Onion prices at India’s largest wholesale onion market, Nashik in Maharashtra, have dropped almost 70 percent in the past two months. Onion growers in Maharashtra have been compelled to sell their crops at Re 1 to Rs 2 per kilogram. Potato farmers in Uttar Pradesh, Punjab, Haryana and West Bengal have faced a similar crisis, with prices dropping below Rs 4 per kilogram, far below their cost of production.
This has pushed many kisans deeper into debt. There are reports of two kisans in West Bengal committing suicide in early March 2023. An onion producer in Nashik preferred to burn the crop while many others allowed the onions to rot in the field rather than incurring the expense of harvesting and transporting the produce to the market.
Onion and potato producers have no option but to sell their produce at the market rate because of the low shelf-life of their produce. They cannot hold the stock for long. This vulnerability of the kisans is exploited by big traders and corporates. Potato producers are often forced to sell their produce at as low as Re 1 or Rs. 2/kilo. Big traders and corporates who purchase at such throw away prices, keep it in cold storage, and release it into the market when the prices rise.
They ensure that the retail prices are kept artificially high by controlling the supply to the markets in the cities. This time too, while procurement prices have crashed, retail prices have fallen relatively less. The big traders and corporate trading companies who have put the stock in cold storage will release the stock gradually to ensure that they receive better prices.
Onions and potatoes constitute a major part of the diet of workers and peasants. Their prices in India are highly volatile. A little surplus in supply brings prices crashing down, plunging thousands of onion and potato farmers into crisis, while a shortage can send prices soaring, sparking working peoples’ anger. This is because the Indian state has deliberately refused to ensure guaranteed procurement of onion and potato crops from kisans at remunerative prices. Kisans growing onions and potatoes are left to the mercy of a market controlled by big traders and corporate trading companies. Kisans suffer, whether the crop is good or bad as they have to sell the bulk of their produce soon after harvesting.
Potato price crashed in 2018 and 2019 when output was high. However, in 2020, potato prices rose four-fold to average Rs 60 a kilo in the retail markets as against Rs 10-15 a kilo in 2019. A major factor for this rise in retail price was that many producers opted out of potato cultivation in 2020. They had suffered great losses the previous year. With supplies down, potato prices skyrocketed.
Onion producers too face the same situation. In 2016, kisans were forced to sell their onion for even less than Re 1 per kg. Distress selling led to several kisan suicides in western Maharashtra and Telangana. In 2017, the price of onions crashed once again. In 2022, wholesale onion prices shot up by nearly three times after rains delayed the harvest and damaged crops.
The quantity of onions and potatoes harvested each year depends on many factors including the weather conditions as well as the total area sown. Kisans suffer both when they produce a bountiful crop and when their crops are damaged. The price kisans receive for their produce is determined by the big trading companies controlling the market.
UP is the largest producer of potatoes with around one-third of the country’s production capacity. Around 25 lakh farmers are engaged in potato cultivation in UP. Maharashtra accounts for about 40 per cent of India’s annual onion production of 25-26 million tonnes. Nashik district is the largest producer of onions in the country.
India is one of the largest producers as well as consumers of onion and potato in the world. There is a cycle of overproduction or supply shortage every second or third year. The implications for crores of producers are devastating and yet neither the central government nor the state governments have taken any measures to save crores of farmers from repeated crises.
It is well known that the weather has a significant effect on the production and storage of perishables like onions and potatoes. They require creation of weather protected storage facilities and cold storages of sufficient capacity by governments in the vicinity of every major production area of the country.
A huge quantity of onions and potatoes are damaged each year because of lack of proper storage facilities. A Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution recently pointed out that over 51 million tonnes (MT) of onion had been damaged due to spoilage in the last three years. Storage facilities for onions run by the Centre are of poor quality and need an immediate overhaul, said the Committee.
Whenever prices crash, the central government washes its hands off and leaves it to state governments to manage the crisis, saying agriculture is a state subject. However, when the pro-capitalist farm laws had to be enacted, the central government took it up as its responsibility!
As a show of its concern for producers, the central government announced the Market Intervention Scheme (MIS) in December 2014 to cover horticulture and other agricultural commodities which are perishable in nature and are not covered under the Minimum Support Price (MSP). However, the scheme has not benefitted the kisans. It is implemented by the Centre only on the request of the state government. The compensation given to the kisans is to be shared in 50:50 ratio between the Centre and the state government. By putting half the responsibility of compensating the kisans on the state governments, the central government ensures that in practice the compensation given to the kisans is minimal, because the state governments do not have money. In such a situation, the state governments prefer to give a token amount as compensation to douse the anger of kisans.
Year after year, kisans have demanded that the government should fix a floor price for onion and not allow any purchase to happen below that rate. Further, they want the central agency like National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) to procure and maintain a buffer stock to take care of seasonal variations in production and demand.
Instead of taking the above measures, this month the Maharashtra government announced a compensation of Rs 3 per kg to onion farmers. When the farmers began a protest march to Mumbai, the compensation was increased to Rs 3.5 per kg. This hardly covers their heavy losses. They need to get at least 12-13 rupees per kg, if they have to make at least Rs. 4 per kg over the unit cost of production.
The Uttar Pradesh government too announced a token of relief to potato producers by agreeing to procure potato at Rs 6.50 per kg in the current season, which the producers called a joke. Their cost of production is Rs 10 per kg, and they are demanding a minimum support price of Rs 15 per kg, to meet the cost of production and earn a reasonable net income.
The Indian state defends the interests of large traders and big corporate chains by allowing them to manipulate procurement, wholesale and retail prices. It is reported that onion prices in the country are controlled by only a dozen big traders! Kisans and broad masses of people have been left at the mercy of these profiteers.
The interest of kisans can be taken care of only by the state guaranteeing procurement of all crops produced at the time of harvest at remunerative prices and creating infrastructure for effective storage near all the major production centres and points of consumption. This will eliminate the stranglehold of traders and big retail chains and manipulation of both procurement and sale price. There must be public procurement at guaranteed prices for all agricultural produce to secure the livelihood of farmers. Correspondingly a universal public distribution system must be created which will supply all the necessities to all the people in cities and villages.
Why is the Indian state refusing to implement what is in the interests of the overwhelming majority of the population? The answer lies in the fact that the Indian state defends the rule of the bourgeoisie headed by the monopoly capitalists, over the broad masses of workers and peasants. The orientation of the economy is to maximise the profits of monopoly capitalists by intensifying exploitation of workers, robbing peasants, and plundering the natural resources of the country. Every government at the centre and in the states defends this anti-worker, anti-peasant orientation.
Workers and peasants need to wage their struggles with the aim of replacing the rule of the bourgeoisie with their own rule. Then we will be able to reorient the economy to ensure that it fulfils social need instead of monopoly capitalist greed. Then we will be able to ensure security of livelihood to the kisans.