Onion problem in India

By | December 3, 2015
The Onion problem in India has affected the people in each and every lean season. Sky rocketing prices have kept them out of the reach of common man. The detailed analysis of the Onion Problem has been done below, with some suggestions for the government.
Inside An Onion Storehouse As India Prepares To Import Onions As Prices Surge
Major producing states:
  • Maharashtra
  • Madhya Pradesh
  • Karnataka
  • Andhra Pradesh and Telangana
  • Bihar and Gujarat
  • Nashik district in Maharashtra accounts for nearly 15% of the total onion production in India
Why onion shortage?
  • Indian cuisine has a widespread usage of onion
  • Demand supply mismatch
  • Truant monsoons
  • Rabi onion crop, down in December and marketed in April, is the best of the three onion crops of the year.
    • It forms nearly half of the total onion production in the country
    • Is of best quality
    • Can be stored for up to 6 months
    • It was this crop which was destroyed by untimely hailstorms in March, which has led to this supply shortage
What is being done?
  • The government increased Minimum Export Price (MEP) of onions by 2.5 times to put a virtual ban on exports, so that the supplies can be channelised into the domestic market
  • Government has set up the Price Stabilization Fund
    • Initial corpus of ₹500 crore
    • Would cover fluctuations in prices of Agro horticultural perishable goods
    • Cover only potato and onion currently
    • Losses would be shared by centre and states equally
What are the problem areas?
  • Government is following knee jerk reactions and interfering in market forces, which might have short term gains, but is harmful in the long term
  • Hoarding by large scale traders and speculative trading
  • Lack of storage facilities and perishability of onions
  • Problems in supply chain
  • Indians do not prefer ready made alternatives for cooking in place of onions like onion pastes etc. These can help reduce the demand during peak periods
What needs to be done?
  • Production and productivity of onion needs to increase
  • Hoarding needs to be checked. Market speculations need to be reduced
  • The crop needs to be made immune from vagaries of monsoon and the onion intensive areas should be brought under predictable and efficient irrigation
  • Inventory can be managed so that it can be used to stabilise prices in case of glut and in case of scarcity
  • Dehydration of onions can be done to improve their shelf life
  • The reaction time of the government is very long. Observing the looming crisis period, the government should act swiftly to import onions or use Price Stabilisation Fund to procure during supply gluts

Leave a Reply

Your email address will not be published. Required fields are marked *

7 + 2 =