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The economics of onion farming

2018: Low Wholesale Prices, High Debt

(With inputs from Bhavika Jain in Mumbai, Amarjeet Singh in Bhopal, Neel Kamal in Bathinda, Sandeep Rai in Meerut, and Priyangi Agarwal in Bareilly), Would you grow onions if all they got you was 2/kg?, December 14, 2018: The Times of India

Low Wholesale Prices, High Debt Are Squeezing Farmers Across India

On November 23 this year, the street near the farmers’ market at Nivdunge village in Ahmednagar district of Maharashtra ran red. It wasn’t blood. But Bandu Markad said it wasn’t any different for him. The farmer was in distress and he had just squished the pomegranates that he had grown under tremendous hardships, which included getting water in the drought-prone district.

Markad had reason to curse his luck. When he took the yield from his 1,200 trees to the market, he got a price of Rs 10 per kilo. Days ago, it was Rs 80. A video of Markad in tears and beating pomegranates to pulp soon went viral. Moved, people sent him money. At the end of five days, he had about Rs 2 lakh in his account.

One could call Markad fortunate. But across the country, a range of issues from debt to low prices for their produce have forced farmers to take desperate measures. Many killed themselves, destroying the lives they left behind. A month after BJP’s Devendra Fadnavis took over as CM of Maharashtra in 2014, he said tackling the agrarian crisis would be his top priority. He drafted a special action plan to check suicides in 14 of the worst-hit districts. In 2017, 2,917 suicides were reported, while in the current year, up to October 31, 2,223 farmers have ended their lives.

On March 12 this year, thousands of farmers from Maharashtra reached Mumbai after covering 180 km on foot to highlight their plight. On November 30, those in north and central India trooped into Delhi — among them prominent leaders from Opposition parties, indicating the significance the issue has acquired on the national political stage — to articulate their anguish. In the sullen crowd were men like Mohanlal Nagda of Rewli-Devli village in Neemuch district of MP.

Nagda had for long avoided looking at the big pile of onions rotting away in a corner of his farm. It invariably brought tears to his eyes. Harvested on his 2-acre land, all 100 quintals of his onion yield now lies dumped. He knows he won’t recover the cost if he tries to sell it.

“The mandi is only 10km away. But I’d rather not take my produce there,” he said. He quickly did the math. “The onions are harvested, but to cut them I must spend Rs 15,000 at Rs 150 per quintal. Transporting it to the mandi will cost Rs 2,500 more at Rs 500 per trolley. I need to spend another Rs 1,500 on loading, unloading and mandi expenses,” Nagda told TOI. “At Rs 2 per kg, all I’d get is Rs 20,000. So, I preferred dumping them, however much it hurts. I spent around Rs 40,000 on cultivation alone. The produce is already decaying. It terrifies me.”

Maharashtra has declared drought in 151 talukas across 26 districts in the wake of a deficient monsoon. The dry spell has affected an estimated 60% of the 1.6 crore farmers in the state. Due to below average rainfall during sowing season, the output has been hit too. Several areas reported over 70% crop loss and the state sought relief of Rs 7,962 crore from the Centre.

But respite looks remote for large chunks. A Nashik farmer recently sent a money order of Rs 1,064 to the PM’s office. It was what he’d got after selling 750 kg of onion after a crash in prices. It doesn’t help that Maharashtra — like many other states — hasn’t been able to break cartelisation by wholesale traders and middlemen in market yards to ensure fair pricing. Even implementation of minimum support price (MSP) has not been achieved by the state. Moreover, farmers across India are forced to sell their produce at low rates because the infrastructure to store and process it is lacking.

