Experts suggest buffer stocks of onion as govt calls meet with states

Written by Sandip Das | New Delhi | Updated: Oct 24 2013, 09:37am hrs
As the government grapples with yet another spike in onion prices, experts have suggested a number of measures, including building a buffer stock for lean months and promoting the use of the dried crop.

Price volatility would always be there for an agricultural commodity if it is not processed, Ashok Gulati, chairman, CACP told FE. Gulati said that by building buffer stocks and promoting use of packaged, dried onion during the lean months, farmers' income could be augmented.

At present, of the total annual production of more than 16.6 million tonne, only about 2 lakh tonne is processed, mostly for exports.

A farm ministry official said that supply is restricted during July-September as the chunk of produce is grown during the October-March period, which includes late kharif and rabi.

There is ample scope for processing onion, which will deal with supply constraints to an extent, said Anil Jain, MD, Jain Irrigation, which exports dried onion.

Meanwhile, agriculture minister Sharad Pawar has called a meeting of all states agriculture secretaries on Friday to deal with the spike in prices, which have risen to as high as R90 a kg in many cities.

Onion prices rose sharply again on Monday to R80-90 per kg, up about 30% from the R60-per-kg level of last week. Traders attributed the increase in onion prices to supply constraints from producing states, especially Maharashtra, Gujarat, Karnataka and Andhra Pradesh.

Nasik-based National Horticultural Research and Development Foundation (NHDRF) in a report said: harvesting of kharif onion in Karnataka, Andhra Pradesh and Tamil Nadu is in full swing and the crop is coming to the markets in Bangalore, Hubli, Hassan, Dhavengere, Bijapur and Belgaum in Karnataka and Kunool and Hyderabad in Andhra Pradesh,.

The harvesting of kharif onion has also started in Maharashtra, Gujarat, Rajasthan and Madhya Pradesh, but the arrivals are lower and expected to increase from the end of October onwards, the NHDRF report noted.

Agriculture minister Pawar ruled out the possibility of traders exporting onion to other countries where prices are less than India.

"Nobody is exporting because in other countries the price is somewhere near $500 dollars and, in India, it is $900. So, in such a situation, there are no exports," he noted. Pawar urged the chief ministers of all states to invoke the Essential Commodities Act against hoarders.

To improve supplies in the domestic market, co-operative major Nafed on Wednesday floated a tender for import of the bulb from Pakistan, Iran, China andEgypt.

"Nafed is interested in importing onion of Pakistan, Iran, China and Egypt origin to be delivered at the warehouse at New Delhi," the tender noted. An Nafed official said that onion from Pakistan, Iran and China would cost around $200-250 per tonne while supplies from Egypt are likely to be at at $350 per tonne.