Farmers In The Red: The multi-layered problem of onions

Mahasrashtra government asked the National Agriculture Cooperative Marketing Federation (Nafed) to intervene to stabilise markets, but given that the late-Kharif harvest season is almost over, the damage can’t be undone. (Representative Image)

For almost five months, there were early warnings that onion growers in Maharashtra would be in trouble when fresh harvests arrive in the markets.

First, the bumper crop of red onions in October and November. Second, onion acreage had swollen, even if marginally, for the late-Kharif sowings, sandwiched between Kharif and Rabi seasons. Three, mid-February, with a looming spectre of rising temperature and forecasts of untimely rains, farmers began to harvest this second crop earlier than normal.

Result: a glut, a sharp price crash in markets, and simmering anger erupting in protests.

A Distracted Government

But because the Eknath Shinde-government has been saddled with other pressing issues around its very legitimacy, namely the ongoing legal battle in the Supreme Court, the red onion warnings weren’t heeded in Mumbai, because Mantralaya remains besieged by the political rumblings.

Meanwhile, staring at staggering losses, growers made a bonfire of their onions in Nashik, the production epicentre of this layered daily staple, early-March during Holi and decided to set out on a march last week to Mumbai on foot, to knock on Chief Minister Shinde’s doors. The CM woke up.

Lok Sabha elections are a year or so away. Maharashtra will vote in October 2024 for its assembly, if the new dispensation lasts its term. But all eyes are on the apex court’s constitutional bench that has reserved judgement on a batch of cases of rift within the erstwhile Shiv Sena.

Shinde Throws A Lifeline

Though onion issue in Nashik won’t have a pan-Maharashtra political impact – given that small and marginal onion growers are restricted to merely two or three tehsils of that district, any minor blip on the radar does not make for a good political spectacle in a politically charged climate.

So, mid-March, Shinde announced an aid of Rs 300 per quintal and quickly raised it to Rs 350 per quintal in the face of continuing protests, to part-compensate for farmers’ losses.

That apart, his government asked the National Agriculture Cooperative Marketing Federation (Nafed), the Centre’s canalising arm, to intervene and procure onions to stabilise markets, but given that the late-Kharif harvest season is almost over, the damage can’t be undone.

For now, the Maharashtra government has managed to mollify onion growers, having extended an olive branch – that the government would set up a ministerial committee to look into the 14-plus legitimate demands – to the agitating farmers, after which they called off their protest.

Why Farmers Are Angry

Usually, March sees a spike in onion prices, not a crash. This was an immediate is in no dearth, as fresh harvests began mid-February. That’s only a part of the problem though.

The extreme volatility in the prices of onion – or other perishables – is a more structural issue, one which the Shinde-government has no time to address, given its other preoccupations.

Onion farm-gate prices are at a lowly Rs 2-4 a kg for a grower. The Shinde-government will pay Rs 3.5 a kg in aid. That makes it to Rs 7.5 for a kg. The farmer’s production cost is Rs 12-14 a kg.

That’s one reason why many of them just burnt, razed or dumped onions in anger, rather than incur further expenditure on harvesting and transportation to market.

Onions are not the only commodity selling cheap – there’s a long list of perishables selling at a price below par for their growers, while consumers in cities continue to pay higher prices.

Chhattisgarh tomato growers threw their vegetables on the road a couple of months ago; potato growers in Uttar Pradesh have had to sell their tubers at a price below their production costs.

An Onion Glut

Going back to onions: They are cultivated three times a year.

The Kharif sowings start in June-July, the crop is harvested in September-October; Rabi sowings are done in December-January and harvested in March-April-May (also called summer onions).

In Nashik, farmers also take what is called the late-Kharif – onions sowed in September-October and harvested in January-February. The Kharif and late-Kharif onions are red in colour, contain high moisture, and therefore have short shelf-life. The Rabi onions enjoy long shelf-life.

This time, onion production for Kharif and late-Kharif is bumper, and while the arrivals from the former season still continued, the farmers resorted to an early harvest for the second sowings due to a spectre of untimely rains coupled with rising temperature. The production has breached the record in five years: arrivals in Lasalgaon touched 8.4 million quintals by February end, as against 8.2 million in the previous year. We still have the Rabi crop left to be harvested.

More Supply, Less Demand

This resulted in a glut and together with the arrivals of onions in other parts of India brought about a sharp crash in prices – remember red onions with no storage possibility must change hands fast from farm to fork. The harvest of rabi onion during March-May is important because that onion has a longer shelf-life and better quality.

Maharashtra is among the largest producers of onions in India but now have competition from states like Karnataka, Rajasthan, Bihar, and Madhya Pradesh. In other words, demand in those states is met partially from local produce, unlike say 20 years ago when Nashik onions flooded markets all over.

To add to it, this year, the demand from countries like Bangladesh, Dubai, or Sri Lanka has been sluggish. That in part explains why prices are down when they should actually be up in retail markets. September-October, February-March are usually the periods of deficits.

Remember The TOP Scheme?

The crux of this high price volatility is the perishable nature of onions and no mechanism for a fair price assurance for the growers. It’s here that the State must step in to create what Professor M S Swaminathan called a “price stabilisation fund”, something that the central budget of 2018 set out to do with much fan-fare announcing a new Operation Green programme called TOP – for tomato, potato and onions. Notwithstanding its catchy abbreviation the scheme has been a non-starter, with an unspent allocated budget.

On the lines of ‘Operation Flood’ programme for milk, the aim of Operation Green was to develop a value chain to reduce extreme price fluctuations in the three basic vegetables, while enhancing farmers’ returns by improving their share in the consumer rupee. Clearly, the TOP with an enlarged basket of 22 perishable grains in the 2021-22 budget hasn’t delivered. That’s because the scheme focuses on creation of storage and cold-chain infrastructure, which is in no dearth, but remains cold to the price guarantee and incentives to the vegetable growers.

What happens when the Rabi onions arrive in the markets? And will a grower be able to make up for his losses in the previous two seasons from his third onion crop?

It’s a question that will have to wait for an answer another month or so. For now, with Rs 350 per quintal as a dole, the Shinde-government has borrowed some time for itself.

Jaideep Hardikar is a Nagpur-based journalist, a core team member of the People's Archive of Rural India, and author of "Ramrao - The story of India's farm crisis". Views are personal and do not represent the stand of this publication.