Top Crisis

Short-term, consumer-centric measures have left the tomato, onion and potato farmers struggling to eke out a living.

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The annual ritual of onions bringing tears to consumers played out yet again in September and early October. The price of the vegetable had at one time soared to Rs 45 per kg in Lasalgaon, Asia's largest wholesale market near Nashik in Maharashtra. Retail prices of the onion had shot up and were ruling at over Rs 80 per kg in many parts of the country.

A worried Central government soon swung into action to arrest the spiralling prices of the politically-sensitive crop. In mid-September, the government levied a minimum export price (MEP) of $850 per tonne. The MEP is a stock weapon in the government's armoury used to discourage exports. With this levy, no exporter can ship a product below the MEP, which makes the product costly in the export market and hence unviable to export.

The MEP measure was soon followed by a total ban on export of onions, a crop that has brought several governments down in the past. Besides, stock limits were also imposed within the country, limiting stocking of the vegetable to 50 tonnes for wholesalers and 10 tonnes for retailers.

Onion in India has two crop cycles. The Kharif onion is a Monsoon crop sown at the beginning of the summer rain between May and June and harvested between September and December. The Rabi crop, on the other hand, is a winter crop sown in October and November and harvested during April and May. Erratic rain in the Kharif season played havoc and led to prices of the vegetable soaring high this time.