Ground Zero Comment

The bane of a bumper crop

“Traders decide the price, farmers accept it without protest.” The Lasalgaon onion market in Maharashtra. Photo: Vivek Bendre

“Traders decide the price, farmers accept it without protest.” The Lasalgaon onion market in Maharashtra. Photo: Vivek Bendre  

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Farmers in Maharashtra’s onion belt are getting an unprecedented low price for their produce, though they retail at tear-inducing rates after leaving Asia’s largest wholesale market for it, Lasalgaon. Alok Deshpande details their helplessness

Every day, around 3 p.m., hundreds of lorries loaded with onions queue up at the new agricultural market complex at Lasalgaon, around 45 km from Nashik, waiting for the afternoon auction to begin.

As a group of traders approach, the farmers drop their produce at their feet, as if to tempt them into bidding high. The traders halt and look over the merchandise. A market committee employee calls out the reserve price: “400!” Eyes roll, unspoken words seem to pass between the traders. Then the bidding starts: “1!” “11!” “13!” “17!” In less than 30 seconds, the auction is over. The farmer gets 17 rupees over the reserve price, Rs.417 per quintal (100 kg). A pittance at any given time, more so now when compared to prices last year.

A trader-controlled market

No matter how united the farmers are, no matter how hard they fight for a better price, they turn into mute spectators in front of the traders when auction begins. The auction is dictated by the traders with money and considerable political clout. Traders decide the price, farmers accept it without protest.

The market complex has a huge parking space for the lorries. Sometimes there are up to 1,000 vehicles at a time. The otherwise deserted place comes alive twice a day. The first auction of the day starts at around 10 a.m. and the second at 3 p.m. Depending on the number of vehicles, the auction can stretch from an hour to three hours.

Once the rate is fixed, the group of traders moves immediately to the next vehicle. The farmer, left with the price decided by the group, starts collecting the onions he has dropped on the ground. An official from the market committee approaches him with a receipt, bearing the auction rate, trader’s name and farmer’s name. With a receipt in hand and onions in the vehicle, the farmer then proceeds to the godown where the weighing process takes place. As per the rules laid down by the market committee, the farmer must get the payment before the end of the day, which is largely followed.

After the produce is dropped off at a shed in the complex, the traders take control of it. Workers start segregating the onions according to the quality and the packaging begins. Vehicles are loaded with the produce to be sent off to cities or to different States. Traders then get into a huddle to firm up the retail price of the produce — adding their profits — with nary a concern for the farmer and the price demanded by him. The operation is bloodless and smooth.

Barely breaking even

While onion is one of the major crops in this belt, farmers also cultivate grapes, soya bean, sugarcane, and ginger. Speaking out against the cartel of traders is not easy when the farmer is dependent largely on the onion crop, as it may result in traders ganging against him (or her) by dropping rates for his produce.

Official data from the Lasalgaon Agricultural Produce Market Committee (APMC) says that this year’s prices — between Rs.500-Rs.800/ql., down from Rs.970-Rs.3,786/ql. — are the lowest in the last five years. This year, Rs.1,020/ql. (in June) was the highest rate given to farmers, compared to Rs.6,326/ql. in 2015-16, and Rs.2,626 in 2014-15.

Growing onions costs between Rs.50,000 and Rs.80,000 per acre, and a cultivated acre yields not more than 100 ql. With this year’s average selling price at Rs.728/ql., an acre’s worth of onions would get the farmer around Rs.72,800. This sees some farmers barely break even; many lose money.

Small wonder that Milind Darade, who owns 13 acres of land, is furious. “This is the only industry where producers have no right to decide the price of their product,” the onion farmer from Karanjgaon, Nashik district, says. “Isn’t it cruel? Shouldn’t we get angry?” The week before The Hindu caught up with him at the Saikheda sub-market committee, Darade was given a humiliating price for his produce: Rs.5/ql., or 5 paisa/kg. If that was not bad enough, Maharashtra’s Minister for Co-operation, Subhash Deshmukh, said on a live television show that his onions were rotten. “Let me give you some information,” he says indignantly, “this is the onion you eat at a restaurant. Just peel off two layers and you would wonder whether it was really rotten.”

