heyNeon is India’s second favorite (after potato) and number one politically sensitive vegetable.
India grows 30 million tonnes of onions. It is the second largest producer behind (you guessed it) China. An Indian household eats 5 kg of onions a month, which adds up to an annual household consumption of 15 million tonnes. Onions constitute 13% of the vegetable bill of an average Indian household.
From fancy five-star hotels to street food stalls, onions provide body, bulk, a hint of sweetness, and pungent pizzazz to Indian curries and chaats. For the poor, a fresh onion and a couple of green chillies are often added to a meal of rotis or rice soaked in water overnight.
Given the perception that it is poor people’s food, the expensive onion is a political nightmare.
Why do onion prices fluctuate so much in India?
“The simple answer is demand and supply. Onion is a highly climate sensitive crop. When weather conditions are good, yields can be phenomenal. Prices fall when there is a glut of onions in the market. At the same time, winter frosts, high Spring or summer temperatures, and unseasonal rains can wipe out much of a farmer’s entire season’s crop. That’s when prices skyrocket,” says Nanasaheb Patil, a director at the Agricultural Produce Market Committee (APMC) in Nashik, Maharashtra. Runs India’s largest onion market at Lasalgaon in the district, and is also a board member of the National Agricultural Cooperative Marketing Federation of India (Nafed).
But there are many layers to this dirty onion story. Let’s try to peel them.
With a substantial annual production of 30 million tonnes, a large, projected and growing domestic demand of 15 million tonnes, onions should be a happy story for both farmers and consumers. With production twice the domestic consumption, India must export its surplus and emerge as a global powerhouse.
But the onion’s journey from farm to your plate is the story of almost everything that is rotten about India’s agricultural economy.
Almost every year, onion cycles make Indians cry. It is farmers now as wholesale prices are around Rs 5 per kg; It will be the turn of the consumers by November when retail prices will touch Rs 100 per kg.
To understand why this happens, we need to understand the onion production scenario in India.
India grows two types of onions: red, which has a shelf life of two weeks or so, and pink, the larger crop, which has a shelf life of about six months.
View India’s onion production calendar as Mexican wave on the map. The first crop of fresh onions arrives from southern Karnataka in August. The supply then gradually shifts north: Kolhapur in September, Nashik in October, onions from Madhya Pradesh and Rajasthan start entering the market by the end of February. The August-to-February cycle brings mostly perishable red onions. Soon after the red season ends, pink onions, called ‘ganthi’ or ‘gulabi’, start arriving from March to early May. They are a mainstay of India and fetch better prices. Pink onions are stored and released over several months. There is no new production until August.
How do high onion prices affect politics?
India’s first experience of a large-scale nationwide onion crisis was in 1998. In May 1998, India conducted a nuclear test at Pokhran. By November the celebratory mood had disappeared. The arrogance of possessing the atomic bomb was not enough to take away the pain of high onion prices.
“The extremely hot summer has damaged the crop in Maharashtra, leading to onion prices rising to Rs 75-100 per kg. For the first time, the wholesale price in Lasalgaon had touched Rs 40 per kg,” recalls Nitin Jain, a trader in Lasalgaon and elsewhere, who calls him the ‘onion king’. It’s a tag he tries to downplay “We hardly do much business anymore,” he says with a nonchalant smile.
Lasalgaon, a small town located 60 km from Nashik, is the center of India’s onion trade. The farmers here sell around 2000-3000 tonnes or around 120 truckloads of onions daily.
Nitin Jain’s father was among those who established the onion market in Lasalgaon in 1947. On a January afternoon, sitting in his small, dingy office, wearing rimless glasses and a black-and-yellow checked shirt, Jain has a playful demeanor.
Its two iPhone 14 Pro can’t stop buzzing. On one, he keeps telling about the current price of onions. On the other hand, he constantly calls buyers from Begusarai to Bengaluru, duping them by saying that he has no stock left.
But as soon as the clock strikes 12, Jain puts the phone away, closes his eyes and folds his palms and long, slightly curled fingers in prayer for a few minutes.
“After that price hike in 1998, governments in Delhi started paying attention to Lasalgaon and onion prices on a daily basis,” he says.
In 1998, a rumor spread in Rajasthan that radiation from nuclear tests had destroyed the onion crop.
In 1998 Delhi’s BJP chief minister Sushma Swaraj was angered by the high prices of onions in losing the assembly elections. The party has not regained power in Delhi since then.
Since 1998, a feature of Indian policy has been banning the export of onions when local prices rise. Another favorite trick of central governments is to bring onions under the Essential Commodities Act when prices rise.
This means that any trader who has a stock of more than 25 tonnes of onions (which is essentially a truckload) can be jailed.
