Shortage of supplies and hoarding push up prices

Traders hoarding for speculation, cartelisation and artificial scarcity in onions that has shot up prices will go unchecked till the next crop comes next month, as the commodity is not covered under the Essential Commodities Act.

So when the Central government and Union Ministers ask States to crack down on hoarders, it is not under any defined law but only through their “influence,” highly placed sources said.

“Onion is not a commodity defined under the Act and therefore, no stock limits can be imposed on it and no de-hoarding can be ordered unless a State has notified such specifications under its own law,” the sources told The Hindu.

By all accounts, therefore, the onion crisis is set to deepen in the next two weeks due to shortage of supplies and hoarding. A Central government’s inter-ministerial group (IMG) that reviewed the situation, decided to raise the Minimum Export Price (MEP) of onions to $ 900 per tonne from $ 600 per tonnes to discourage exports.

It, however, took no decision to ban exports as has been the demand since July when the onion prices first shot up to Rs. 80 per kg.

Onion production in 2012-13 was lower by 4.89 per cent and exports were higher by 17.39 per cent over the previous year. Even as onion prices showed signs of spiralling, 7 lakh tonnes were exported between April and August.

While onion prices have risen to Rs. 60 and Rs. 70 per kg, wholesale traders have warned that the prices might touch Rs.100 per kg in the next two week, giving jitters to the Delhi government which faces elections in a few weeks.

Reacting to the situation, Union Minister Kapil Sibal said vendors and traders must be asked to buy the bulb at a lower price and sell it a lower price. “Does the government sell onions,” he said when asked about the crisis. Food Minister of State K.V. Thomas said the States must act against hoarders.

The Centre has asked Maharashtra, where maximum rabi season onion is stored for use in the lean period (July-October), to ensure steady supply of the vegetable. Delhi, Chandigarh and Kerala have also been asked to look into factors responsible for the sudden price increase and take an action “as deemed appropriate.”

There has been no import on government account although the National Agriculture Marketing Federation of India (Nafed) claims to have floated tender notice indicating its interest to import the bulb from Pakistan, China, Iran or Egypt.

Sources told The Hindu that onion cultivation and trade required a serious look by the government considering the fact that the country needs between 180 to 200 lakh tonnes of onion compared to 160 to 170 lakh tonnes produced at present. On an average 12 to 15 lakh tonnes are exported and up to 25 lakh tonnes are lost in post-harvest losses.

A senior official in the Ministry of Agriculture and Managing Director of Nafed Sanjeev Chopra told The Hindu that the government was making efforts to ensure all year-round cultivation of onions. “We want to create regional hubs such as Punjab and Haryana to cater to Delhi, Bihar and Jharkhand for eastern States and Maharashtra, Gujarat, Karnataka and Andhra Pradesh to cater to the southern and western regions. We want to expand the kharif and later kharif period.”


Onion crisis will ease in 2-3 weeks: Pawar September 20, 2013