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Farmers against bringing onions under Essential Commodities Act -Dilip Kumar Jha
-The Business Standard


Won't sow next season if Rs 15 MSP not declared and govt does not procure at market driven price, scarcity seen in 2015-16

Lasalgaon (Maharashtra): Arjun Kadam, a farmer here, has vowed not to sow the onion crop next season because of the government's frequent intervention to keep prices low, in many cases lower than the cost of production.

Thousands of farmers such as Kadam have voiced concern over the Centre's decision to put onions under the Essential Commodities Act. They also want state governments to de-list this commodity from the Agricultural Produce Market Committee (APMC). "Now, we are forced to sell onions at suppressed prices because of fear of state government raids and seizures of godowns housing bulk quantities of onion," Kadam said.

This small town in Maharshtra's Nashik district houses Asia's largest onion mandi and auctions an average of 2,500 tonnes a day. Lasalgaon, which sets the benchmark price for the country, contributes about 10 per cent to India's annual onion production of about 19 million tonnes.

"In India, no harvest takes place between March and September. Therefore, farmers and traders store the rabi crop for supply through the year. Bringing onions under the Essential Commodities Act and putting a stock limit will force farmers and stockists to avoid stocking. Does the government have any plan to feed India's rising demand during this period? It might focus on importing at high prices. Why not encourage domestic producers rather than increasing our dependence on imports?" asked Nanasaheb Patil, chairman, APMC, Lasalgaon.

Hoping prices would rise to Rs 50-60 a kg (as was the case last year) and expecting significant profits during the lean period of August-October, most farmers didn't release their produce, despite prices rising to Rs 20-24 a kg about a month ago. Now, they are gradually releasing it in small quantity, amid fears of spoilage and a further decline in prices. Data provided by APMC, Lasalgaon, showed the average cost of production was Rs 12-13 a kg, compared with the National Horticulture Research and Development Foundation's data of Rs 8-9 a kg.

"We are urging the government to announce a minimum support price of Rs 15 a kg and be ready to procure when the price falls below this level. Otherwise, we will not sow onion next season. This might lead to a huge scarcity, for which the government will be responsible," said Sachin Pardeshi, another local farmer.

Against the model auction price of Rs 15.5 a kg in the Lasalgaon mandi on Thursday, consumers in Mumbai pay Rs 28-30 a kg.

Farmers auction the commodity in Lasalgaon, from where it is supplied to the Vashi mandi. Here, traders pick up onions in bulk and sell to large traders who supply other middlemen, from where local retailers buy the product. Thus, there are at least four channels between farmers and consumers. Considering at least 30 per cent weight loss in a channel and profit at every stage, retail prices should not be more than double the auction price.

"The government's major worry is food inflation and trade deficit. While onion exports generate huge foreign exchange, its weightage in food inflation stands at a negligible 0.18 per cent. Therefore, the government's intention of putting restrictions on onion is unjustifiable," said Sandeep Gaikwad, an onion trader.

Meanwhile, the Centre has initiated talks with state governments to scrap APMCs, raising farmers' concerns further. "APMC is required for both data collection and setting benchmark prices. Scrapping the APMC will create a mess, as farmers and stockists will not go directly to consumers to sell onion in small denominations, say half a kg," said Uttam More, a trader.

As of now, onion sowing is 15-20 per cent less than usual. But prices are unlikely to rise as the early kharif crop has started hitting Karnataka mandis. And, it is expected the arrivals will intensify in the coming weeks.