It’s a double whammy for Maharashtra’s onion farmers: in the third consecutive drought year, a demand-supply mismatch has pushed them to the brink.
While high prices pinched citizens last year, this year, farmers are struggling to recover their production cost. The all-India onion production figure has touched 203.15 lakh metric tonnes (MT), the highest in recent years, which is in excess of the average consumption of 144 lakh MT. Prices at Lasalgaon market in Nashik, the largest onion market in the state, have dropped to Rs 750 per quintal on average from last year’s Rs 5,500 to Rs 6,000 per quintal.
This essentially means a farmer is selling one kg of good quality onions at Rs 7.5 in the wholesale market, a price too low to even compensate the production cost. The state is one of the largest producers of onions in the country, contributing to almost 40 per cent of total production.
Essentially, the farmers got their math wrong. Buoyed by onion prices last year, many farmers took to onion cultivation. “The area under onion cultivation in the state almost doubled in the 2015 rabi season. Farmers hoped they would get the 2015 rate, which did not happen as the produce quantity shot up,” said Nanasaheb Patil, chairman, Lasalgaon Agriculture Produce Market Committee (APMC).
A major reasons for the rise in onion prices last year was hailstorm-induced damage to the crop. “Though production was satisfactory last year, the natural calamity had reduced the keeping quality (shelf life) of the crop. So the produce that was harvested faced damages and prices went up,” said Mr. Patil.
The drought too pushed up onion farming. “There was water scarcity and sensing that, even sugarcane farmers turned to onion cultivation in many parts of the state,” said Deepak Chavan, a Pune-based agriculture commodity analyst. A similar trend was witnesses in other parts of the country, he said.
The vicious cycle
According to Mr. Chavan, while the drought has already affected lakhs of farmers in the state, the continued drop in prices and the government’s inability to extend fair prices to farmers will hit more of them hard. “Due to this drop, next year, farmers will not opt for onions and then it will lead to an increase in prices. This is a cyclical process that has been going on for years. It should be stopped in the interest of both farmers and consumers,” he said.
“There is a similar increase in onion production in Pakistan and China and has brought in restrictions on export of the Indian crop,” said onion trader Sanjay Pingle from the Vashi APMC.
According to a National Horticulture Research & Development Foundation report, the arrival of onion increased in almost all the markets of major rabi onion-producing states. “The harvesting of rabi onion will continue till May 2016. Farmers and traders started storing good quality onions from April 2016, and it is expected to continue till May-end. Around 45 lakh MT or even more is expected to be stored in the current year due to the availability of good quality and the prevailing low rates. Onion prices are expected to remain the same till May/June 2016,” the report stated.
Systemic failure
Farmers say the government failed to see this coming. “Farmers have been agitating since December 2015, but no one bothered to listen to them. Adding onion to the essential commodities list has ensured that traders do not stock, making matters worse. Our policies are always consumer-centric, but what about the producers?” Mr. Patil said.
While high prices pinched citizens last year, this year, farmers are struggling to recover their production cost. The all-India onion production figure has touched 203.15 lakh metric tonnes (MT), the highest in recent years, which is in excess of the average consumption of 144 lakh MT. Prices at Lasalgaon market in Nashik, the largest onion market in the state, have dropped to Rs 750 per quintal on average from last year’s Rs 5,500 to Rs 6,000 per quintal.
This essentially means a farmer is selling one kg of good quality onions at Rs 7.5 in the wholesale market, a price too low to even compensate the production cost. The state is one of the largest producers of onions in the country, contributing to almost 40 per cent of total production.
Essentially, the farmers got their math wrong. Buoyed by onion prices last year, many farmers took to onion cultivation. “The area under onion cultivation in the state almost doubled in the 2015 rabi season. Farmers hoped they would get the 2015 rate, which did not happen as the produce quantity shot up,” said Nanasaheb Patil, chairman, Lasalgaon Agriculture Produce Market Committee (APMC).
A major reasons for the rise in onion prices last year was hailstorm-induced damage to the crop. “Though production was satisfactory last year, the natural calamity had reduced the keeping quality (shelf life) of the crop. So the produce that was harvested faced damages and prices went up,” said Mr. Patil.
The drought too pushed up onion farming. “There was water scarcity and sensing that, even sugarcane farmers turned to onion cultivation in many parts of the state,” said Deepak Chavan, a Pune-based agriculture commodity analyst. A similar trend was witnesses in other parts of the country, he said.
The vicious cycle
According to Mr. Chavan, while the drought has already affected lakhs of farmers in the state, the continued drop in prices and the government’s inability to extend fair prices to farmers will hit more of them hard. “Due to this drop, next year, farmers will not opt for onions and then it will lead to an increase in prices. This is a cyclical process that has been going on for years. It should be stopped in the interest of both farmers and consumers,” he said.
“There is a similar increase in onion production in Pakistan and China and has brought in restrictions on export of the Indian crop,” said onion trader Sanjay Pingle from the Vashi APMC.
According to a National Horticulture Research & Development Foundation report, the arrival of onion increased in almost all the markets of major rabi onion-producing states. “The harvesting of rabi onion will continue till May 2016. Farmers and traders started storing good quality onions from April 2016, and it is expected to continue till May-end. Around 45 lakh MT or even more is expected to be stored in the current year due to the availability of good quality and the prevailing low rates. Onion prices are expected to remain the same till May/June 2016,” the report stated.
Systemic failure
Farmers say the government failed to see this coming. “Farmers have been agitating since December 2015, but no one bothered to listen to them. Adding onion to the essential commodities list has ensured that traders do not stock, making matters worse. Our policies are always consumer-centric, but what about the producers?” Mr. Patil said.