Peeling the layers: The annual saga of onion price hike and crash

While consumers pay up to Rs 90 a kg for onion, farmers are still earning only Rs 25 a kilo. Farmers blame poor policies of the government for the great divide.

Mithilesh Dhar Dubey
| Updated: November 11th, 2020

On November 5, the retail price of onion was Rs 90 a kilogramme (kg) in Mumbai, Rs 70 in Delhi and Lucknow, and between Rs 60 and Rs 80 in and around Varanasi. A day later, on November 6, in a major onion mandi, a farmer sold his onion stock for Rs 1,500 and Rs 1,100 a quintal, which means he sold it for Rs 15 and Rs 11, a kg, respectively. Thus, while consumers pay through their nose for onions, farmers are still earning a pittance.

For instance, in Pipalia mandi in Mandsaur district of Madhya Pradesh, about 300 kilometres from state capital Bhopal, Amritlal Patidar sold 20 quintals (a quintal is 100 kg) of onion at the rate of Rs 1,100 a quintal. “In the cities, people are paying hundred rupees a kg, but here, our onion has no takers,” he rued. “This hike in price has not benefited the farmer; it has only helped the middlemen,” he told Gaon Connection

Jitendra Singh, a young farmer from Madhya Pradesh, got lucky. He waited four days at the Mandsaur mandi, and managed to sell his nine quintals of onion at the rate of Rs 2,800 a quintal. “I saw many farmers selling it for as less as one thousand five hundred rupees a quintal. Many farmers are waiting for six to seven days in the mandi, hoping they will get a better rate, but the traders are offering arbitrary rates,” Jitendra told Gaon Connection.

In Mandsaur mandi, onion was purchased from farmers for Rs 1,500-Rs 2,800. Photo: Gaon Connection

Saurabh Dubey, a resident of Ashok Nagar in the country’s capital New Delhi and who works in a private company told Gaon Connection that he bought onions for Rs 70 a kg. “Yes, the price has come down by ten rupees over the week, but it is still steep at seventy rupees,” he said.

Six hundred and fifty km from New Delhi, onion continues to sell between Rs 60 and Rs 80 a kg in Varanasi, and in the adjoining districts of Jaunpur, Mirzapur and Bhadohi. Anand Vishwakarma from Nadesar in Varanasi told Gaon Connection that while onion has been selling at Rs 70 or Rs 80, they have no choice but to buy it. 

And so, the price of onion is problematic for both consumers and farmers. For the former, the steep cost is prohibitive, for the latter, the low returns they get, even for high-quality onion, irrespective of retail price, grates. 

With 31 per cent, Maharashtra leads the country’s onion production. The state is home to the Lasalgaon mandi, which is Asia’s largest wholesale market for the bulb. Pimpalgaon Baswant is another big mandi in Nashik district in Maharashtra

Onion stock in Shamshgarh mandi of Mandsaur.

Madhya Pradesh’s Mandsaur mandi adjoining Rajasthan is counted among the large mandis in the country. Onion rates here have gone down by more than 50 per cent over the last week. Three years ago, six farmers were killed here during an agitation demanding higher price for onion. 

“I heard two to three days ago that onion was selling at five or six thousand rupees a quintal in Shamgarh mandi [in Madhya Pradesh], but that was not true. I ended up selling it for two thousand five hundred rupees, at a huge loss,” Ram Vilas, a farmer from Mandsaur, told Gaon Connection.

Onion producing regions in different states of the country. Source: APEDA

Even in the mandis of other major onion-producing states such as Karnataka, Gujarat, Bihar, Andhra Pradesh, Haryana and Telangana prices have crashed. As per the government AgMarkNET, which monitors mandi prices, on November 6, a quintal sold between Rs 1,601 (Madhya Pradesh) and Rs 5,200 (Andhra Pradesh). This meant that while a farmer was getting anywhere between Rs 16 a kg and Rs 52 a kg, in the retail market, onion was being sold between Rs 60 and Rs 90 a kg.  

