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Onion crisis looms as trader-exporter nexus waits for the kill

Onion price fluctuations, which are potent enough to dislodge state governments in India, are back to haunt the Indian commodities market and the government.

Onion prices have been in an upward spiral since the last fortnight.

Onions were retailed at Rs 6 a kilo two weeks back. Today, the price was almost 100 per cent up, hovering in the Rs 10-12 band in different parts of the country. Even in a production centre like Nashik, onions are being sold at Rs 8-10 per kg.

A few marketmen attributed the rise in price to the government's mid-August move to export 5,000 tonnes of the vegetable bulbs. During 1998-end, the same government had put onions on the essential commodities list and banned exports, in its attempt to check the upward price spiral.

The National Agricultural Co-operative Marketing Federation of India Limited or NAFED, the canalising agency, has already exported 500 tonnes of good quality onions to Sri Lanka.

Vinay Pandey, an onion trader at the Byculla vegetable market in south Bombay, says, "Owing to lack of adequate rains, the onion crop this year was of comparitively poor quality. The supply chain has also been affected. This has caused the price-hike."

One more reason, it is learnt, is rumours. There is talk in the market that the government is likely to lift the ban on onion exports. Apparently, some traders are resorting to hoarding in anticipation of demand from markets abroad.

Mohammad Mustaqin, a trader at the Crawford Market (aka Jyotiba Phule Market) in Bombay, says that a fewer number of trucks are transporting onions to the metro these days. "There are fears that prices may soar further."

NAFED in New Delhi was not available for an official word. However, a source, pleading for anonymity, said that exporters are indeed waiting for the government to lift the ban. Why? "So that they can go in for the kill." The exporter-trader nexus is behind the price-hike, he added.

He further said that the Prime Minister's Office is monitoring the situation on a day-to-day basis. An onion price crisis is the last thing that the Bharatiya Janata Party would want at election time, he said.

In November 1998, the onion price-hike led to a mauling of the incumbent BJP in the state legislature elections in Madhya Pradesh, Rajasthan and Delhi.

India, with annual onion production of around 4 million tonnes, is the world's second largest producer after China. Maharashtra accounts for 30 per cent of the 4 million tonnes. Nashik, Pune, Ahmednagar, Satara, Sholapur and Dhulia are considered the onion bowls of Asia.

India produces three onion crops annually: the kharif (October-December), the Rangada (January-March) and the Rabi or Unhal (April-May). All the three harvests find their way to the export markets. The Rabi crop produce is said to have the longest shelf life.

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