The State Cabinet on Wednesday ruled out the possibility of a minimum support price (MSP) for onion while announcing a compensation of Rs. 9,000 a hectare for crops damaged due to rains in Chitradurga, Davangere, Gadag, Dharwad and Bellary districts. This has come on the heels of growers protesting crashing prices of their produce.
A macro view of market scenario shows that fluctuations are not a one-off phenomenon but a worrying trend for over a year.
Apprehension Onion yield arriving at the Agricultural Produce Marketing Committee (APMC) at Amaragol here during August 2013, fetched Rs. 4,350 a quintal at higher end (with the Average Modal Price being Rs. 2,517 a quintal). It was due to apprehension that there might be shortfall of supply in Nasik market (one of the main onion markets in the country) due to poor monsoon.
Just over a year and a quarter later, the price at higher end is now Rs. 1,900 a quintal (with AMP being Rs. 764). This is because of huge but poor quality arrivals in the market. In the intervening period, there have been constant fluctuations. At its lowest, it was Rs. 482 a quintal in May 2014.
One of the reasons attributed to the falling price is excessive rain this monsoon that has affected the quality of the yield and the merchants are not ready to pay more for the “wet” yield. Although the farmers admitted that their crop had been affected, they were of the opinion that “poor quality” was a mere ploy by merchants and brokers to reduce the price.
And despite protests and assurance by the government on intervention in the market, the price has only kept dropping since September this year. This forced farmers to resort to frequent protests last month and this month. On Tuesday, the auction of onion at the Hubballi APMC had to be suspended. While their protest resulted in intervention of the Deputy Commissioner of Dharwad, resulting in setting up of a committee for daily monitoring, the end result was just a slight upward revision in the prices.
Import norms relaxed
Onion trader Saleem Byahatti, however, said many farmers opted for onion cultivation hoping that they would get better price. Meanwhile, amid concerns about high prices, the government relaxed the norms for import of onion. “Now huge arrivals and the relaxed import norms have both contributed to the slump in the price,” he said.
