Food inflation: The truth of onions

This year has been exceptional, wherein the kharif crop saw both lower plantings, on account of very little rains till July, and also suffered damage, because of excess rains at the time of harvesting. There’s no clarity as yet on the late-kharif crop, though even in its case, plantings may have well been impacted by the rains that continued till early-November. As a result, we have had a marked upward trend in prices since September. But that has purely to do with crop failure — kharif and possibly late-kharif as well — and not lack of storage. In any case, there is little incentive for anyone to store onions beyond September. Which farmer or trader would take that risk, when the new kharif crop is due for arrival.

Coming now to the point about processing, the Indian consumer always likes her onions fresh. There aren’t many takers — save maybe restaurants or the processed food industry — for onion paste, flakes or dried powder. When fresh onion is anyway available in plenty round the year, why would any entrepreneur invest in a processing facility, whose viability is guaranteed only when we have too little or too much of rains? Such instances — of two out of three crops in a single year failing — are as rare as onions breaching the Rs 100/kg mark.

Equally naïve is the tendency to blame the government every time the prices of onion go up. While it is expedient for the Opposition or political analysts — who oversimplify a causal relationship between winning/losing elections and onion prices — to weave such narratives, the fact is that this government, like its predecessors, has taken every possible measure to cool market sentiment. That all these have failed spectacularly is only thanks to the vagaries of the weather. The truth is that India produces over 23 million tonnes (mt) annually and also exports 2 mt in a normal year. We are blessed with agro-climatic conditions that allow onions to be grown in multiple geographies in multiple seasons within our country. 2019-20 happens to be one of those freak years when multiple crops have failed and we may have to be prepared for a delayed rabi harvest to boot.

The core issue to address, after peeling through onion’s many layers, is not about absence of storage or processing infrastructure, but managing the vagaries of the weather. We can possibly do the following to mitigate some of this impact, which may become more rampant in the future, courtesy climate change:

* Accurate weather forecasts that are made accessible to farmers: If there are sufficiently advance predictions of heavy rains or floods, farmers can prematurely harvest and save at least part of their crop that can come into the market. They can, then, also optimise the use of inputs that would otherwise get washed away, thereby saving some of their costs.

* Satellite mapping of sowing area and dissemination of this data to enable better supply-side planning: Both over-production and under-production create multiple wastages in the system. Farmers have, this time, aggressively expanded rabi crop acreages, in response to current prices. Since practically everyone has done it without considering how much others, too, have — which only aggregate data can reveal — we are potentially staring at a New Year price crash towards March-end. Those abominably low prices would, perhaps, hit the farmer more badly than the high prices that are now hurting the consumer.

* Timely gathering and dissemination of price information to farmers, traders and other stakeholders: This is complementary to the earlier point about releasing reliable data on sowing and crop status. The absence of such publicly available information is what fuels unnecessary market speculation, which is neither in consumer nor producer interest.

* Timely policy intervention, especially in unforeseen circumstances like the present one: The government has reacted correctly to the current production shortfall by banning exports, allowing imports on government account and imposing stockholding restrictions. However, better information flow and market intelligence would have helped it act faster and more effectively. Now, it should equally know when to withdraw these extraordinary measures.

* Educating consumers on alternatives to onions: Onion is, after all, just a garnishing that adds taste and imparts pungency to our food. There are multiple alternatives even if it isn’t avocados. Onion is not an essential nutritional item that we cannot do without, for a few months at the most.

Finally, it must be borne in mind that the high price of onion today is really translating into higher income for the farmer. The Kanda Chawls have made this possible, which wasn’t so in the earlier times, when only the trader raked in the moolah from every price increase.

The writer is Head of Fruits & Vegetables at BigBasket.com, India’s largest online grocery retailer. The views expressed are personal