Onion overdose turns into a problem of plenty for farmers

The onion crisis has turned into a problem of plenty for the farmers. If scarcity of onion brought tears to the eyes of consumers about a month ago, it was now the turn of farmers to feel the pinch.

With prices of onion hitting rock bottom, the high minimum export charge of $700 per tonne has made it uneconomical to ship the crop into the international market. The new crop has flooded wholesale markets in Nasik and other places. The produce, which used to sell at around Rs 80 a kg in open markets, is priced at Rs 20-25 a kg in retail outlets and the rate at the Nasik mandi has come down to Rs 8-10 a kg.

Supply of the produce in the Nasik wholesale mandi has gone up by 80 per cent as compared with the same period last year. "About 1,400-1,500 trucks arrive daily in our market in Nasik. It is due to high production. At the same time last year, only 700-800 trucks used to reach here. Prices have come down to Rs 8-10 a kg," said Mahendar Khattau, a trader in Nasik wholesale mandi. He said that the market is facing a situation of oversupply and farmers have started facing losses.

"Where would the onion go? India exports onion worth over Rs 2,000 crore every year. But, this time the door is closed. Who would buy onion at the rate of $700 per tonne?" Mahendar questioned adding that traders had alerted the authorities to lower the Minimum Export Price (MEP), but nothing has been done. Ashok Jadhav, a Maharashtrabased farmer complained, "We are not getting enough money and very soon we would start incurring losses. We are getting only about Rs 7-8 a kg. More supply would further lower the price. We would be nowhere if government does not do anything about the exports. Situation would improve only when the export of onion restarts."

The issue was also raised in Parliament on Wednesday. Hemant Godse of the Shiv Sena made a strong plea to the government for reducing the MEP saying there would soon be a glut in the market. He said the MEP of $700 per tonne was affecting the onion grower adversely as there is likely to be production of 80 lakh tonnes by March next year as against the domestic need of 40 lakh tonnes for the period. With retail onion prices crossing Rs 60 per kg in many centres ahead of crucial Bihar elections, the Centre had practically banned exports of the bulb. The minimum export price (MEP) of onion was steeply raised to $700 per tonne in August this year. This follows an earlier increase, from $250 to $425 per tonne, which was effected in June.

Khattau said that MEP should be $300 so that other country could buy onion. "If they are getting onions from China and Pakistan at $300, why they would buy from us at higher rate?" he asked. Traders claimed that MEP of even $300 a tonne is not viable for exporters due to cost-effective supply from Pakistan and China. Harvesting of new season crop has started in Pakistan. Interestingly, the quality of new season Pakistani crop is better than the stored onion of India, they claimed. Both India and China compete with each other for onion supply to Gulf countries. India competes with China in onion exports to Sri Lanka and Far East countries.

(In Association with Mail Today)