Onions are so ubiquitous on people’s plates that fluctuations in the tuber’s prices can make or break electoral fortunes; cultivators of the bulb, however, seem to be perenially at the receiving end. Now, as a government move to allow imports threaten to replay their tragedy as a farce, here’s our take on just how much can you peel off the humble vegetable.
Few have received the kind of recognition and fondness from humanity like I have. Whether you are an American or Indian, I have been the fulcrum of your platter, your culture, economy and memories for ages.
People from over 150 countries relish me everyday, through all seasons, and irrespective of their birth or wealth — for the poor I am the only affordable side dish while the rich just cannot savour their soups without me. Now I see chips packs displaying my rings to market their brands better. All this makes me feel privileged.
My rising stature makes my companion — the farmers — feel secure and reassured. After all, I am a round-the-year cash earner for them.
That is why I felt rattled when the Indian Parliament voted me out of the country’sessential commodities list mid-September 2020. The Lok Sabha and Rajya Sabha accomplished this by amending the Essential Commodities Act, 1955 (ECA), flat in a week from September 15.
The law was drafted at a time when India barely produced enough to feed its people. It empowered the government to regulate the flow and distribution of essential commodities by controlling their trade and storage.
I could not hear what the honourable members of Parliament said while knocking me off the list along with potato, cereals, pulses, oilseeds and edible oils; they amended the law through a voice vote amid ruckus — not through division, the usual electronic voting.
But I could hear clearly what Danve Raosaheb Dadarao, the Minister of State for Consumer Affairs, Food and Public Distribution, had to say. He was the one who introduced the Essential Commodities (Amendment) Bill 2020 in Lok Sabha to replace Ordinances promulgated June 5.
He said stock limit conditions imposed through ECA hindered investments in agriculture infrastructure. Opening up trade and giving widespread freedom to my cultivators and traders, he argued, would promote ease of doing business and help the National Democratic Alliance (NDA) government achieve its target of doubling farmers’ income by 2022 from the level of 2015-16.
But the amendment has somehow left me perplexed. In 2014, barely two months into its first stint as a government, NDA’s leader and Prime Minister Narendra Modi brought me under ECA. My price was then heading through the roof. And this is a situation dreaded by all politicians and governments in India. The then Minister of External Affairs Sushma Swaraj must have reminded Modi of her troubled tryst with me as Delhi’s chief minister in 1998; though most of you speculated, I knew for sure that she lost the Delhi assembly elections that year because of spiralling onion prices. To lower the prices by ensur ing more supply in local markets, the NDA government had then also discouraged export by fixing a minimum export price.
This had triggered protests by farmers, from the largest producing state Mahara shtra to the major exporter Karnataka. They said they cannot store me beyond a certain limit once I am under ECA, and will have to sell at suppressed prices fearing raids on stocks. This would result in huge losses for them. In India, I am not harvested between March and September (more on this later). So, farmers and traders usually store the stock, harvested during rabi, for supplying throughout the year and for a steady income. The fear of income loss was so profound that Swabhimani Shetkari Sanghatana of Maharashtra, which was an ally with NDA, also threatened to join the protest. This put the government on the back foot. It said the decision was taken to tame food inflation and promised that I would be regulated only for a year. Then, what kept me in the ECA list for the next six years?
Before narrating this to you, let me take you through our shared ancestry and the long journey of evolution. Knowing that is important to understand why I am writing this biography now.
YOU HAVE BETRAYED ME
You would not believe me, but I have been at your service much before you learned the art of cultivation. That was some 10,000 years ago.
Like other fruits and vegetables, I used to be a wild variety then, and you, a hunter-gatherer. During your everyday excursion for food, some of you would dig me up and eat the fleshy bulbs for immediate satiety. I quenched your thirst. Your ancestors grew fond of me and started domesticating me—much before they tried their hands at growing rice or wheat. Since then, I have closely watched your species transitioning from “savagery” to “civilisation”. I have witnessed your struggle with organi sed farming and how it fundamentally changed the way you lived and evolved to be the most intelligent species on the planet. All this while I have been hitchhiking with you.
