Peeling the pinch
Governments have fallen in the past because of a sudden, scarcity-driven surge in onion prices, and will doubtless fall again in the future.india Updated: Oct 04, 2007 22:18 IST
PEEL AN onion in India and you get political trouble. Despite being the world’s second-biggest producer of the vegetable, despite accounting for more than 22 per cent of the world’s total area under onion cultivation, and despite being blessed with the agro-climatic conditions for raising three crops a year of the red bulb, we manage to get hit with an ‘onion crisis’ every year. And when onion prices take a hit, the reverberations are felt in virtually every kitchen in the country. And are amplified from there into the political space. Governments have fallen in the past because of a sudden, scarcity-driven surge in onion prices, and will doubtless fall again in the future. That is because every crisis has elicited the same type of response—a heavy-handed clampdown on free movement of the vegetable, and fumbling attempts at supply management, either by banning exports, or asking state-run agencies to solve the problem. That these measure have manifestly failed to result in any kind of lasting solution is evidenced by the frequent recurrence of the problem.
India’s onion crises are classic examples of supply-side inefficiencies in the agricultural system. Prices shoot up because of an unexpected crop failure. The current surge, for instance, has been precipitated by unseasonal rains in major onion-producing areas, leading to spoilage. This could have been easily avoided if modern rural infrastructure had been in place. It is high time that a time-bound and holistic plan was put in place to eliminate basic inefficiencies in the agricultural supply chain.
Modern storage and transportation infrastructure, accurate weather forecasts and up-to-the-minute price information are not luxuries. They are necessities. Without them, farmers are hit because they lose their crop. And consumers are hit harder by skyrocketing prices. The only ones to benefit are middlemen. It is hardly surprising, therefore, to see that the most vociferous opposition to the entry of organised retail into the agri-commodities business is coming from traders and middlemen — not producers or consumers.