Onion prices cause of tears again

The retail prices of onions have steeply risen all over the country in the last few days from around Rs 20 a kilo to Rs 100 in some places. In most places, it is around Rs 80. An increase in the price of onions at this time of the year is not uncommon but governments have been found unprepared to face the situation. Onions are staples in all kitchens and so when they go beyond the reach it hurts everyone, and the special circumstances of this year make it more difficult. There are many reasons for the spurt in prices. The major onion producing states in the country are Karnataka, Maharashtra and Madhya Pradesh and there are three crops in a year. If production is affected in any one state and if one crop fails, supply is affected adversely. 

Heavy rains in Karnataka in September and in Maharashtra and Madhya Pradesh in October damaged crops and supply was badly hit. Even the good onion crops of this season are difficult to store because of their higher moisture content. When the supplies started falling, the government imposed stock limits on both wholesalers and retailers to prevent hoarding. Traders in major onion markets stayed away from auctions in protest, and this aggravated the situation. Onions do not come under the purview of the amended Essential Commodities Act, but the government imposed the stock limits under a special provision, with the ongoing Bihar election in view. Traders have claimed that they cannot buy onions because they cannot stock them, and farmers are not bringing them to the market. At the same time, import restrictions have been removed but it will take time for imported onions to reach the market. 

It is difficult to see the situation easing in the next two or three weeks, and by then the next crop will start coming into the market. Imports may also arrive by then which, together with increased domestic supplies, may push the prices very low so that the farmer will suffer again. Both farmers and consumers have suffered from the volatility of prices, which have ranged from Rs 8 to Rs 100 a year. It is necessary to create buffer stocks of farm goods and vegetables like onions, too, as a cushioning mechanism. This year, there is an onion buffer stock for the first time, but it should be bigger and should continue for the next year, too. Better and larger storage facilities should be created and most importantly, there should be a stable policy environment.