“A few months after the November 1998 peak, prices in Lasalgaon fell again to Rs 1-2 per kg as the next bumper crop hit the market,” says Jain.
Why did onion prices fall?
Again, the simple answer is, there is currently more supply than demand. There are both local and global factors at play. Most of the major growing regions produced a bumper crop during the February harvest. And many farmers cut crops in early March for fear of damage from unusually high springtime temperatures.
This meant that there was a lot of onion that had nowhere to go. Countries that import onions from India – mostly Sri Lanka, Bangladesh, Pakistan (not directly, but through the UAE), and some in South East Asia – have stopped buying. Faced with a severe foreign exchange crisis, he cut down on imports. Even as exports declined, India’s failure to connect its farmers to the domestic market made matters worse.
In 2020, the Prime Minister flagged off a dedicated railway freight service called ‘Kisan Rail’ to move farm produce faster and cheaper across the country. Farmers can use the service at subsidized rates. For the government, this served the twin objectives of increasing farmers’ income and ensuring adequate supplies of high-demand vegetables such as potatoes, onions and tomatoes.
Of the 2,400 trains running under the service, over 1,800 carried onions and tomatoes from Maharashtra. “Kisan Rail can transport onions from Maharashtra to Bihar and Bengal in 30 hours. But due to acute shortage of coal, it has been closed for almost a year. Now farmers have neither an export market nor full access to the domestic market,” says Kshitij Jain, who runs Sureshchand Ratanlal Jain & Co., a large onion trading and export firm in Lasalgaon.
Why are onion farmers almost always angry?
This is because they rarely make a profit. “It costs us around Rs 12-15 per kg to grow onions. The cost of inputs such as labour, transport, seeds, fertilizers and pesticides keep rising. There is a lot of weather related and post harvest losses. If I harvest 200 quintals from one acre, after wastage and moisture loss, I am left with only 135-150 quintals when I sell in the market. To make a small profit, I should be able to sell for at least Rs 20 per kg,” says Santu Sanap, an onion farmer with three acres in Shivre Phata village on the Nashik-Mumbai highway.
Here’s a shocking fact: In India’s biggest onion market, Lasalgaon, farmers are selling 40% of their produce at a loss. Only a quarter of the onions that come to the market are sold at a profit of 50% or more. Here’s another thing: for every rupee an urban consumer spends on onions, the farmer gets only 30 paise.
On seeing the journalists and camera crew in the market of Lasalgaon, the anger of the farmers starts boiling. “The media comes here only during the month when prices are high. They run headlines like ‘Nashik’s onion farmers are making housewives cry’ on TV and make us villains. Where is the media when we are crying for the rest of the year,” says Arun Kadam, a farmer from Neelkheda village, who has grown a tractor load of onions for much less than his production cost.
Nanasaheb Patil organized workshops for journalists to help them understand the plight of farmers. But things haven’t changed much.
Onion is at risk of heavy damage. About 30 per cent or 10 million tonnes of onion is wasted on its way from farm to plate. Millions of tonnes simply rot in godowns, warehouses and on the way because India has not found a way to efficiently supply onions across the country.
By November the stock of pink onions gets depleted. With a bad monsoon or excessive rains (excessive weather is now the new normal) the supply of fresh red onions gets disrupted, resulting in a severe shortage in the middle of the festive season.
And only then the government starts to panic. To control domestic prices, the government first imposes export restrictions. As the second largest global producer of onions, India should be earning billions from exports. This will help the farmers to earn more. But suddenly banning exports every time local prices rise, tarnishes India’s image in global markets. Since 2010, India has banned exports four times, and on eight other occasions imposed heavy restrictions that almost turned into embargoes.
Tired of pleading India to sell onions in 2019, biggest importer Bangladesh launches its own onions soul dependent Objective. At a time when there is a huge global shortage of onions, India has a huge surplus. But buyers from Malaysia or Dubai find India’s export policy unstable. Global markets prefer reliable supply chains.
“Today, productivity is not a problem. We should be an active global player. Our embassies should help us to get better export opportunities. But we are psychologically afraid of shortage. No proper management,” says Nanasaheb Patil. There is no production estimate or forecast, there is no stable export policy.”
Inability to take advantage of global demand bothers most farmers in Maharashtra. “To keep the people in the cities happy, the government keeps on banning exports and the poor farmer can earn a few rupees more. If you don’t eat onions for a month while the prices are high, you will not die.’
The Maharashtra government has agreed to give a temporary bonus of Rs 3.5 per kg over the Lasalgaon mandi price to onion farmers.
It is at best a band-aid solution to the ill effects of prolonged policy failure.
let’s start talking seriously about the price of onion that comes on our plate.
this article was originally published on the plate TR Vivek is the editor and co-founder of the portal along with Fehmi Mohd.