Acting on a report that finances, lack of assistance for healthcare and poor crop output were among the reasons for farm distress, Fadnavis proposed last year that agricultural loans should be waived and farmers can avail fresh aid from financial institutions. In June 2017, the CM announced a loan waiver scheme for 89 lakh farmers; loans amounting to Rs 32,000 crore were to be waived. So far, loans worth Rs 17,000 crore owed by 40 lakh farmers have been waived, while Rs 25,000 crore has been sanctioned for 50 lakh farmers as fresh aid. A raft of schemes has also been drafted to tackle agrarian distress, but implementation is slow owing to lack of coordination and supervision at different levels.

Far away in Punjab, farmers are on the warpath over implementation of the Swaminathan Commission recommendations on fixing of MSP of rabi and kharif crops. They also want a complete farm loan waiver, not the partial one okayed by the Amarinder Singh government.

Seven farm organisations in Punjab have decided to raise both issues and hold protests on December 18. The organisations have decided on round-the-clock protests outside banks from January 1 to January 5. These groups had earlier stopped the supply of milk and vegetables to urban areas in the state, leading to clashes with milkmen and a lot of produce literally going down the drain.

It’s a similar story but a different crop in UP. Owing to a bumper harvest this year, potato farmers say they are ruined as the price per 50kg sack has fallen to as low as Rs 20. Cold storages are full of unsold potato. Rakesh Kumar, owner of Mangla Mata cold storage in Badaun, said, “Storages in the region have a total capacity of 30 lakh sacks. Of these, 20% are potatoes, but no farmer is coming to fetch them right now because of falling prices. I have already thrown 7,000 sacks while 10,000 more are still here. Selling the produce at villages for Rs 20 per 50 kg sack does not even recover the cost of transportation.”

Mahendra Swaroop, state president, Cold Storage Association, UP, said, “Huge quantities of potato are stuck. District magistrates do not let us dump our produce anywhere as it stinks badly. Haalat kharab ho gayi sab ki.”

Onions and Indian politics

History shows onions can make parties cry

Rising Cost Of Vegetable Hits Aam Admi Hard

Akshaya Mukul | TNN

The Times of India 2013/0814

1981

There was a time when growing onion price contributed to the fall of otherwise credible Janata government in 1981 forcing Indira Gandhi, who made a big comeback after her defeat in 1977, to call it the Onion election.

Soon, she realized onions had made her cry as well. By November 1981, prices had sky-rocketed — Rs 6/kg — that Lok Dal’s Rameshewar Singh walked into the Rajya Sabha wearing a garland of onions and posters attached to it during the winter session. Chairperson M Hidayatullah asked him what was Singh wearing around the neck. After Singh complained of rising onion prices, Hidayatullah, known for ready wit, told him. “Let’s see what you will wear when the prices of tyres go up or for that matter the prices of shoes.”

Some members of Congres (S) protested with onions in their hand which they put on Hidayatullah’s desk. As the chairperson ordered removal of onions from his desk, Piloo Mody shot back, “It is very unfortunate that chairman should take away all the onions with him.” L K Advani then at his fiery best reminded the Congres how it had made onion an election issue and conveniently swept it under the carpet.

Next day, Mody offered Rao Birendra Singh Rs 100 in the Upper House, asking him to get 50 kg of onions if the price had really come down to Rs 2 per kg. Rameshwar Singh went a step ahead and put Rs 1,300 on Hidyatullah’s desk asking him to organize cheap onions. Amid the din, Congres’s Hari Singh Nalwa actually took the money and promised to supply onions. Such wit and repartee that made the larger point and forced the government to take action are now only part of archives as MPs rarely talk of onions or price rise and even when they do a deserted House greets them.

1988

But voters have a way of settling scores — something the political class knows too well. Be it the late Pramod Mahajan on whom agitated Nashik farmers had hurled onions in 2000 or the BJP that met its nemesis during the 1998 election in Delhi and Rajasthan, onions do shape opinions or as a Planning Commission member says, “Onion is the only way inflation is understood by ordinary people. To afford or not afford onion is how poverty is understood across the country. A callous government has turned deaf and opposition thinks it has enough to bring it back to power. Humble onion could have deep fry both.”