Darade has preserved the official paper from the market committee with the offered rate; he has laminated it to ensure it doesn’t get dog-eared. He says that he was so angry that he refused to sell his onions and brought the load, some 10-11 ql., back to his farm to use as fertiliser. But, he says, “When I calmed down, it dawned upon me that I must use it to highlight the plight of onion farmers.”

Supply-demand mismatch

Simplistically put, there was a shortage last year, and this year has seen record onion cultivation. Abundant supply has brought the prices down. The farmers, though, are used to this kind of fluctuation. They don’t blame the bumper crop and supply-demand equation; they say it’s the traders who are conspiring against them and the government has done little — or the wrong things — to help.

To understand the current crisis for farmers, we need to step back a little.

India has three onion crops a year. Early kharif (the crop sowed in the monsoon) onions come to market between October and December. Onions from the rangda, or late kharif, crop arrive from January to March. The winter or rabi crop is up for sale from April to May. Usually, some parts of the rabi crop are stored for a few months to fill the gap from May to October. Traditionally, prices rise from July to October; official data show that wholesale rates rise by as much as Rs.1,000/ql., even Rs. 1,500, later reflected in the retail market with an increase of Rs.5-Rs.10/kg for consumers.

In 2014-15, the onions took a hit following a hailstorm in North Maharashtra which, in turn, affected their storage value. With many rotting, the onions that did make it to market commanded high prices.

Then the drought of the summer just past played a role too; many sugarcane farmers switched to the less thirsty onion this year. “The onion cultivation area in the State has almost doubled in year 2015-16,” says Nanasaheb Patil, Director, National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED). “Farmers hoped that they will get last year’s rate — close to Rs.3,000-Rs.4,000/ql. — which did not happen, as production increased in huge proportions.”

India is the world’s second-largest onion producer (after China) with 26.79 per cent of the planet’s land under onion cultivation and 19.90 per cent of its production. Maharashtra is India’s largest producer, with a 32.45 per cent share of total onion production, and in turn, Nashik district in north Maharashtra accounts for with 41 per cent of the State’s onion harvest. According to the Directorate General of Commercial Intelligence and Statistics (DGCIS), India produced 203.33 lakh metric tonnes (MT, 1,000 kg) of onions in 2015-16, up from 189.28 lakh MT in 2014-15. Lasalgaon, Asia’s biggest onion market, received around 32,680 MT in the previous fiscal year. Five months into this year, it has received 10,874 MT.

To make matters worse for Maharashtra’s farmers, other States — notably Gujarat, Rajasthan, Madhya Pradesh and Karnataka — have reported higher onion yields.

Holding on for a better day

Aside from the production glut, another important factor was a 40-day strike by traders in July and August, opposing the State government’s decision to free agricultural market committees from government regulations. With no outlet for their rabi onions, farmers had no option but to store them and wait for the strike to end. In addition, thanks to the low prices, some farmers are choosing to not bring their onions to the markets, and instead are storing them away hoping an artificial scarcity later in the year will pay off for them.

This strategy, however, comes with its own dangers: that of the crop rotting or the onions sprouting. Malti Bodke of Bhuse village points to her rotten onions with disgust. “How long can we store them? It’s been almost four months. Once the onions start sprouting, they lose weight, and it becomes difficult to get a higher price.”

The farmers also say that the traders are colluding to cheat them. “It’s a cartel of traders which decides the rates and once the market reopened, they ensured prices didn’t cross Rs.1,000/ql.,” says Rajaram Fafale, from Maralgoi village.

The strike gets blame for the glut. But did trade actually stop? Officials and traders seem to want consumers to believe that, but farmers say it never really stopped. Darade says that opportunistic traders discreetly approached farmers and “quoted lowest possible rates. Farmers, thinking it was better to sell, even at a low price, rather than keep them and let them rot, did sell”.

Three years ago, when the farmers were getting Rs.4,500-Rs.5,000/ql., retail onion prices reached Rs.90/kg., which resulted in protests from the then-opposition parties, as well as consumer organisations, in Delhi, Mumbai and other major cities, accusing the United Progressive Alliance government of failing to protect consumers.

