Anticipating further spurt in short-term agri-commodity prices like in the case of onions, Krishi Bhawan has endorsed the proposal to open up organised retail, including fruit and vegetable trade, to foreign direct investment as a remedy.
With onion prices soaring to around Rs 60 a kg across the country, the government on Monday banned export of the commodity till January 15. On Tuesday, Prime Minister Manmohan Singh called for immediate remedial measures. In Delhi, agri cooperative Nafed has decided to retail onion at Rs 35-40 a kg.
?The situation is likely to improve only after two-three weeks,? agriculture minister Sharad Pawar said. He added heavy rains in Nashik area had damaged a substantial quantity of the crop. ?Our expectation is that with the arrival from Uttar Pradesh, Gujarat and Madhya Pradesh, prices will come down,? he said.
?We are trying to feed a billion-plus population with a century-old agro-marketing infrastructure,? a senior officer at the agriculture ministry told FE, adding more such shortages were inevitable unless rapid investments in the food chain from farms to retail were made. The government is divided on opening up multi-brand retail to FDI, with a paper floated by the department of industrial policy and promotion getting a ?mixed response? from the ministers concerned.
The price flare up is also due to a massive 1.1 million tonne onion exported till September (out of 12-mt annual production) to profit from the global surge in prices. Though the figure was 3 lakh tonne less than last year, the government failed in curbing exports on time despite signals from the market and reports of adverse crop prospects.
Due to a combination of these factors, the onion crisis is taking the same contours as last December?s potato crisis. Onion prices have flared across India to above Rs 60 a kg from last week?s average of less than Rs 40 a kg just as potato prices jumped to near Rs 30 a kg from an average of less than Rs 10, with traders sensing an opportunity both the times.
This, despite an annual production of 20 mt onion and over 30 mt potato. Addressing a CII Cold Chain Summit on Tuesday, minister of state for agriculture KV Thomas said India produces 68 mt fruit and 129 mt vegetables annually, making it the second largest producer in the world, but a third of that never reach the kitchens. A whopping 59 mt go waste d due to lack of proper cold storage infrastructure, Thomas said.
At Lasalgaon, centre of the Nashik onion region, wholesale price of the bulb eased to Rs 3,000 a quintal from Rs 4,500 on Tuesday. As a result at Delhi?s Azadpur Mandi, Asia?s biggest vegetable and fruit market, wholesale price declined by more than Rs 5 a quintal to Rs 5,000.
Of the crop exported till September, the bulk went to Dubai and other Gulf areas as supplies from Pakistan was hit due to unprecedented floods. Indian onion commanded a price of more than $400 a tonne in Dubai at that time while the minimum export price from the country was at $350 a tonne.
As domestic prices rose, the government hiked the minimum export price of onion to $425 a tonne in October from $220 a tonne in August to cut back exports.
At the Lasalgaon market, prices jumped to Rs 1,400 a quintal in September from Rs 900 a quintal in August. ?While supplies have been hit due to rabi and late kharif crop failure, it does not warrant such a huge rise in prices,? said CB Holkar, managing director of the National Horticulture Research and Development Foundation (NHRDF).