Consumption

2019

Onion Consumption in India, state-wise, presumably as in 2019.
From: Dipak Dash, November 6, 2020: The Times of India

See graphic:

Onion Consumption in India, state-wise, presumably as in 2019.

Exports

How the 2019 ban affected Asian consumers

Reuters, Oct 3, 2019: India Today

That's because India, the world's biggest seller of the Asian diet staple, has banned exports after extended monsoon downpours delayed harvests and supplies shrivelled. And dedicated buyers across the region, like Nepalese housewife Seema Pokharel, are flummoxed.

"This is a terrible increase," said Pokharel, out shopping for vegetables in Kathmandu. "Onion prices have more than doubled in the last month alone," Pokharel said.

Whether it's Pakistani chicken curry, Bangladeshi biryani or Indian sambar, Asian consumers have developed a serious dependence on Indian onion supplies for go-to dishes. Shorter shipment times than from rival exporters like China or Egypt play a crucial role in preserving the taste of the perishable commodity.

But last Sunday, New Delhi banned all exports from India after local prices jumped to 4,500 rupees ($63.30) per 100 kg, their highest in nearly six years, due to the delay in summer-sown crop arrivals triggered by longer, heavier rains than usual. Since the ban, countries such as Bangladesh have turned to the likes of Myanmar, Egypt, Turkey and China to increase supplies in a bid bring prices down, government officials and traders said.

But the hefty volumes lost will be hard to replace.

India exported 2.2 million tonnes of fresh onions in the 2018/19 fiscal year ended March 31, according to data from India's Agricultural and Processed Food Products Export Development Authority. That's more than half of all imports by Asian countries, traders estimate.

'Taking advantage’

Rising prices of alternative supplies will add to the headache for importers trying to get the vegetable from elsewhere, said Mohammad Idris, a trader based in Dhaka.

In the Bangladesh capital, consumers are now being asked to pay 120 taka ($1.42) per kilogramme for their prized onions - twice the price a fortnight ago and the highest since December 2013.

"Prices are going up elsewhere in Asia and Europe," said Idris. "Other exporting countries are taking advantage of the Indian ban" to raise their asking price.

In response to the crisis, the government of Bangladesh has initiated sales of subsidised onions through the state-run Trading Corporation of Bangladesh (TCB).

"We are looking for all possible options to import onions. Our target is to import in the shortest possible time," said TCB spokesman Humayun Kabir.

But the shipments from elsewhere - Iran and Turkey are also potential suppliers - that authorities in countries across the region are investigating will all take time.

"It takes one month when it comes from Egypt and about 25 days from China, while it takes only a few days from India," said Dhaka trader Idris.

The need for alternative imports is so severe, though, that countries like Sri Lanka have already placed orders with Egypt and China, said G Rajendran, president of the Essential Food Commodities, Importers and Traders Association.

Onion prices in Sri Lanka have risen by 50 per cent in a week, to 280-300 Sri Lankan rupees ($1.7) per kilogramme.

'Double the price’

For other countries, there may be little option but to sit tight and hope for the best.

Malaysia, the second-biggest buyer of Indian onions, expects the ban to be temporary and sees no reason to panic, said Sim Tze Tzin, deputy minister of agriculture.

But even India has been importing onions from Egypt in an effort to calm prices. And there won't be any meaningful drop in prices before summer-sown crops start to hit the market, said Ajit Shah, president of the Mumbai-based Onion Exporters' Association.

That's not expected until mid-November, meaning the export ban isn't going away in the near term.

For now, consumers like Kathmandu shopper Pokharel are having to change habits across Asia.

"I went to buy 5 kilogrammes of onions for our five-member family but ended up buying only 3 kilogrammes due to higher prices," said Afroza Mimi, a Dhaka housewife on a shopping expedition the day after India imposed the export ban.

"They [traders] are selling old stock nearly at double the price. This is crazy," Afroza Mimi said.