Ad hoc Steps Must End

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 stocks is the genesis 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.