Onion tears

Onion prices have again spurted all over the country, after a few months of fall from last year’s high levels. The prices are ruling at around Rs 28-30 per kg now in most parts of the country.

There are fears that another period of hikes has started which will take the prices to even Rs 100 by October. Onion prices are among the most volatile among the prices of vegetables.

They came down from last year’s highly elevated levels to even under Rs 5 a kg some time back. The movement between Rs 5 and Rs 100 is difficult to explain, but such wide variations have been noticed in all the four years since 2010.

This should alert the government about a possible design behind them, involving price rigging through supply controls or by other means, irrespective of the size of the crop or export figures in particular years.

There was a record harvest of onions this year which, at about 19.5 million tonnes, was 15 per cent more than last year’s yield.

Yet the prices are 20-30 per cent more than last year’s in many places. Many reasons are cited like the possibility of a deficient monsoon, or a big hike in the prices of seeds which may reduce the area under cultivation.

But these are not enough to explain the large spurts. It is admitted that the high food inflation has meant rise in prices of all items of food but the onion story has been different. It hurts more also because it is among the most essential of all vegetables.

While the government may have better control over the prices of food grains because of the leverage in stocks, vegetable prices are more difficult to control.

The government has announced measures to boost the supply of onions by imposing a minimum export price. It has asked state governments to take strict action against hoarding.

As a general step to check on the prices of all perishables, the Centre has also told the states to exempt them from the purview of their APMC legislations.

Onions will need particular attention because their prices are politically sensitive and their price history is different from others. It is unlikely that now or in the immediate future adequacy of production will be a problem.

What the government should ensure is that artificial shortages are not created through manipulation of supply by traders, middle men and other agents.

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