Why does this happen, without fail, every year?

Policies and prices

Rajendra Sharma, onion trader and president of the Onion Merchant Association of Azadpur Mandi in Delhi blames the increase in retail prices on the policies of the government. “Everyone knows about this price fluctuation. But, the government delayed the decision to curb exports,” he told Gaon Connection.

“The biggest mistake was lifting the stock limit of onion under the new agri laws. Because of this, the price shot up. Now, the stock limit is back, and there is more onion in the mandis.  The wholesale price of onion in Delhi mandis is down to thirty or thirty five rupees a kg. It will fall further,” Sharma added. 

After the steep rise, onion prices fell because of government policies to contain price rise. To provide relief to consumers, the National Agricultural Cooperative Marketing Federation of India (NAFED) said on November 6 this year that 15,000 tonnes of imported onion would be released as per the demand by various states.  According to NAFED, this will flood the domestic market and keep prices in check. 

A large number of farmers are arriving in Mandsaur Mandi to sell onions.

Union Minister for Consumer Affairs, Food and Public Distribution, Piyush Goyal had said on October 30 that private import of 7,000 tonnes of onion and another 25,000 tonnes shipment before Diwali would improve the domestic supply situation and check price rise. “Enough supply will be there in the market as NAFED will also commence imports,” he was quoted as saying.

The government’s measures such as imports, ban on exports, and imposing stock limits provide relief to consumers, but not to farmers. Their losses have not been addressed.  “The situation of onion farmers is very grim,” said Ram Vilas.

“For several years, we have even had to abandon onion stock at mandis, due to lack of proper price. Last year, we suffered due to excessive rains, this year due to rain deficit. We are not asking for excess money. All we ask for is a fair price. We have lost faith in governments,” Vilas told Gaon Connection.

The story is similar in Maharashtra, where farmers have suffered heavy losses this year, like last year, due to inclement weather. The onion in the market now was harvested in March, and sold during the COVID-19 lockdown, but a large quantity rotted due to the rains.

About 70 per cent of India’s onion cultivation is as a rabi (winter) crop. So, onion harvested in March lasts till October. However, since onions are prone to rot when exposed to rain or moisture, their storage is crucial, but also expensive and painstaking.

“This time, in numerous regions, more than 80 per cent of the onion was spoiled,” said Bharat Dighole, chairperson of Maharashtra State Onion Growers’ Association. Out of 100 quintals of onion produced by a farmer, if 60 to 70 quintals go bad, there is no way of recovering the loss, even if the remaining onion sells at Rs 50 to Rs 100 a kg, he told Gaon Connection.

Speaking about Mandsaur and how traders are simply not offering farmers a good price, Jitendra said a farmer could not wait at the mandi for five to six days. “I have to sow the next crop and need money for the new crop as well as other farming activity. The traders take advantage of this situation,” he rued.

Meanwhile, the onion crop is still standing in the field of Shivmangal, a farmer of Tarakhedi village in Ratlam district, Madhya Pradesh. “In Jaora mandi, the price has reduced to twenty to twenty five rupees a kilo. I am buying onion for personal consumption at sixty five rupees a kilo,” he said, the irony ripe in his voice. “The way rates are falling, I fear that this year too, I will sell onion at one or two rupees a kilo,” he added.

Ashok Patidar, a farmer from Dewas district adjoining Mandsaur, speaks with the wisdom of experience. “Some acquaintances have sold onion in the mandi at twenty five rupees a kilo. They had to sell, because they had to sow their new rabi crop and needed the money. But, prices will crash, you see. They always do when farmers hope for some benefit,” he told Gaon Connection.

As you peel layer after layer of the yearly onion price-rise and crash saga, you’ll see the heartbreak of farmers and their stinging tears. 

With inputs from Ashok Parmar, Mandsaur, Madhya Pradesh.

Read the story in Hindi.