Why in News: Since September 12, thousands of onion farmers in Maharashtra have launched protests against falling onion prices.
Background
Maharashtra is India’s largest onion-producing state.
- Onion is a politically sensitive crop given its impact on both farmers’ livelihoods and consumer inflation.
Causes of Farmers’ Distress
1. Price Crash: Market price ₹800–1,000/quintal vs. production cost ₹2,200–2,500/quintal.
2. Excess Supply: Bumper Rabi crop + deterioration of stored onions.
3. Export Decline: Exports halved from 25.25 lakh tonnes (2022-23) to 11.47 lakh tonnes (2024-25). Importers shifted to China, Pakistan due to India’s policy flip-flops.
4. Buffer Stock Release: NCCF & NAFED onions released under Price Stabilisation Fund, pushing prices further down.
5. Policy Mismatch: Andhra Pradesh procures at ₹1,200/quintal, while Maharashtra farmers lack such support.
Onion Price Stabilisation Policy – Intended vs. Actual Impact
- Intended Goal: Maintain affordability for consumers, prevent hoarding, and manage volatility.
- Current Impact: Worsens farmers’ situation during glut years by competing with their marketable surplus.
Demands and Suggested Reforms
- Stable Export Policy: Avoid ad-hoc bans/curbs to maintain credibility with importers (Bangladesh, Sri Lanka).
- Export Incentives: To safeguard India’s position as a leading exporter.
- State Procurement Model: Emulate Andhra’s assured procurement.
- Market Infrastructure: Invest in storage, processing, dehydration units to reduce wastage.
- Balanced Policy: Ensure consumer affordability + producer viability.
Way Forward
1. Stable Export Policy: Introduce a predictable medium-term export framework (with minimum assured quotas) to reduce credibility loss in global markets.
2. Farmer-Centric Procurement: Extend assured procurement (like Andhra Pradesh’s model) with minimum support-like interventions for onions in glut years.
3. Market Diversification: Promote value-added products (onion powder, flakes, dehydrated onions) to absorb surplus and boost exports.
4. Strengthened Storage Infrastructure: Invest in modern cold chains, pack houses, and scientific storage to reduce post-harvest losses (currently ~30–40%).
5. Price Risk Management: Introduce crop insurance and futures trading mechanisms to shield farmers from extreme volatility.
UPSC Relevance
GS Paper III (Economy, Agriculture, Food Security):
- Issues of agricultural marketing and price volatility.
- Role of buffer stock policy and Price Stabilisation Fund in balancing farmer income security and consumer inflation.
Mains Practice Question
Q. “The onion price stabilisation policy in India seeks to protect consumers but has often resulted in distress for producers.” Critically examine the dilemma of buffer stock operations in agriculture and suggest a balanced way forward. (250 words, 15 marks)