LASALGAON // Tensions are running high at Asia’s largest onion market in the agricultural hinterland of the Indian state of Maharashtra.
An angry mob of farmers and traders quickly congregates at the Lasalgaon wholesale market when a seller is questioned by The National about soaring onion prices, which have more than tripled this year. Onions have become a surprisingly sensitive topic in the country. Considered a dietary staple, the vegetable has been credited with political parties losing elections in the past and the rise in onion prices is presenting a headache for Manmohan Singh’s coalition government and the central bank.
“The onion has become like a TRP [target rating point] for the performance of the government,” says Nanasaheb Patil, the chairman of the Agricultural Produce Market Committee, Lasalgaon, which is at the centre of the state’s onion industry. The state supplies the majority of onions to the rest of the country.
Retail onion prices have shot up to as high as an eye-watering 80 rupees (a little less than Dh5) a kilo in recent weeks – double the prices in July. Inflation data showed that wholesale onion prices shot up 245 per cent in August compared with a year earlier, driving the wholesale price index up 6.1 per cent.
The price rise is such that a offer on the local version of the group-buying website Groupon for cut-price onions resulted in the site crashing. Some restaurants in India have reduced the amount of onions used in their cooking and stopped giving out the onion salads that are expected to be served with curries.
Rates set at auctions at the dusty market of Lasalgaon play a key role in determining prices across the country. The farmers blame last year’s drought in Maharashtra for the shortage in the supplies available now.
“Because of the drought there was 40 per cent less crop,” Mr Patil explains. “Ultimately, there is the question of demand and supply with perishable commodities. Since the demand was the same and the supply was less, the prices went high.”
The federal government has recently taken steps including raising export prices for onions to try to curb outflows of the vegetable. It has accused traders of hoarding to drive up prices. But Mr Patil said that this was “not true” and explained that raids by the government in the area had not uncovered any such practice.
Vijay Karad, a farmer, says that he managed to sell onions at Lasalgaon market for 4,500 rupees per 100kg last week, while last year the highest price he could get was 1,500 rupees for the same quantity.
“I faced a loss last year,” Mr Karad says. The failure of last year’s monsoon – which resulted in a 35 per cent drop in onion production at his farm – and the long chain of middlemen in the market, are to blame for the spike in prices, he says.
Despite having far fewer onions to sell, he says that this year he has managed to turn a slight profit because of the higher prices – for the first time since 1997.
“It’s good,” he says.
Harvesting of the next crop is expected to start later this month, so Mr Karad says that good rains this monsoon should mean that onion prices will start easing from the middle of the month. “Next year there will be so many onions, it will be impossible,” he adds.
Last week, there was limited activity at Lasalgaon. The farmers explain that there are only about 150 tractors arriving with relatively small loads, about one tenth of the supply that was coming into the market at the same time last year.
Vishnu Devde, a trader, who buys at the market to sell on to other wholesale traders in Mumbai, says that finding supplies of onions is difficult.
“Normally I’d do four big truckloads, but now getting one small truckload is difficult,” he says, adding that he is not actually benefitting at all from higher prices.
In Navi Mumbai, at the vast APMC market, Nitin Parakh, a trader, explains that he has virtually stopped exporting onions because of the shortage of supply and the high prices he can get locally.
“The export quantity is very less because of the shortage,” Mr Parakh says. “Normally we export about 18 to 20 lakh tonnes [one lakh = 100,000] of onions per year. We normally export for the Gulf region – Dubai, Abu Dhabi, Bahrain, Saudi Arabia, Oman – and also Malaysia, Singapore, Vietnam.”
These countries are now opting to buy onions from China instead, where the prices are much lower, he adds.
Mr Parakh is selling his onions at a wholesale rate of 45 rupees per kg compared with about 15 rupees per kg last year.
“We’re not making any profit. We’re selling on behalf of the farmer and we’re giving the same rate to them.”
Mr Parakh even installed an eight-camera security system to protect his onion stocks from thieves once the prices surged.
The onion is essential to daily life in India, he says.
“In India, every family needs onions daily because they want to make curry. It’s a very important commodity in Indian culture.”
But he thinks the prices could come down soon.
“Within the next month the situation will cool down,” he says. “The crop will come heavily and the market will go down about 10 to 15 rupees per kg.”
At the nearby Narayan restaurant, Lokesh Dubey, who manages the eatery, says that he has reduced the quantity of onions in their dishes to 25 per cent of what it should be.
“I can’t afford to use more because the customer isn’t going to want to pay much more for the same dish.” Mr Dubey says.
They have He has stopped giving out free onion salads with the meals and taken onion bhajis off the menu because they are simply too expensive too make.
“Some customers are bringing their own onions along with them and asking us to cut them up.”
Sambhaji Damale, an autorickshaw driver in Mumbai, says that he has not bought onions for his himself or his family for almost a month.
“Onions are so expensive,” he says. “How can the poor afford them?”