Centre curbs stock limits to cool onion prices

For representation only.   | Photo Credit: G. KARTHIKEYAN

With onion prices crossing ₹100 per kg in several cities, the Centre imposed stock limits on wholesalers and retailers until the end of the year to prevent hoarding. This is the first time stock limits have been imposed on any commodity after the Essential Commodities Act was amended last month to reduce such interventions.

Under the curbs, wholesale traders will not be allowed to store more than 25 tonnes of onions, while retailers will be limited to two tonnes only, from October 23 till December 31.

“We want to send a strong message that the government will not allow hoarding and price manipulation to hurt the ordinary consumer,” Consumer Affairs Secretary Leena Nandan told journalists on Friday. “Storage has to be such as meets current requirement; it should not be hoarded in expectation of a possible future price spike.”

String of measures

Onion prices have been rising steadily since early September, and the Centre has already slapped an export ban on the staple vegetable, taken steps to facilitate imports from other countries, and released more than 40,000 tonnes from its buffer stock of one lakh tonnes into retail markets to cool down prices.

Prices are always high at this time of year as stocks from the last rabi crop dwindle before the fresh kharif crop begins to arrive. However, excess rainfall and flooding in the key producer States of Maharashtra, Karnataka, Andhra Pradesh and Madhya Pradesh this year has resulted in significant damage to the standing kharif crop, and the expectation of short supplies has led to soaring prices, crossing the ₹100 per kg mark in Mumbai, Pune and Hyderabad. 

Nationally, the average retail price is more than ₹55 per kg as on October 21. This is only 22% higher than last year, when excess rainfall had similarly affected crops, damaged onions in warehouses and caused transport disruptions. However, the price is 115% higher than the average of the last five years for this date, which triggers the “extraordinary price rise” clause of the amended Essential Commodities Act, allowing the government to invoke stock limits.

The Act was amended by Parliament last month to reduce government regulation and encourage traders and investors to build warehousing and supply chain infrastructure without worrying about being raided on suspicions of hoarding. The Centre had also promised that farmers’ income would rise through the move. 

Farmers unhappy

Although consumers will be relieved by the stock limits imposed on onions, farmers groups are not happy.

“When prices go up, the government immediately steps in to intervene. But when the price goes down to ₹5 and ₹10/kg in February and March, will they step in to help farmers then,” asked Vijay Jawandia, Maharashtra-based farmer and activist. 

The untimely rains had not only destroyed the standing crop, but also seedlings in the nurseries, meaning that onion seed prices are now reigning at a record high of ₹5000/kg, in comparison to the usual rate of ₹1000/kg, Mr. Jawandia said.

“One must understand that natural calamities happen, and the farmer cannot always bear the whole burden. It is only farmers who suffer, never consumers. If one does not eat onion for a month or two because prices are high, one is not going to die,” he added suggesting that the government intervention was due to the upcoming Bihar polls, with onion prices, especially on the eve of festival season, having become a political issue in the last few years.

PTI adds:

“We have stepped up efforts to check the price rise. We have requested state governments and union territories to take onion from our buffer stock for retail intervention,” Ms. Nandan said.

Assam, Andhra Pradesh, Bihar, Chandigarh, Haryana, Telangana and Tamil Nadu have shown interest and taking a total of 8,000 tonnes of onion from the buffer, she said, adding that the Ministry is awaiting response from other States.

The Centre is offering onion from the buffer stock stored at Nashik at the procured rate of ₹26-28 per kg to States who wish to lift the stock on their own. For others who want it to be delivered, the offered price would be ₹30 per kg, she added.

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Printable version | Dec 2, 2021 7:23:59 PM |

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