By Rohit Kumar Singh
Onion is omnipresent in cuisines within India. India is the second-largest onion producer globally, just behind China. Onion harvesting is through the year, except in peak summer months of May and June. The production is spread across Kharif, Late Kharif and Rabi, with the latter having a major share of around 65% of the total. While Rabi onion (harvesting between March and May) can be stored for a period of five to seven months, the Kharif onions are highly perishable and do not usually last for more than 30 days. Their perishable nature, combined with comparatively low processing penetration and sub-optimal storage infrastructure, results in post-harvest losses of about 25%. The combination of these factors often results in periodic spikes of gluts and shortages, adversely affecting the availability and affordability, hurting both farmers and consumers.
Onion prices tend to increase gradually from July and peak in the month of October. With Kharif and Later Kharif arrivals, the prices soften in November till mid-February. The short window between late Kharif and Rabi crop during second half of February triggers price rise in February which tapers with arrivals picking up in March. However, this year, the situation turned on its head for the farmers, where recently the prices of onion in the wholesale markets nosedived. Maharashtra, the leading producer and trade hub, witnessed a massive 25% decrease in prices in the last five months, where the wholesale average price dropped from Rs 2,150/quintal in November 2022 to about Rs 1,600/quintal in February 2023.
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Uncertain weather saw prolonged rains that forced onion farmers to take up late sowing, even re-sowing in some cases, thus shifting part of Kharif production to Late kharif. On the other hand, a comparatively warmer February resulted in early harvest of Rabi crop, causing overlapping of Late kharif and Rabi arrivals. Due to increased market arrivals and a lack of primary storage facilities, wholesale onion prices dropped dramatically in the major producing states while prices ruled relatively higher in consuming states. NAFED and NCCF were tasked by the government to intervene and procure from the farmers in Maharashtra and Gujarat, which brought considerable solace to the farmers (the two agencies have procured a total of about 7,000 mt from the farmers in the last 10 days). However, the situation once again underscored the need to develop a robust onion value-chain in India.
The government deploys a multi-pronged strategy to protect the interests, often competing, of both the farmers and the consumers. It has been addressing the onion price situation on multiple fronts, including promoting an effective supply chain, innovative storage solutions and value-added product development. NAFED and NCCF were mandated to develop a 250,000 tonne onion buffer last year through the Price Stabilization Fund (PSF); stocks were to be released into the open market as and when required. This has paid dividends resulting in stable onion price for the consumers across the country in 2022. The process to build the buffer in 2023 has already begun.
Overall, onion production exceeds domestic demand. However, there is high demand for value-added onion products in the European and North American markets. In recent months, the onion prices across the globe have increased significantly. Countries such as Turkey have seen price-increases of up to 700% because of the Russia-Ukraine conflict and the unfortunate earthquakes. The disastrous floods in Pakistan and frost damage of onion crop in Central Asia has also impacted the global supply chain. However, due to increased demand and a liberal export policy, India exported $523.8 million worth of onions in April-December 2022.
In line with PM Modi’s clarion call to promote innovation and out-of-box solutions across the spectrum, the department of consumer affairs (DoCA) launched the “Grand Onion Challenge”, a hackathon of sorts, which aims to find innovative ideas and solutions to improve onion storage, reducing post-harvest losses, and processing along with the valorisation of excess and unconsumed onions. This challenge, carried out in association with the All India Council for Technical Education (AICTE), suitably provoked the stakeholders including scientists, professors, start-ups and students to partner with the government in addressing the perishable nature, storage and other associated challenges in the onion supply chain. Amongst hundreds of entries, 23 ideas, including Artificial Intelligence (AI) based assaying & grading, and IoT-backed storage structures, have been shortlisted for further mentoring by experts to help develop prototypes that have the potential of scaled up deployment. DoCA is also actively engaged with Bhabha Atomic Research Centre (BARC) and the department of atomic energy to use irradiation technology to extend onion’s shelf life. Bureau of Indian Standards (BIS) has already developed a set of standards (IS 17912:2022) that includes guidelines to address curing, sorting, grading, packaging, procurement, handling, storage, transportation and distribution to assist stakeholders in reducing losses during post-harvest operations.
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By focusing on institutionalising technology-backed strategies for the storage infrastructure, price data analysis-backed solutions for supply chain, having a robust buffer stock and an associated liquidation strategy for price stabilisation—along with market-integrated production planning to reduce the production concentration—the government is committed to reduce price volatility and foster a stable, profitable onion ecosystem.
The writer secretary, department of consumer affairs, Government of India