Now, onion over-supply crisis

NEW DELHI: The government seems to be facing another onion crisis. If just a month ago it was scarcity and high prices that forced the government to almost stop export, this time abundant production and crashing prices is likely to cause unrest among onion growers ahead of the general election.

There were reports of farmers halting business in Nashik on Tuesday as the wholesale price touched Rs 9.5 per kg at Asia’s largest onion mandi, Lasalgaon. Though for the past one month farmers’ leaders and observers had been maintaining that the huge supply can be addressed only by substantially reducing minimum export price (MEP) for onion or scrap it altogether , the government has now reduced it by about 30%.

In November, the crisis of onion was so acute, with the vegetable selling at Rs 80 per kg, that the government almost stopped export, increasing the MEP to make overseas selling unviable. But with the wholesale price of onion now touching as low as Rs 9-10 per kg and likely to fall to Rs 5 in next one month, the government has taken a U-turn to promote export. The MEP has been reduced from $1,150 per tonne to $800.

While farmers have demanded that it should fall further to $300 so that Indian produce finds takers in the international market, experts feel the government and state agencies’ failure to manage the crisis has been exposed.
“There is supply shortage between August and November every year. Steps have to be taken to ensure that the fresh kharif onion reaches markets by October. The government must create more storage space,” said Hari Prakash Sharma, deputy director (statistics) at the National Horticulture Research and Development Foundation.