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Onion prices plunge following oversupply due to release of old stocks
The reports underline two of the basic issues in Indian farming -- the lack of efficient linkages between producers and markets, and the complete absence of food processing infrastructure in many parts of the country.
Prices of onion in some states, especially major producers of the vegetable, Maharashtra and Madhya Pradesh, have seen a fall in the past two weeks due to oversupply caused by release of old stocks farmers stored in anticipation of higher rates, reports from states show.
The reports underline two of the basic issues in Indian farming -- the lack of efficient linkages between producers and markets, and the complete absence of food processing infrastructure in many parts of the country.
The price of garlic too has crashed to ₹2 per kg in its biggest mandi (or market) in Neemuch, Madhya Pradesh. In Mandsaur, it was trading at ₹3. Onion was trading even lower in both.
Indermal Patidar of village Kelukhedi in Neemuch said he brought 15 quintal (each quintal is 100 kg) of onions to sell at the mandi but after discovering that he was getting only 50 paisea kg, decided to take it back. “I will feed it to my animals,” he added.
The main reason for the current crash is linked to the arrival of kharif (summer) crop, along with the late release of last winter’s unsold stock by farmers who stored it in anticipation of a better price. “We are monitoring the price situation. We don’t see a general problem and prices will stabilise once stocks are dispersed gradually,” a Madhya Pradesh official said, asking not to be identified.
He said the government may procure more onions if rates don’t stabilise, adding that fresh stocks have just started arriving and more time is needed to arrive at a price trend and then decide on a course of action.
According to official production estimates, onion output was projected marginally lower at 22.07 million tonnes in 2017-18 from 22.42 million tonnes the previous year. The volatility in prices therefore may have to do with stock management.
Bharatiya Kisan Union leader Anil Yadav said that with the arrival of new onions, it is but natural that prices will crash, as many farmers had stored older crop. “The government should have opened up a channel for exports.”
Neemuch mandi secretary Sanjeev Shrivastava said around 10,000 bags of onion are coming to the market, which is 25 to 30% more than normal for the season.
Farmer leader and BJP state general secretary Bansilal Gujar agreed that prices have crashed but added, “Under Bhavantar, the government will pay ₹8 per kg and farmers will get the difference between the selling price and the Bhavantar price.
His reference is to a state government price intervention scheme aimed at preventing farm distress.
In Maharashtra, onion farmers are throwing onions on the streets to protest of the fallen prices of ~200 per quintal (or ~2 a kg).
The state saw among its highest production of onions in the winter season last year owing to good rainfall and other factors.
