September this year is 35 per cent less than that in 2018.
India is the world's second largest producer of onions in the world, after China. But the problem is that it isn’t efficient enough—its yield is among the lowest in the world.
India constitutes one-fourth (27 per cent) of the global acreage for onion cultivation. In fact, in terms of the area under cultivation, India's onion acreage is higher than China’s.
Tell you what, the United States which is not even in the top 10 onion producers, has a yield that's nearly four times that of India's.
Alright, let’s make one thing clear: the sowing seasons for the onion crop in India.
- Kharif, which is done between July-August with harvesting in October-December;
- Late Kharif, which is done between October-November with harvesting in January-March;
- Rabi, which is done between December-January, with harvesting between end of March-May.
About 65 per cent of the onion production happens during the rabi sowing season, and that’s what sustains the country's requirements from the time it's harvested till the festive season, in October-November.
But, you see, onion is a semi-perishable crop. And according to the Indian Council for Agricultural Research (ICAR) report, "30-40 per cent of the crop gets lost during the storage" with losses going over 40 per cent during natural calamities.
In India, onions are mostly stored in the ventilated storage structures without any control of temperature and relative humidity. Yes, there are cold storage facilities but then it also comes with a couple problems: the construction and running costs are too high, and the bulbs start sprouting immediately after they are removed from the storage facility.
As per the Department of Agriculture, Cooperation and Farmers Welfare, India's current cold storage capacity for its total onion crop is a measly 2 per cent of its total production — leaving 98 per cent of its produce open to the vagaries of the elements.
This one’s a perennial problem.
Between the price at which it's delivered at the wholesale market and the price at which it reaches the kitchen, the average Indian household ends up paying double or even more than double the wholesale price.
In Delhi, for instance, which on Monday received 221 tonnes of onions, the retail price was hovering at Rs 60 per kg against the wholesale price of Rs 25 per kg while in Mumbai, which received more than 6,000 tonnes of onions on Monday, the wholesale and retail prices were Rs 32 per kg and Rs 60 per kg, respectively.
The Centre has imposed countrywide stock limits on onion traders to facilitate release of stocks in the market and prevent hoarding—for retail traders, the stock limit is 100 quintals and for wholesale traders, it is 500 quintals
One wonders why the government did not show similar alacrity when onion prices crashed to Rs 1-2 per kg in the past, forcing farmers to discard their produce.