The government’s first step was to increase the Minimum Export Price (MEP) to $1,150/MT. This made it difficult for Indian exporters to compete in international markets; whatever stock was available was diverted to the domestic market, which brought prices down. By March 2014, when the late kharif crop got to market, prices had dropped to less than Rs.1,000/ql. in the wholesale market, and consumers got theirs at Rs.20-Rs.25/kg.

This may have played out well for consumers, but has had other consequences for the industry. “There is absolutely no consistency in our approach towards onion exports,” says NAFED’s Patil. A look at MEPs between December 2010 and December 2015 bears him out: the figure has fluctuated wildly, dropping to $0 in May 2012, and with a high of $1,150 in November 2013. “It only enrages our customers overseas,” says Patil. “They are left with absolutely no guarantee of quantity and price of onions exported from India. These customers have instead chosen Pakistan, China and Iran, and we have lost guaranteed markets.”

Patil says that the government’s decision to placate enraged urban customers has lost it both its farmers’ support and its overseas markets. The onion, he says, is no longer an agricultural commodity, it has become a political symbol.

An MSP for onions?

Assuming the government has to balance the needs of consumers with those of producers, what else could it have done to ensure that farmers get some return on their labour?

The National Horticulture Research & Development Foundation (NHRDF) keeps track of potential harvests by collecting information on each district. This year, despite being aware of the possibility of a bumper crop, the government appears to have failed to take any measures to protect farmers. The NHRDF’s estimates say the rabi onions should be selling at around Rs.818/ql., which is significantly higher than what farmers are managing to get. If the government chose to use its Price Stabilisation Fund, it could subsidise the crop, paying, say, Rs.500/ql.

What the State government has announced this week by way of relief — Rs.100 per quintal, up to a maximum of 200 quintals, or a maximum of Rs.20,000 — has, to put it mildly, failed to enthuse farmers. Every farmer The Hindu spoke to called the measure not just inadequate but practically a mockery of their plight.

Fafale, who sold 10 ql. at Lasalgaon for Rs. 220/ql., or Rs 2.2/kg., greeted the news with scorn. “Now I will get one rupee more. What a relief!” he says sarcastically. “We aren’t begging in front of the government. What we are asking is our right. How does this government conclude that this much of money is sufficient as financial aid? Who advises them? Have they bothered to check the ground reality?”

One of the major demands the farmers have is for the government to introduce a Minimum Support Price (MSP) for onions, as it has for sugarcane. “Why don’t the officers understand that we are not independent and traders enjoy a free run here?” says Darade. “Unless an MSP is announced, we cannot be sure of a certain minimum profit. Why this neglect?”

Western Maharashtra, the State’s sugar belt, has seen, in recent times, sugarcane farmers agitating for an increased MSP. It became an electoral issue in 2014 when the Congress and the Nationalist Congress Party (NCP) suffered major defeats in the Assembly polls in the region considered a bastion for both.

The Swabhimani Shetkari Sanghatana (SSS; its name means ‘organisation for farmers’ self-respect’), led by Raju Shetti, which was in the thick of the agitation, is now part of the State government and Shetti is an MP. While the SSS has stage limited protests in the State’s onion belt demanding an MSP, it has not been able to take the protests to a wider audience. With the Bharatiya Janata Party-Shiv Sena regime, as with the previous Congress-NCP rule, the MSP for onions issue is far from being solved.

In the village of Bhuse, Ramdas Bodke, 65, is philosophical. “I have seen many seasons and farming has never been easy. We know how to tackle nature. What do we do with man-made problems? We farmers feed the world, but now we wonder whether we will have food cooked at home.” He lapses into silence for a minute, and then his tone turns bitter: “Did the government discuss its proposal to hike MLA salaries for even a day? The government takes an instant decision to increase the salary of MLAs, but it takes a long time to decide about farmers. This is injustice. But there is no one to give justice to farmers.”

As for the urban consumers and their agitations, farmers mince no words when the topic comes up for discussion. Turning towards me, one of them asks, “You get agitated when prices skyrocket, but have you ever wondered what happens when prices hit rock bottom? Why don’t you come out on the streets demanding a fair price for us?”

I have no answers.

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