A few months ago, when the price of Onion touched 100 rupees per kg, the central government put severe restrictions on the export of the kitchen staple and decided to import 33,600 metric tonnes of Onion to curb the rising prices. The government imported Onion at 58 rupees per kg, but, the imports reached late and till then the local varieties were present in the market, and now it is forced to sell it at 6 rupees per kg, bearing a loss of 200 crore rupees.
With the availability of local varieties from mid-January, the prices of Onion came down and there are no takers for the imported onion. The state governments as well as the distribution agency- Safal, run by Mother Dairy- refused to buy the imported onions. By March, the availability became so excessive that the onion is selling at 30-40 rupees per kg and the union government has decided to lift the restrictions on export.
The stock of imported onion is perishing at Jawaharlal Nehru Port (JNPT) in Mumbai, and Minerals Trading Corporation of India (MMTC)- the public sector company which imported onions- has to bear loss of 200 crore rupees, as out of total spending of 226 crore rupees on import, the company has been able to recover only 20 crore rupees so far.
The Onion politics is responsible for the sorry state of affairs of onion farmers and the consumers. All the governments in the country want to keep the consumer happy, in order not face the wrath of consumers in the elections, which are a regular exercise in the country.
To keep the consumers happy, the government takes knee-jerk reaction whenever the price of kitchen staples like Onion or tomato goes up. Generally, the price of Onion in India is between 15-25 rupees per kg, but, even if the prices shoot up for even a month, there is hue cry among the consumers. And in order to placate the consumers, the government puts up export restrictions; imports the staple and sales it at subsidized price. All this is because the government is willing to lose the vote of ‘Aam Aadmi’.
The knee-jerk reaction by the government hurts the farmers as well as the traders. The short time period when the prices shoot up is the moment of the farmers and traders, who have invested in farming and storage, to make money. But the government, in order to keep the consumers happy, kills this short moment of happiness.
When the government put restrictions on export and decided to import the kitchen staple, former Economic Affairs Secretary criticized the move and wrote, “Onion is not the most nutritionally rich or necessary food to have. It has about 90% of water and some flavour. What is the problem if some people have to pay for higher prices or have to cut down their consumption temporarily? Indian farmers receive, on average, the lowest prices in the World for their onion produced.”
Now, the imported onion is rotting at the port, as there are no takers of the kitchen staple. “Most of the imported onions are lying in the open at the Mumbai port and are rapidly rotting due to high humidity,” said an official. “The MMTC held e-auctions for the sale of imported onions on NeML (which provides a trading platform for several commodities) and Agribazaar (an online marketplace) but it also fetched bids as low as Rs 11/kg,” she added.
The government also asked Bangladesh and Maldives to buy the imported Turkish onion, at a lower price than what India paid, but Maldives has not responded so far, and Bangladesh said that it wants indigenous variety, not the Turkish one.
Until and unless the government stops the ‘Onion politics’ and continues to hurt the farmer and the trader at the cost of consumer, the Prime Minister’s dream of doubling farmer’s income could not be realized. It was expected from the Modi government to take tough decisions on the agricultural front, and not bend to populist measures, but the government has failed to resist the pressure so far.