Many northern states of the country recently saw an increase in the price of tomatoes because of extreme weather changes and a distorted supply chain, and now, onions are here to stress the public. The Centre has taken a big decision which has resulted in a huge rise in the price of onions in the country. This price hike will last for the month of September too.
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What has happened?
On August 19, the Ministry of Finance imposed a 40 percent export duty on onions throughout the country. This has led to a huge rise in the price of onions. Therefore, some states in the country saw a hike of Rs 2-5 hike on onions. Some places in the country have seen a hike of Rs 20 as well. This has also resulted in traders closing onion auctions in the Nashik district of Maharashtra.
The prices of onions so far- tracking the spike
Since the very beginning of August, the rates of the commodity have witnessed a steep increase. The average price of onions has increased to Rs 2,050/quintal as seen on August 19, while it was Rs. 1,370/quintal at the beginning of the month; a price rise observed at the Lasalgaon wholesale market in the Niphad taluka, Nashik.
However, earlier in the months of March to March, huge financial distress was faced by onion growers, as the selling price of the produce was Rs 500/quintal and Rs 700/quintal.
Why has the Centre imposed a 40 percent export duty on onions? Before getting the answers to this question, it is important to first understand the crop better.
How are onions different from other crops? Understanding the crop and the acreage
Onions differ from other crops in many aspects, but one of them that is connected to the increase in price is the fact that the crop is not grown all around the year, unlike other crops like beans.
If we delve deep into the basics, the Rabi crops are sown from December to January. It is after March that these crops are harvested. Kharif crops are sown from June to July and are harvested after September. The late-Kharif crops are sown from September to October and are harvested from December to January. The Rabi crops, onions being one of them, have a low moisture content and thus support storage. It is easy for farmers to offload stored onions in storage structures known as kanda chawls.
A Kanda chawl
Image Source: Agrowon
Weather and the onion crop
Last year, India saw a major decline in onion acreage. It was noted by the Crop and Weather Watch Group that while the target was 3.76 lakh hectares for the onions, India sowed around 3.29 lakh hectares. It became even more difficult for the country to come closer to the target when the Rabi crop got damaged in the months of March and April due to unseasonal rain in most onion-growing states like Maharashtra.
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But why has the Centre put a 40 percent export duty on onions, after all?
The big move is all set to shake the markets for the commodity, but this is not an act without a reason. The real objective to impose a 40 percent export duty on onions is to curb the export of onions across the world. India is one of the top exporters of onion in the world. This has resulted in an increase in the price of vegetables in India itself.
Since the previous two years, the inflation of onion rates has stayed negative. This year in the month of July, the rates spiked up over 11 percent. In order to manage this inflation of the rates of onions, the Centre took the decision to put export duty, so that it discourages the export of onions.
Another reason that led to the imposition of 1 40 percent export duty on onions is the Centre’s intent to encourage the domestic supply of onions throughout the country, by means of handling the yield which has been hampered due to irregular weather situations.
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Onions on subsidy?
This export duty imposed by the Centre on onions led to an unanticipated rise in the rates of onions. This led the Centre to offer the commodity stock at a subsidized rate in a few states. These areas include Uttar Pradesh and Delhi NCR as well.
For the subsidized onion stock, the National Cooperative Consumers’ Federation of India (NCCF) has fixed the price of Rs 25 per kg. The overall stock, however, is running out soon.
For the fiscal year of 2023-24, the government has kept a reserve of 3 lakh metric tons of onions. To add to this reserve, the Centre has also decided to purchase an additional 2 lakh metric tons of onions.
At present, the NCCF is selling tomatoes on the Central Government’s behalf at a low price and is about to do the same for onions.
Anice Joseph Chandra, the Managing Director of the National Cooperative Consumers Federation of India has expressed that this retailing of buffer onions will commence from Delhi. Moreover, the Director also said that the onions will be thus sold at a subsidized price of Rs. 25 per kg via mobile vans and two retail outlets.
Therefore, the onions will be sold at a subsidized rate in the states of Andhra Pradesh, Assam, Delhi, Himachal Pradesh, and Telangana
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Categories: Trends
Source: vcmp.edu.vn