Country director, International Crops Research Institute for the Semi-arid Tropics talks to DTE on onion price volatality, amendement to Essential Commodities Act, 1955
It is a crisis that repeats itself year after year: A poor yield of onion crop leads to supply crunch — and a sharp spike in its price. The Union government on September 18, 2020 issued a notification prohibiting the export of onions to check the spiralling prices.
Being a key crop, onion often suffers from supply crunch and price volatility.
Arabinda Kumar Padhee, country director, India, International Crops Research Institute for the Semi-arid Tropics, spoke to Down to Earth on the price volatility of the crop, inadequate storage facilities and amendment to Essential Commodities Act, 1955 that deregulated several commodities including cereals, pulses, potatoes, onions, among others.
Snigdha Das: Why are onion prices so volatile?
Arabinda Kumar Padhee: India is one of the largest producers as well as consumers of onion across the world. Still, we often see a cycle of onion crisis every second or third year. The reasons ascribed to such situation are many.
Production shocks are, in many instances, related to weather-related events. For example, in late 2019, the excessive rainfall during monsoons damaged the kharif crop, creating shortage of the most important vegetable and spiralling of its price.
Proper crisis management by stakeholder ministries with advance planning is crucial. This is evident from the fact that imported onions in 2019 could not be utilised on time.
Inadequate storage facilities and stock-holding limits fixed by authorities according to the Essential Commodities Act, 1955 are also major reasons for the crisis.
I would like to add another dimension to the problem. As general elections draw closer in any state, the price of onion becomes an issue and policies around it get mired in politics.
SD: Do onions require special storage?
AKP: Yes, indeed. From my own experience as a development practitioner, I would take the inadequate storage structures as the main reason for the demand-supply gap.
As a district collector in a few tribal districts of Odisha, I have seen how even poor and marginalised cultivators keep the little quantity of their surplus harvest in traditional onion storage structures.
It is high time that the Union government promotes and invests in low-cost storage structures as well as private sector investments in post-harvest storage facilities. Significant quantities of onions get wasted for want of good pre- and post-harvest practices.
Buffer stocking by National Agricultural Cooperative Marketing Federation of India Ltd and state agencies could stabilise the price situation. Collection of credible data on area and production and market arrivals of onion could inform the policy space better in proper planning.
Farmer producer organisations in the sector could play an important role in the present context.
SD: What do you have to say on the export ban on onions?
AKP: As we speak, the Essential Commodities Act, 1955 has been amended taking onion, potato and few other commodities out of its purview. Imposition of stock limits (to prevent hoarding) have not met desired outcomes in case of onions.
Another thing that the Union government must do to regain confidence of farmers and traders is to lift the ban on the export of onions.
In my view, the ban is regressive and needs rethinking. A stable agri-exports policy would, in fact, be in the larger interest of farming communities. Effective and proactive coordination between stakeholder ministries such as the commerce, agriculture, consumer affairs, etc as well as state governments and trade bodies will be rewarding.
SD: Other countries have promoted cultivars of longer shelf life. Why not India?
AKP: The national agricultural research system, including private sector companies, should intensify efforts for development of new varieties with a longer shelf life and other desired characteristics.
Productivity of onion crop in India, as compared to countries such as China, Egypt and the United States is also quite low. Moreover, production of onion in India is limited to a fewer states. This needs to be diversified to non-traditional areas with specific mission-mode interventions.
SD: What kinds of onions have a longer shelf life — processed or dry?
AKP: Dehydrated onions have longer shelf life and a huge export potential. The Union ministry of food processing industries could incentivise investments in this particular sector for establishment of plants that make dry onions, onion chips or powder, etc. The urban, aspirational sections in India would be a good segment to catch up for such products.
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