But in this long journey, you have forgotten my ancestry. There is no record of my geographical origin; despite 50,000 agriculture scientists in India, nobody could trace it. They only say I must have been domesticated across the world around 7,000-10,000 years ago. Now I am in your hundreds of hectares of farms, in balcony pots and in roadside markets. But I appreciate the way you have named me. In Latin, I am called unio, which is oneness or unity. This perfectly captures my association with human civilisation; worldwide I am identified as a staple vegetable. That makes me feel happy. But of late, there has been a growing realisation that you have colonised me.
My realisation became starker when the Parliament met on September 14 for the monsoon session, after a gap of five months. It was held under strict regulat ions due to the COVID-19 pandemic. The setting was historic. Never before there were poly-carbon sheets between two rows, besides a staggered seating arran gement; the only division was on the basis of ruling and opposition and on the basis of political parties. Over the week, the Houses swiftly passed three agriculture related bills: other than the Essential Commodities (Amendment) Bill 2020, they passed the Farmers’ Produce Trade and Commerce (Promotion and Facilita tion) Bill to allow intra-state and inter-state trade of farmers’ produce beyond the physical premises or market yards (mandis) of Agricultural Produce Market Committee (APMC); and the Farmers’ (Empowerment and Protection) Agreem ent of Price Assurance and Farm Services Bill to provide a framework for farmers to enter into contract farming.
These were hailed as “historic reforms in agriculture”. It was said that these laws would allow free markets for farm produce and enable all to trade without any government restrictions. I was willing to forget my gripe about the listing and delisting under ECA.
But then I was shocked to learn that during the week, the government also banned export of all varieties of onion. It was ironic. At a time when the government was adopting laws to unshackle me from all restrictions, why did it put restrictions on my export? The government did so by invoking the Foreign Trade (Development and Regulation) Act, 1992. By now, I am quite familiar with this law. Between 2014 and 2019, the government has used it to stop my export as many as 17 times—over three times a year on an average—apparently to keep my price from spiralling out of control.
But this time I could not see a compelling reason for the move. The nationwide lockdown, which was announced in the last week of March to curb the spread of COVID-19 and continued till June, had severely disrupted my supply chain, incurring huge losses to my cultivators. They had just started recovering the losses after exports resumed in April. Over the next three months, till June, India exported US $198 million worth of onions. This was less compared to the fact that last year for the same period my export value was $440 million.
My political importance comes from this volatile pricing in the market. When it goes up, politicians take drastic steps to tame inflation. This is to protect my middle-class consumers who form the biggest pie of the vote bank. But they simply forget about my producers.
Let me take you on a tour through the Lasalgaon mandi to show how devastating the export ban has been for the cultivators. This mandi in Maharashtra’s Nashik district accounts for 10 per cent of the national production and is regarded as Asia’s largest onion mandi. The price here more or less reflects the price at all the other mandis across the country. For most farmers in the region, I am a major source of cash. But this year, everything from an unpredictable weather to a stagnant market and the pandemic have conspired against them.
It all began with the extreme rainfall in October last year. That’s the time when farmers sow my rabi varieties in nursery. These not only account for a major chunk of the harvest in a year, but are also valued for their longer shelf life. First, most crops were destroyed at the sowing stage. Then in April, when they were ready for harvest, heavy rainfall and hailstorm played the spoil sport. Bharat Dighole, a farmer and also part of the Maharashtra State Onion Growers’ Association, says the state lost about 40 per cent of the crop in just one season. Many more lost their stocks that caught fungicide after hailstorms and rains. On an average, the yield reduced to 28,000 kg per hectare (ha) from 42,000 kg.
