Maharashtra onion crisis: Farmers bearing the brunt of low demand, poor export

Produce rates may remain low until export-worthy summer harvest arrives in the market

By Himanshu Nitnaware
Published: Friday 17 March 2023
Moisture in the air quickly affects the red onions grown in winter, so it spoils in about 20 days. Photo: iStock
Moisture in the air quickly affects the red onions grown in winter, so it spoils in about 20 days. Photo: iStock Moisture in the air quickly affects the red onions grown in winter, so it spoils in about 20 days. Photo: iStock

Low demand in the country for Maharashtra onions, combined with poor export  might be behind the massive crash in the prices of the essential kitchen commodity. The low shelf life of the winter harvest red onions is also hindering exports, even as prices of the allium are skyrocketing in other countries.

Farmers in Maharashtra have reported low rates in the market for their produce since February. The rates for onions fell to Rs 900 per quintal from Rs 1,000 per quintal in the first week of February. By the end of the month, it plummeted to as low as Rs Rs 300-500 per quintal. 

At the same time, onion prices have soared around other parts of the world, raising concerns of a rising vegetable crisis. The crisis first hit the Philippines and forced countries like Kazakhstan, Turkey, Morocco and others to secure their supplies by banning exports to manage shortages. 

Read more: Onion crisis: ‘High time Union govt invested in low-cost storage’

The Ukraine-Russia conflict that has been ongoing for over a year has impacted the essential food item across the globe, resulting in unfeasible exports.

Exasperated growers in Maharashtra have taken to the streets to protest the plummeting market rates. Auctions at Agriculture Produce Market Committees (APMC) were stopped at least twice to demand higher prices, said Bharat Dighole, state president of the onion growers association.  

“The farmers could not celebrate the festival of Holi, which signifies a good harvest season. It has been more than a month and onion prices have failed to stabilise,” he told Down To Earth (DTE). The price for winter harvest red onion on March 16, 2023 was Rs 750 per quintal on average. 

The prices are now a political concern in Maharashtra, with farmers burning their produce on Holi, March 8, 2023, to register their protests, reported news outlets. Chief Minister Eknath Shinde announced a compensation of Rs 300 per quintal to the others during the state assembly session on March 13. 

The central government has also extended help, with the Centre-run farm produce trader National Agricultural Cooperative Marketing Federation (NAFED) being tasked with procuring the surplus produce.

Farmers were in a hurry to sell off produce at throw-away rates

Surplus production, unseasonal rainfall and poor economic conditions of the neighbouring countries who buy heavily from India might be leading to a drop in the rates, according to traders and farmers. 

However, a major reason seems to be the low shelf life of red onion, which grows during winter. The moisture in the air affects the red onions quickly, so it spoils in about 20 days. 

Erratic rainfall last year has made growers fearful for their produce, said Tukaram Mahale, a farmer from Dindori in Nashik. “Farmers fear unseasonal rainfall may spoil their produce and rushed to sell at throw-away prices initially. Onion production has also been high this year,” he claimed.

Government data, however, does not match with Mahale’s claim. Onions were sowed on 542,000 hectares during the Rabi season, with an average production of 20 tonnes per hectare, according to the agriculture department. In comparison, 596,000 hectares were sown last year, producing 105 tonnes of the allium. 

Production was estimated to be around 108 tonnes this year, a department official said. “But if the rains damage the crop on a large scale, onion production may be similar to last year,” the official claimed.

Read more: Onion price crash, farmers’ distress fail to move governments

Dighole blamed the traders and APMC officials for not unlocking fair prices for onion procurement. “Earlier this week, there was a meeting of district officials concerned, APMC members and people’s representatives. We demanded an increase in exports, which will increase the selling price of onions,” he said.

The representatives also demanded the ex-gratia be increased from 2 per cent to 10 per cent, he added. 

Maharashtra has not seen an increase in onion production, but other states have, claimed Suvarna Jagtap, chairman of APMC, Lasalgaon, Nashik. “West Bengal, Madhya Pradesh, Haryana, Gujarat, Karnataka and Andhra Pradesh have reported surplus produce,” she told DTE.

Maharashtra exports around 40 per cent of its onions, Jagtap said. “As other states have adequate produce, they have not bought from Maharashtra. Red onion spoils quickly, making it difficult to export,” she said. "The short shelf life makes the western markets unreachable too.”

The Indian markets are saturated, making it hard for onion traders, said the chairman of Asia’s largest onion market. 

“Countries like Sri Lanka, Bangladesh and United Arab Emirates buy a significant amount of onions from India. But the poor economic conditions of Sri Lanka and Bangladesh have wiped off their credit and they are no longer buying from India,” she said.

Bangladesh has imposed three times more export duty, making it unfeasible for traders to sell onions at profits, she claimed. 

Onion procurement by NAFED has helped increase the onion price at Rs 900-1,000 per quintal, said Jagtap. “However, it is not a long-term solution and will just reduce losses. The rates must be around Rs 1,200-1,300 per quintal to overcome the production costs for farmers,” she said. 

State and central governments need to urgently come up with solutions to increase exports and revise export subsidies as farmers demand, she added.

Read more: Centre draws flak from Parliamentary panel over state of onion silos

“Otherwise, the situation will continue for another month until the summer onion harvest arrives in the market, which can be exported to other countries. This will stabilise the market prices,” Jagtap said. 

Interestingly, onion prices have historically been politically volatile, with rising rates often resulting in a change in the government’s ruling party. 

For example, in the 1980s, a hike in the cost of the essential commodity helped Indira Gandhi topple the country’s first non-Congress government. The Bharatiya Janata Party government also found it difficult to retain its regime in 1998 owing to onion price rise. 

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