For the second time this year the onion farmers of Mandsaur-Neemuch belt are being forced to sell onions at as low as Rs 1 per kg and many are abandoning their onion produce in the mandis to be consumed by cattle and the main culprit appears to be demonetisation, say those associated with the trade.
Prices are holding at around Rs 6 per kg in Indore and neighbouring places at present, though for how long is debateable. According to state horticulture department, Madhya Pradesh is the second highest onion producer in the country with 2.65 million tonnes (2015-16), in 1,13,754 hectares, the highest being Maharashtra. Across the country, onion cultivation is spread across three seasons -- kharif, late kharif and rabi.
In April, prices crashed to 20 paise per kg in Ratlam
When the rabi crop hit the market in April, prices crashed to 20 paise per kg in Ratlam and the situation was no better in Mandsaur and Neemuch, forcing the government to go in for purchase of onion at Rs 6 per kg. On Thursday, many farmers left their onion crop in Neemuch mandi when they were offered prices around Rs 1 per kg and in Mandsaur irate farmers stopped the bidding process for two hours when the opening bid for onion was Rs 1.50 per kg. The prices are hovering around the same level on Friday also. As of now, Markfed officials have ruled out any plan to purchase onions as they did in May this year.
While excessive sowing by farmers in the rabi season (winter crop) was attributed as the main reason for the crash in prices in April, the Kharif sowing of onion has been 12 per cent lower this year compared to 2015. Kharif is the monsoon crop and at present those who had sown late are coming to the market with their produce.
Explaining the impact of demonetisation, a mandi official who did not want to be identified said, “all the small traders who used to bring in supply from small farmers in the hinterland have vanished due to shortage of cash and big traders appeared to have formed a cartel. The small traders used to act as counter-balance. Also small farmers are selling their produce at their nearest smaller mandi where prices are always 20 to 30 per cent less than bigger mandis. Due to swift communication in this technological age, the big traders are sourcing their produce from smaller mandis, which is leading to pressure on prices in the bigger mandis.”
‘Most traders prefer cash for which they do not pay taxes’
Lack of cash has meant more cashless transaction which can come under the scrutiny of the taxman. The same mandi board official said, “Most traders prefer cash for which they do not pay taxes, but now with cheque payment not only do they have to pay 7 per cent to 8 per cent tax, if they increase their turnover too much, they will invite attention of the tax authorities, so they are limiting their purchase.”
MP Kisan Ayog president Bansilal Gujar admits that demonetisation has had some effect on the prices, but he also attributes other factors too. “Overall there is shortage of cash and while earlier one trader used to lend cash to another trader for the day (on a day when huge quantity of grains come to the market, the grain trader used to take money from say the onion trader) but this practice has come to a halt as there is not enough cash,” Gujar says. He also attributes lack of communication between government department officials and farmers on what they should sow and how much. He also blames herd mentality of the farmers of sowing whatever his neighbour is doing for the problems.
MP Horticulture director Satyanand said that local factors at the mandi could be responsible for the crash in prices of onion in Mandsaur-Neemuch as there is no spike in supply during this time of year. “The rabi crop will arrive from February 2017,” he said.
‘State has increased storage capacity of onions by almost 50%’
Satyanand said that after Rabi glut the state has increased storage capacity of onions by almost 50 percent, but in Neemuch and Mandsaur they are yet to meet the target. Onions have to be stored in special storehouses and not in cold storages. “Last year we have 80,000 store houses in the state, now it has increased to 1,20,000, with capacity ranging from 25 tonnes to 50 tonnes.”
Local mandi authorities in Neemuch and Mandsaur were unwilling to come on record for the reason behind the crash in prices. Neemuch mandi secretary R S Baghe said, “I do not want to comment on this matter.”
Farmer Ramnarayan said that he was planning to buy a water pump from the proceeds of the onion crop, but when I reached here I came to know that the prices have crashed to Re 1 per kg.
Farmer Lalaram Bhatt of Diken village was in tears after hearing the news of crash in onion prices. “We are already facing cash shortage problems due to demonetization and this crash in onion prices is a double blow. At these prices, we won’t be able to pay even for transport,” he said.
Farmer Prem Patidar said that input cost for producing onion crop on one Bigha land is about Rs 20,000. “The production from one Bigha is about 5,000 quintal and today we are getting Rs 5,000 for this crop.”
Markfed bought 10.4 lakh quintal of onions
After onion prices crashed in April 2016, the Madhya Pradesh Marketing Cooperative Federation bought 10.4 lakh quintal of onions. It sold 1.46 lakh quintal of onions at PDS shops while 7.52 lakh quintals of onions were damaged. The government spent an additional Rs 90 a quintal to dispose the rotten onions, according to a Markfed official