Let me introduce you to Shankar Darekar of Vinchur village in Nashik. He usually sows rabi varieties on less than 1 ha. Last year, he increased the area to 1 ha in the hope of good rain. Though he harvested 30,000 kg of onion, heavy rain and fungus spoiled half of it. In the absence of good storage facility, Darekar and many other farmers in his village approached traders. But no one was ready to pick up the stock because of the COVID-19 lockdown. This forced them to sell the produce at a distressed rate. At Lasalgaon mandi, the rate was Rs 500- Rs 600 per quintal (100 kg) in April and May, and increased only to Rs 700- Rs 800 in June. Darekar claims that he has incurred a loss of Rs 1,50,000 per ha. He had carefully stored about 5 quintals to sell between August and September, when the supply dwindles, to recover some of the losses. The rate usually goes up around this time. Just before the export ban, farmers were getting a good price, between Rs 2,500-3,000 per quintal on an average. For a day, it also went up to Rs 4,000. As soon as the ban was announced, the prices dropped.
Two years ago, a survey by the Department of Agricultural Economics of the College of Agriculture in Latur on the economic importance of export-oriented onion crops needs to be shared here. The researchers studied the socio-economic characteristics of exported onion growers and non-exported onion growers in Nashik. They say those who exported oni ons did not have to depend on supplem entary activities for survival—indicating huge profits. One hectare of onion crop meant for export earned Rs 4.18 lakh while those meant for the domestic market earned Rs 2.12 lakh for the same area.
This season there was a shortage but the situation was under control, says Darekar. The shortage in retail market would have come a month later and lasted 15 to 20 days till fresh harvests arrived from Madhya Pradesh, Rajasthan and Gujarat. Farmers still have 25 per cent produce stored with them which would have kept coming to the mandis. Besides, at the time of announcing the ban, the National Agricultural Cooperative Mar keting Federation of India Ltd (NAFED) had 100,000 tonnes of stock, which could have been used to stabilise the situation. So I see no reason to ban exports at this point.
On the contrary, the situation would have helped farmers. They say with conti nued exports, mandi price would have reached Rs 7,000- Rs 10,000 per quintal. This would have benefitted those who have suffered huge losses in the last few months. This would have been a win-win situation.
Now, my cultivators are angry. They feel that the government only interferes for the consumers and not for them. It did not compensate them when they were incurring losses due to low prices at the mandis. So it should not have interfered even now, when they were starting to recover the losses. Darekar says the government will not be able to check a rise in onion price despite the export ban. He says the stock that comes from Karnataka and Andhra Pradesh at this time of the year has also got damaged due to excessive rains. The arrival at mandis has reduced by 40-50 per cent. This will make the situation worse.
I'M NOT THE CULPRIT
I am the victim. Then why am I always linked to the overall food inflation, banning export and the other trade controlling steps?
The day the government imposed the export ban, the Union Ministry of Commerce and Industry released data on the country’s wholesale prices. It increased by 0.16 per cent in August, and the government attributed this to the increase in the prices of food and manufactured items. Yes, food articles have become expensive by 3.84 per cent. But this could have been driven by potato prices that has risen by 82.93 per cent. Onion prices, on the contrary, have fallen by 34.48 per cent.
If this surprised you, I have more to add. Within five days of the ban on export, the government flooded the market with NAFED onions. It was sold at a cheaper rate than the produce coming to markets directly from farmers. At APMC market in Navi Mumbai, farmers were selling their produce at a modest rate of Rs 220-260 per quintal. With arrival of stocks from NAFED, the price crashed to Rs 180-200 per quintal.
I and my cultivators have always suffered to keep your food bills low. In fact, I was fearing a move like the ones taken in September since December last year.
