The onion price crisis may be a precursor of worse news.
India is the world’s second largest producer of onions — China is the largest — but its harvest is reducing by the year. From 135.65 lakh tons in 2008-09, the harvest shrank to 121.67 lakh tons in 2009-10. Estimates for 2010-11 are even lower, with the Central Government’s Horticulture Department pegging it at 115.6 lakh tons.
Mahrashtra, India’s largest onion producing state, once contributed nearly 30% of the country’s harvest. Now, it’s closer to 25%
Increasingly, Maharashtra’s farmers are shying away from planting onions. In 2008-09, the state had 2.5 lakh hectares of onion farmland. In 2009-10, the figure reduced to 2 lakh hectares. In 2010-11, it is estimated that onions will be planted only on 1.70 lakh hectares in Maharashtra.
The resultant reduction in supply, the absence of a common minimum price to protect farmers, little action against hoarders and price manipulators, as well as unseasonal rain have made prices zoom.
Common minimum price is the rate the government gives farmers for their harvest, thus ensuring that they are not dependent on wholesalers and traders.
“I have five acres on which I used to plant onions. For the past four years, we decided to limit onions to just an acre,” said farmer Bhausaheb Kute.
Memories of 2006, when farmers like Kute were forced to sell onions to traders for a mere Rs 2-3 per kg due to a glut in the market, haven’t faded yet. Many farmers thought it better to throw away their harvest. The price it was fetching was not enough to even cover the cost of transporting it to the market.
In 2007, onion prices remained stagnant at Rs 900-1,200 per quintal (100 kg). This made farmers think of diversifying their crops. “Why should we put all our eggs in the same basket?” said Kute.
The National Horticulture Research and Development Foundation, in its internal reports, claimed that this year’s unseasonal rain damaged 35% of the kharif crop planted in May-June and harvested in October-November.
The government, said farmers, did little about it. “The state should propose a minimum support price for onions just like it does for sugar cane,” said Narayan Gunjal, a farmer from Yeola.
Experts said a minimum support price would encourage farmers to plant onions. “There is a critical need to increase the area under onion cultivation. A support price system would help ensure against a price crisis in the future,” Dr RP Gupta, director of the foundation.