Context:Spike in the prices of onions has become almost an annual feature.
Ad hoc steps taken to solve spike in onion prices
Blocking exports
Incentivizing imports
Capping the stocks allowed to be kept by traders
Problems related to these Ad hoc steps
Issues with the buffer stock:
Stockholding limits are imposed despite the removal of onion from the list of essential items:
Flawed management of available stocksis thegenesis of the price volatility.
Government’s restrictive policies inhibit the storage of onions and are pro-consumer, and entrepreneurs don’t invest in onion storage infrastructure for fear of being viewed as hoarders
Restricts farmers’ choices: Ban on exports denies farmers freedom of choice to sell their products to anyone and anywhere
Issues with incentivizing imports
Vital fumigation and phytosanitary requirements have been set aside, risking the introduction of new pests and diseases.
Farmers will be denied fair returns for their produce due to high imports, and low prices would act as a disincentive for farmers to expand onion plantings.
Way Forward:
Boost the production of rabi crop: since matures in April-May and is relatively suitable for storage because of the low moisture content of the onion bulbs.
Promote value-addition: Dehydration and processing of onions into value-added products like onion puree are the other means of prolonging the consumable life of onions.
Deploy consistent and stable marketing and trade policies: which can spur farmers to increase production and entrepreneurs to invest more in storage, dehydration, and processing of onions.