Notwithstanding the reduction in the Minimum Export Price (MEP) of onions by the Union government, the wholesale markets are heading for a glut and decline in prices after around six months of short-supply and skyrocketing prices.
The MEP, which was $ 1,150 per tonne, was reduced to $ 800 on December 16 and further to $ 350 per tonne on December 20, as wholesale markets in the onion growing regions continued to get flooded with the arrivals of the late Kharif crop. Unlike the Rabi season crop that can be stored for over six months, the Kharif variety is highly perishable and cannot be stored over a month. This compels the farmers to sell it at whatever price it fetches.
The downward revision in the MEP has come after a series of agitations by onion farmers in various parts of Maharashtra, demanding remunerative price for the commodity as prices that had peaked to over Rs 50 a kg in the wholesale markets had crashed to Rs 9 a kg following fresh arrivals.
Officials expect that the lowering of the MEP would enable traders to export more as they would be in a better position to compete in the international markets with their counterparts from Pakistan and China. In the process, the falling prices are expected to rise in domestic wholesale markets, providing relief to farmers.
Though the lowering of the MEP has eased the situation a bit, with the average wholesale price at Lasalgaon - the biggest onion market in the country - rising from Rs 9 to Rs 13 a kg, it might not help in the long run, considering that there is going to be abundant supply of the commodity in the next few months.
In Nashik district alone, the area under onion cultivation in the Kharif season has gone up from 6,626 hectares last year to 17,473 hectares in 2013. On the other hand, the area under onion grown during the late Kharif season has increased from 21,104 hectares in 2012 to 31,197 hectares this year. Consequently, the production of onions is expected to go up from 1.21 lakh tonnes to 3.49 lakh tonnes in the Kharif season and from 3.32 lakh tonnes to 5.92 lakh tonnes in the late Kharif season.
The summer crop that was harvested in April-May and hoarded by traders for better prices (since its shelf life is six months) is exhausted. The wholesale markets are receiving the Kharif crop and early arrivals of the late Kharif crop that will continue to flood the markets till April, when the fresh Rabi crop will be harvested, adding to the abundance in supply.
The situation that prevailed in the last six months, with prices rising and consumers raising hue and cry, is reversing with the fresh arrivals. Now, it is the turn of the farmers to agitate, demanding higher price for the commodity. Organizations like the Swabhimani Shetkari Sanghatana and local politicians are already demanding that the MEP be totally scrapped. Their argument is that removal of the MEP would encourage traders to buy more onions from the domestic markets as they would be able to compete better in the international markets. In the process, the downslide in prices in the wholesale markets would stop providing relief to farmers.
The large-scale fluctuation in onion prices is a result of inconsistent government policies. For instance, even as onions were being hoarded and prices had risen to an all-time high of around Rs 56 a kg in the wholesale markets two months ago, the government did not include the commodity in the Essential Commodities Act, to check hoarding.
Onions had been placed under the Act by the NDA government in 1999 (after debacle in four state polls in 1998). But when the UPA returned to power in 2004, onions were deleted from the commodities listed in the Act. Besides, the state and the Union governments woke up too late this year and did too little to overcome the situation despite clear signals of an onion crisis last summer, considering the drought situation that had affected the area under cultivation.
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Source:- articles.timesofindia.indiatimes.com
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