Onion won't do a tomato on India as Centre procures 5 lakh tonnes at historic rate to be sold on subsidy

Amid the steep rise in prices of onions in the country, Union Minister Piyush Goyal on Tuesday invited farmers to sell their onions at “good” prices, without worry about anything.

The minister further informed that National Cooperative Consumers’ Federation of India (NCCF) and National Agricultural Cooperative Marketing Federation of India (NAFED) have been selling onions at a subsidised rate of Rs 25 per quintal to consumers in different regions.

“This subsidy will be provided by the government,” he added.

“NCCF and NAFED will buy 5 lakh tonnes of onions instead of 3 lakh, so that our farmers don’t have any problems. Two lakh tonnes will be bought at Rs 2,410 per quintal,” Goyal said.

“Both consumers and farmers are valuable to us. Our food giver (farmers) gets a good price. I invite all the farmers to sell their onions at good prices and they don’t need to worry about anything,” the Union minister said.

#WATCH | Union Minister Piyush Goyal at a press conference says, “On 17th August, two important decisions were taken, on the export 40% tax has been imposed. But along with this, NCCF and NAFED will buy 5 lakh tons of onions instead of 3 lakh, so that our farmers don’t have any… pic.twitter.com/oXQt2gqLaR

— ANI (@ANI) August 22, 2023

Why are prices of onions rising?

Onion, a kitchen staple, has been leaving consumers in tears due to rampant surge in its prices. As per traders, the late onset of the monsoon has been affecting supplies and this shortage is expected to shoot up by December this year.

It is worth mentioning that India is the biggest producer of onion with four states - Madhya Pradesh, Gujarat, Karnataka, and Maharashtra - cumulatively producing over 80 per cent of the country's total production.

As per a report by The Indian Express, the present price rise of onion is due to two reasons:

1- Shortage in stored produce

2- Lower-than-expected acreage of the bulb itself. Unlike other vegetables, onions are not grown around the year.

On 19 August, the Union government on imposed 40 per cent duty on the export of onions to check price rise and improve supplies in the domestic market. This decision has led to fresh protests among farmers.

Meanwhile, the Centre is in conversation with Maharashtra Chief Minister Eknath Shinde and Deputy Chief Ministers Ajit Pawar and Devendra Fadnavis as the farmers from the state are protesting against the 40 per cent export duty. Farmers in at least three districts in Maharashtra protested at APMCs against the export duty on the onion.

Shortage of onions in India

As per the report, the drop in output began last year after the country saw a dip in onion acreage. As per the Crop and Weather Watch Group, as against the 3.76 lakh hectares target for onion, India had seen sowing over 3.29 lakh hectares.

Also, damage to the Rabi crop in March–April, when most onion-growing states, including Maharashtra, witnessed unseasonal rain and hailstorm, made the situation worse and affected the output massively.

Just as tomatoes…

Citing example on how the Union government was able to stabilise prices of tomatoes which rose to Rs 300 per kg at some places, Goyal said: "The intervention in tomatoes was successful and farmers also got a good price. The sale of discounted tomatoes allowed us to stabilise retail prices."

With inputs from agencies