That month my prices skyrocketed across India, mostly in middle-class dominant cities. Retail prices reached Rs 165 per kg in Panaji (Goa), Rs 160 per kg in Mayabunder (Andaman) and Rs 150 per kg in Thiruvananthapuram, Kozhikode, Thrissur and Wayanad (Kerala). Soon, the National Statistical Office (NSO) declared that food inflation has reached 14.1 per cent—the highest in six years— due to spiralling vegetable prices. Three vegetables (potato, onion and tomato) seem to have driven this inflation. Their prices rose at 37 per cent, 328 per cent and 35 per cent respectively, said NSO. Agreed. My cultivators and traders in Karnataka were then selling at Rs 200 per kg. But then, just a month later in January 2020, they had to sell their produce at Rs 40 per kg. What does this mean? Am I the real culprit as it is being made out to be? Or, there is someone or something else playing spoilsport?
SEE THROUGH INFLATION
As per the International Food Policy Research Institute (IFRI), India has been facing high food inflation post 2009, when a severe drought hit.
But even after this year, high food inflation continued till 2015-16. Since then, it has been rising at moderate levels. In an analysis of food inflation in the country during 2006-2015, IFPRI found that it has been above 7 per cent for all the years except 2014 and 2015. In November 2013, it reached the highest—14.72 per cent. In December 2019, negative growth, or deflation, was recorded at -2.65 per cent.
In 2009, it was assumed that production would pick up, thus reducing food inflation. But it never happened, pointing at other structural issues that trigger food inflation. Are these three vegetables, considered important in the Consumer Price Index basket, always responsible for high inflation? According to the decadal analysis by IFPRI, onion contributes just 2 per cent to overall food inflation while tomato contributes an insignificant 1 per cent. Rice contributes about 11 per cent. Milk at 22 per cent has the highest impact on food inflation. There is, in fact, no standard trend to show which item usually impacts food inflation. But it depends on situations in a specific period. The December 2019 inflation seems to have been caused by the price rise of both onion and milk.
Now let me bust another myth. It is assumed that cultivators benefit when the price of a food item goes up. But my farmers did not gain from the unprece- dented price hike in December 2019. By January 20, 2020 the government flooded the market with 120,000 tonnes of imported onion to arrest the inflation. This happened when new harvests were on their way to the markets. The price crashed with the first flush of domestically produced onion. This forced farmers in Karnataka to sell their premium red onion at a suppressed price.
The government also got a taste of economic loss because of this glut in the market. It had to sell the onion, imported at Rs 58 per kg, for Rs 6 per kg. State governments, traders and cooperatives like Mother Dairy-Safal refused to buy imported stock citing non-suitability for the Indian kitchen. Stocks started rotting at the Mumbai port. It is said that the government suffered a loss of Rs 200 crore.
REMEMBER, I AM SENSITIVE
I am highly profitable. I can ensure a stable market only if I reach there at the right time, in the right condition.
A committee set up by the Union govern ment to recommend ways to double the farmers’ income by 2022, says an onion farmer receives 43-44 per cent of the price at which the crop is sold. Their earning gets further reduced as farmers lose about 14.4 per cent of the produce due to lack of proper storage and transportation.
Politicians and governments can stop dreading me just by addressing these twin problems. After all, if I compare with the other countries, India has the largest area dedicated for me.
The Food and Agriculture Organization (FAO) data shows that in 2016, I was cultivated in 1.2 million ha in India. China is second in terms of area under my varieties. According to a research by the National Council of Applied Economic Research (NCAER), onion consumption in India has increased considerably over the years. The National Sample Survey Office says from 2004-05 to 2009-10, onion consumption increased by 32 per cent in rural areas while it increased by 18.6 per cent in urban areas. In 2009-10, consumption in rural areas was 9 kg per person while in cities it was 10 kg per person. This rising consumption is primarily due to the increasing number of food chains in India. About 1 million kg are used for processing such as dehydration and pickles. I am told that India needs 1.3 million tonnes of onion a month for consumption—this itself is a huge market.
