Despite lifting of export ban, woes of onion farmers far from over

Farmers in Nashik district, among the largest producers of onion in the country, said wholesale prices ranging ₹1,200-1,600 per quintal were unviable

Nashik/Mumbai: When the central government ban lifted the ban on onion exports on May 4, it was expected to benefit onion traders and farmers across the country. But a simultaneous imposition of 40% duty on exports put paid to those hopes, with wholesale prices stagnating at ₹1,200-1,600 per quintal. Farmers in Nashik district, among the largest producers of onion in the country, said these prices were unviable – leave alone making any profit, they were not even able to recover more than half the input cost.

Despite lifting of export ban, woes of onion farmers far from over

Farmers unable to recover input cost

In 2023, the wholesale price of onion hovered between ₹3,000 and ₹4,000 per quintal, depending upon the quality of produce. Prices fell marginally after August, when the central government imposed a 40% duty on onion exports in a bid to control domestic prices and address shortage of the commodity.

On December 8, however, a complete ban was imposed on the export of onions, which pulled down wholesale prices to ₹1,200-1,600 per quintal, less than half of pre-ban levels. This pushed onion farmers into a desperate corner, struggling for survival.

“This year, I harvested around 200 quintals of onion,” said Keshavrao Kshirsagar, 57, who owns a seven-acre farm in Devargaon village of Nashik district, used largely for onion cultivation. “I sold the produce in two lots at ₹1,300 per quintal and ₹1,400 per quintal and earned around ₹2.80 lakh, which was nearly half of the money I invested on seeds, fertilisers and other inputs.”

Shivaji Wable, 60, another onion farmer from the district who owns a ten-acre farm in Babulgaon village, also sold 35 quintals of the commodity for ₹1,200 per quintal. “I held on to around 150 quintals as I was hoping that the government would lift the export ban around the Lok Sabha elections. Though the ban was lifted, the 40% export duty shattered all my hopes,” he said, adding, “You will not find a single onion grower in this region who has managed to recover his input costs.”

Onion farmers spend around ₹60,000 per acre on inputs, said farmers, but they do not have the option of waiting for wholesale prices to rise to recover their costs. This is because the commodity is highly perishable – it can be stored for a maximum of three months, and that too in ideal conditions which they are unable to afford.

““We cannot store onion for more than 10-12 days, and even during that period, the quality starts deteriorating rapidly,” said 62-year-old Prakash Janrao, who owns a 15-acre farm in Ambulgaon. Like the others, Janrao was forced to sell around 600 quintals of onion at ₹1,200-1,300 per quintal as his hopes were dashed – first by the export ban, and now with the 40% duty on exports. “In the beginning it was the climate; now, the export policy is making life miserable for us,” said Janrao.

Traders miffed with high export price

In May this year, the central government mandated a floor price of $550 per tonne, below which onion traders were not allowed to export the commodity. A 40% export duty on this floor price works out to $220 per tonne, taking the final price of exported onions to $770 per tonne. This, traders, said, has made Indian onion much constlier than produce from other countries.

“The 40% export duty makes our onion more expensive than that of Pakistan and Egypt, among other countries. Pakistan is exporting onions at the rate of $350 per tonne while Indian onion costs more than double this rate,” said Narendra Wadhavane, secretary, Agricultural Produce Marketing Committee (APMC), Lasalgon.

Considered the largest onion market in Asia, Lasalgaon Lasalgaon received 96,25,838 quintal onions in 2022-23. But in 2023-24, the quantity fell to 79,33,078 quintal owing to a drop in production due to unseasonal/ below average rainfall.

Many exporters buy their stock from farmers at the Lalsalgaon wholesale market. But after the export ban was imposed in December, they suspended all procurement. Though the ban has been lifted now, procurement hasn’t picked up pace, said traders. “The inconsistency in our export policy has resulted in a perception that India gives no guarantee to buyers that will get onion whenever required. In contrast, both China and Pakistan have kept their policy flexible to capture the market,” said Wadhavane.

He stressed that the government should allow export of onions which are in excess of consumption requirements in the country. “This is the only way consistency can be maintained in onion prices for the domestic market as well as exports,” he said.

Officials blame global scenario

Anoop Kumar, additional chief secretary, state agriculture department said that the state had no role to play in the issue. “It is a matter subject to the Centre’s policy. We have no role to play in it. However, we are coordinating with NAFED (National Agricultural Cooperative Marketing Federation of India) and NCCF (National Cooperative Consumers’ Federation of India Limited) so that PSF (price stabilisation fund) procurement takes place properly,” Kumar told HT.

Under PSF procurement, the central government buys all produce directly from farmers or farmers’ organisations. NAFED and NCCF, on the other hand, will procure 2.5 lakh quintal onions each, and the process for procurement has already been initiated, said officials.

“As far as onion export is concerned, it is a fact that the policy has not been consistent. There has also been also a general escalation of prices of food items globally owing to the ongoing wars in Gaza and Ukraine. This is the reason every country is trying to protect the interest of its consumers. For India, it is also an election year so such decisions are very obvious,” said a senior official from the state marketing department.