Volatile prices of onions hurt onion farmers as well as consumers

Onion farmers in Maharashtra blocked the Mumbai-Agra highway on 8th December. They stopped auctions at onion markets of Lasalgaon, Chandwad, Nandgaon and other places in Nashik district. Maharashtra is the largest onion producing state in the country, accounting for nearly 50 per cent of the total onion production in the country.

The onion farmers of Maharashtra launched their agitation in response to the announcement of the central government of a ban on exports of onions till 31st March 2024. This has resulted in a crash of the price that farmers receive for their produce. Farmers are fearing big losses once again. The past year has been a bad year for onion farmers, with majority of them suffering big losses.

In March-April 2023onion farmers in Nashik and other onion producing districts of Maharashtra faced prices as low as Rs.600-700 per quintal, and even as low as Rs.100-200 per quintal for a few days.

Prices crashed in March-April in the wholesale market following a good rabi crop that flooded the market. The large majority of farmers do not have the financial staying power to hold their stocks and therefore face ruination in such a situation. Farmers in Nashik were burning their onion crop rather than incurring the cost of transportation to bring their produce to market. They were demanding that the government should procure their produce at Rs.1500 per quintal. However, while farmers were getting ruined due to very low prices, the price mark-up was so high along the chain of wholesalers and traders, that ultimately the consumer bought onions for nearly 65% higher cost than what the farmers received.

The big traders who had purchased the onions from the farmers from March to June, were sitting on huge stocks, and profiting from exports and rising prices in the domestic market.  The wholesale price of onion reached Rs.1,161 per quintal in the week of 24-31 July. A month later, it had shot up by a further 60% to reach Rs.1,819 per quintal. The central government imposed a 40 per cent export duty on onions on 19th August, in the name of controlling the rising prices faced by consumers.

Despite the export duty, the retail price of onions started surging again in October. It touched Rs 40 per kg on 25th October, and rose further to touch Rs.100 per kg in November. On 8th December, the government responded with a total ban on exports till March 2024. Onion prices are still high across the country. In the national capital region, the retail price was between Rs 70 to 80 per kg in the first week of December.

As with potatoes and tomatoes, the prices of onion are very volatile over the year, falling below the cost of production soon after the harvest and rising sharply after a few months.

The volatility of onion prices is neither in the interest of the farmers nor in the interest of the working population in the cities. It is mainly capitalist traders who profit from such price crashes and surges, because they have the financial power and access to storage infrastructure. They accumulate stocks when the price is low and sell at huge profits, both in the export and domestic markets.

It has been a long-standing demand of both workers and peasants that the government and its agencies should guarantee procurement of all agricultural produce at a price that gives the farmer a reasonable return over his cost, instead of leaving it to the wholesale traders to set the prices. It is the duty of the government to procure and maintain a buffer stock. The government should then use these stocks to ensure availability of the produce at the retail level at affordable prices. It must take control of foreign trade and not permit exports by any private individual or company.  Only then is it possible to avoid acute shortages in the domestic market as well as the imposition of a sudden export ban.

The refusal of the central and state governments to fulfil these demands shows that they are committed to serve the interests of the capitalists, who are the ones who benefit from the huge seasonal variations in agricultural prices.

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