Farmers here grow at least three varieties—red, yellow and green—and in three seasons: kharif (planted between July and August, and harvested between October and December); late kharif (planted between October and November, and harvested between January and March); and rabi (planted between December and January, and harvested between March and May). Rabi accounts for 70 per cent of the total production while kharif 20 per cent and late kharif 10 per cent. This is the reason my price remains low during the rabi season. Depending on the harvest, this is the stock that meets your demands up to October-November, though at a bit higher price. Then the stock from kharif harvest takes over. Early kharif stock, which is usually grown in Andhra Pradesh, Karnataka and Madhya Pradesh, helps fill any intermittent gap. If the rabi crop gets damaged due to extreme weather events or due to lack of irrigation, it upsets the demand-supply balance. That is the reason onion prices witness a spike during this period. So it is a fragile cropping cycle that must be maintained well to keep the supply intact and price in check.
Increasingly, several other factors are trying to distort my image. One such is erratic weather events. The Institute for Social and Economic Change (ISEC), Bengaluru, has recently estimated that India saw episodes of steep onion price hike every two years—in 2013, 2015, 2017 and in 2019. The study largely attributes the pattern to drought, late arrival of monsoon, floods, crop failure and supply disruptions. It had also predicted a surge in price till March this year.
Sometimes I feel strange when I look at my dipping prices. Like my existence, my trade is also different. I defied all market norms. In 2012 and became the rare vegetable to be probed by the Competition Commission of India (CCI), which tries to ensure that the common man has access to the broadest range of goods and services at the most competitive prices. CCI studied me because despite increase in my production and also acreage my price shoots up. CCI studied major markets of Maharashtra and Karnataka and found that there was no link between my production, arrival in market and my price. They found that in some of the months my prices soared despite high arrival of stock. CCI called it paradoxical.
“It is clearly evident that the correlation of daily arrivals of onion with its daily prices is significantly low in all the markets, meaning the prices of onion in these markets have no correlation or weakly correlated with the arrivals,” it reported.
Then they discovered why I defy all market norms. I am the victim of my traders who always connive to make the maximum profits while pushing farmers into heavy losses and taxing the consumers. The CCI assessment of the spike in food inflation during 2011-12 found that without the in-between chain, onion prices would have been Rs 40 per kg. It said: “Speculative traders made super-profits by fixing prices in onion trade even as the Government was playing with ad hoc fixes.” Going by this assessment, that year wholesale traders in Delhi bought onion at Rs 34 per kg and at retail outlets it ruled at Rs 80 per kg, leading to a margin of 135 per cent. Then, the assessment said, consumers in Bengaluru alone could have been fleeced to the tune of Rs 10.5 crore a day.
It is important to understand the influence of these factors and then draft a policy to check the price rise. Remember, my growers are those with small landholdings. They cannot wait for the market rate to go up and sell the produce. They would rather sell it at a depressed rate for immediate income. So, they are in no position to dictate the market price. Different regions and markets of India want me in their choicest forms and sizes. Those in eastern India prefer the small varieties. In north and west Indian markets, bigger varieties are preferred. It’s the traders who collect me from farmers, and do the sorting according to market preference. Most of my farmers do not even have the capacity or the knowledge of the market to influence my price and earn decently.
Risking the hazard of over-simplifying, let me tell you something: you can call my power to make the politicians and governments nervous just a hoax. The fact is that the factors causing the price rise of onion and the other commodities are the same. Going by basic economics, price rise is a direct fallout of the demand and supply imbalance. Onion is not immune to this. And this is where I become a victim of political class; I get colonised. Research points out that the usual afflictions which impact agricultural produce also affect the demand and supply chain of onion: lack of transportation, effective distribution network and market distortion. Not to forget the omnipresent middlemen who manipulate prices of all commodities for profits.
Instead of addressing these problems, policymakers are try to devise quick fix solutions: They stop export, increase imports and mount raids on stocks. This reduces the price artificially. This offers a temporary relief. But this has a long-term disincentive effect on farmers.
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