Why do onions get costlier at this time of the year?
The onion shortage occurs annually during June-September as there is no fresh supply, resulting in a price rise. Onion harvested from the rabi crop (which accounts for 60 per cent of the total output) during March-May, is normally stored for consumption during the lean season of June-September.
Onion grown during kharif accounts for about 20 per cent of the total production and is harvested during October-December. The late kharif varieties also account for about 20 per cent of the total output and are harvested during January-March. Except for the period between June and September, there is a steady supply of fresh bulbs, whereas consumption during these months is from the stored produce.
This year the unseasonal rains impacted the rabi harvest in Maharashtra and Madhya Pradesh, affecting the quality of the produce. This resulted in a shortage. Also, the quality of the stored bulbs was rather poor, thereby triggering demand for good quality produce.
Are we producing enough?
India is the second largest producer of onions after China, accounting for about a fifth of the global output. Though India's annual production varies between 18 and 19 million tonnes, the yields are among the lowest at 16 tonnes per hectare. Going by the production and export data, consumption of the vegetable could be marginally lower than the domestic production. However, there are no fresh estimates on the consumption.
This year 40 lakh tonnes or 40 per cent of the rabi produce was stored. Of this, around 50 per cent stored stock has been exhausted. Of the remaining, 10-15 per cent is lost in storage.
Are hoarders the culprits?
Besides a shortfall in supplies during the lean period, the traders and hoarders are also to be blamed for the crisis, as they tend to take advantage of the situation by holding back the stocks. Onion prices started increasing from mid-July due to lower arrival, thanks to slow release of stored stock amidst expectation of higher prices, and touched a high recently.
What can governments do?
While keeping a check on hoarders by enforcing stock limits, the governments should focus on creating low-cost and efficient storage solutions for onions that would encourage the growers to store the produce. Considering the low price of the vegetable, cold storage is not a common practice in India due to prohibitive costs. Also, as shortages occur during June-September annually, the government should intervene quickly on the slightest indication that prices are set to rise.
It can take measures such as enhancing the floor price for exports and contracting imports to ensure adequate supplies so that prices do not hit the roof.
Any delay in contracting imports not only affects the consumer, but also hits the farmers’ realisations for the next crop, as the window for bringing in the produce is very short.