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LATEST NEWS UPDATES | Despite record onion yield, prices shoot up -Subodh Varma

Despite record onion yield, prices shoot up -Subodh Varma

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published Published on Jun 20, 2014   modified Modified on Jun 20, 2014
-The Times of India

 

NEW DELHI: There has to be something drastically wrong somewhere when onion prices start rising just after the largest ever harvest of onions. In 2013-14, India harvested 19.3 million metric tons of onions. That's 15% more than the previous year. This is not the final figure: it is the latest estimates put out by the agriculture ministry and may go up or down by a couple of percentage points. But even then, it's an all time record.

Yet wholesale prices of onions jumped up by 20-50% across various cities in the first fortnight of June this year. Even in Lasalgaon and Pimpalgaon, two of the biggest wholesale markets in the country, located in Nashik district of Maharashtra, prices were quoted 22 to 28% higher than a fortnight ago. In all top 10 onion markets in the country (which account for 55% of all onion arrivals) prices had shot up, except in Delhi.

 

The pan India spike, which is still continuing, is a challenge to the newly installed Modi government, its first agni pariksha. Nothing cause more anger and unrest among people than prices of staple food items rising, and nothing is more volatile than onions. One of the key campaign issues of the Modi election campaign was the well-known inability of the UPA government to control prices in the face of repeated price spikes, especially in vegetables.

 

Between 2010 and 2014, there were five spikes in onion prices. In March 2010 prices shot up by 20%. The same year, prices spiked by 45% between November and December. Then in 2011, prices steadily climbed by 42% between July and October. Between December 2012 and February 2013 onion prices climbed up by nearly 30%. And last year, the biggest robbery took place when onion prices steadily zoomed up by a lethal 207% between June and October.

All these spikes in onion prices saw much hand-wringing by the government, stern calls by then agriculture minister Sharad Pawar, and then commerce minister Anand Sharma to state governments to crack down on hoarding and assurances that prices would come down with the next round of harvest coming in.

As the present spike is unfolding, there is a sense of deja vu - it has happened before. Finance minister Arun Jaitley has called upon state governments to check hoarding, while prime minister Modi has called an urgent meeting of ministers and top bureaucrats to discuss strategies. Since the government has barely settled down in office, perhaps they will be given a long rope by the people.

But one clearly established, repeatedly reported nexus about which there is a continuing conspiracy of silence is the wholesale trader -- commission agent cartels that exist in the big wholesale hubs of Maharashtra and Karnataka.

The Competition Commission of India in a report in 2012 had identified these cartels as the key factor behind periodic spurts in onion prices. Holding on to a few tens of thousand tons of onions for a few days can goose the sensitive market because supply and demand are balanced on a razor's edge and any disturbance creates a window for profiteers to make a windfall.

There is already talk of onion woes later this year because of the delayed monsoon which may delay sowing of the new onion crop. The people await for the new government's next move, while plodding through yet another round of increasing onion prices.


The Times of India, 20 June, 2014, http://timesofindia.indiatimes.com/business/india-business/Despite-record-onion-yield-prices-shoot-up/articleshow/36853238.cms


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