Peeling the layers off onions’ price-rise

In colloquial Tamil, the term vengayam (onion) is often used as a measure of derision, to indicate that something is inconsequential. If the situation of the last couple of months continues, that connotation will have to be revisited. With prices of onions soaring, the public discourse has come came to be dominated by the vegetable.

Unseasonal rains in Maharashtra, north India and Karnataka, from where Tamil Nadu usually gets its onions, have caused crop failure. K.M. Shivakumar, professor, Domestic and Export Market Intelligence Cell of the Tamil Nadu Agricultural University (TNAU), said that the extended monsoon season this year had affected production, and poor logistics in moving buffer produce for consumption had aggravated the crisis.

According to a study by CARE Ratings — Onion Economics — price increases have not always been in alignment with production.

There are three seasons for harvesting onions that affect monthly inflation rates. The first season is October-December, which typically contributes to 15% of output and any failure here results in a spike in prices. The third crop between March and May is also important as it is stored till the next kharif harvest. But it’s not just one vegetable, though the onion has emerged as the villain of the piece. For the past month, the prices of drumsticks, beans, carrots and even the affordable snake gourd and radish have clambered up, over ₹40/kg.

Earlier this year, beans and tomatoes were costly. The price of beans touched ₹160 a kg and tomatoes were sold for ₹45 a kg.

Budget impacted

Madan Sabnavis, Chief Economist at Care Ratings, says household budgets have been affected, depending on the quantum of onions consumed and whether or not the demand comes down. Typically, a family uses at least 4-5 kg a month and with prices moving up from ₹30 to ₹120/kg, continued consumption will increase the overall cost by ₹450 to ₹460 a month at least. “This would normally be the pattern for higher income groups. At the lower end, there would be a tendency to ration such consumption and demand might fall by up to half. Even with this, the budget would get stretched by ₹120-150/month — high for lower income groups,” he said.

Though the prices of vegetables are usually high during the festival season, right from Navaratri to Deepavali, what is worrying people is the upward and constant trend in prices for more than two months. “Except tomatoes, pumpkin and bottle gourd, no vegetable is priced less than ₹40. The trend has been continuing since October. I spend ₹500 a week for buying vegetables. But, I have been spending around ₹1,000 a week since October. It is a matter of concern for middle income group folk like us,” said M. Santhanam of Srinivasa Nagar, Tiruchi.

Onions and polls

The price of the pungent bulb that adds taste to biryanis, kurmas and gravies has even affected the fortunes of State and Central governments in the past. “Former Prime Minister Indira Gandhi made a comeback with onion prices as an election issue. In 1998, the Delhi rulers were negatively impacted as they faced flak for failing to quell the exorbitant rise of onion prices. One cannot take the increase in rates of vegetables lightly,” said Parasuraman, a farmer.

Vegetable prices fluctuate according to season, but for the country, the present hike came at a bad time, said economist Venkatesh Athreya. “We are in a severe economic crisis and the masses have lost their purchasing power. Immediately, we need the government to import and ensure supply, which it seems to be doing but that has to be scaled up. It should directly procure vegetables from farmers and sell them through fair price shops. When Jayalalithaa was Chief Minister, we had a similar spike but she procured from farmers and brought down prices and ensured availability. It can be done. If we can set up Amma Unavagams, we can do this too,” he said.

V.R. Soundararajan, advisor, Koyambedu wholesale market, said the government must fix a base price to protect the livelihood of farmers during crisis. A committee could be formed by the Agriculture Department to fix prices of vegetables and grocery items and put in place a price control mechanism. Storage facilities could be created for vegetables like green peas and drumsticks that have a tendency to soar off season.

A. Thangaraj, general secretary, Tiruchi Onion Commission Mandi Traders Association, suggested that the State government also encourage Tamil Nadu farmers to raise the Bellary variety of onions. “Some years back, a few farmers in places such as Tiruppur raised the crop. But they gave up as they could not compete in quality and price with Karnakata and Maharashtra farmers. If the government comes forward to extend subsidies and incentives, farmers may opt to raise the variety here to meet the local demand,” he said.

Shallots, drumsticks too

The short-supply and consequent hike in the price of small onions did catch traders and consumers off guard. Perambalur and Tiruchi are major small onion-growing districts in the State, with the crop being raised on over 12,000 hectares in the two districts. The bulbs in the fields were hit by intermittent rainfall this year.

“Once the crop matures, by about 50-55 days, there should be no rain. This year there was widespread rain in most parts of Perambalur district when the crop had matured. In some places, the crop was also affected by viral and fungal diseases. The shallots had rotted in the field in most areas,” said V. Neelakandan, district secretary, Tamizhaga Vivasayigal Sangam, Perambalur. Therefore, the rise in prices did not help local farmers either.

Peeling the layers off onions' price-risePeeling the layers off onions' price-rise


The wholesale price of drumstick that ranges from ₹ 200 to ₹ 400 a kg went up to over ₹400/ kg, a few days ago. Mattuthavani Vegetable market, one of the largest in Madurai city, has not received any supply of drumsticks for over three weeks, said vegetable vendors, attributing the shortage to failed crop. S. Uma, one of the vendors in the market, said that a single drumstick was sold at ₹25 in select shops at the market. “If people need to buy drumsticks, they have to go to Paravi market located about 10 km from here but the price remains high,” she said. Small traders like her are hit when prices rise, as their usual customers put off buying until the prices come down, and they do not have proper storage facilities.

Fresh arrivals

With the slight increase in arrivals from Bellary and Andhra Pradesh, onion prices are dipping in Koyambedu wholesale market. Similarly, cost of drumsticks that went above ₹400 a kg has declined to ₹250 a kg. Traders noted that about 25 to 30 tonnes of onions had arrived from Egypt, priced at ₹100 a kg. With a fresh harvest expected soon, prices are expected to stabilise around Pongal time.

Wholesale traders in Tiruchi said that the Centre’s move to allow imports of the bigger variety of onions did help in arresting the spiralling prices of the vegetable. Traders allege cartelisation and claim that the price of onions and even the supply situation is dictated by traders in Maharashtra.

P. Sukumar, treasurer, Koyambedu Vegetables, Fruits and Flowers Merchants’ Association, said, “Chennai gets only 20% of its supply from the State and this dips to 10% during winter.” He claimed this is due to arable land being converted to real estate. For instance, Chennai used to get vegetables such as okra and cabbage from Gudiyatham until a decade ago. But supplies have gradually stopped as the region has become urbanised. Moreover, lack of sufficient groundwater affected cultivation. “We need to create storage hubs in the cultivation belt and also markets. In countries like Israel and Brazil, onions are stored up to three months in open ventilated warehouses. We too could adopt such innovative measures to minimise price fluctuations,” he said.

Suggested interventions

Long-term interventions such as construction of warehouses, the government directly procuring from small farmers, strengthening of Uzhavar Sandhais and ensuring extension services will help, experts said.

Peeling the layers off onions' price-risePeeling the layers off onions' price-rise


Prof. Shivakumar of TNAU suggested that warehouses be set up in hubs of agricultural commodities. Price volatility, be it spikes or drops, cannot be prevented but can be minimised this way. “We need an integrated approach, taking into account market and non-market factors such as weather parameters and demand and supply to forecast prices,” he said. Potential areas other than the major hubs must be identified to grow onions. Unlike shallots, the shelf life of onions is limited and modes of storage could be chalked out with the help of experts. The cell is preparing to provide price forecasts for shallots in January, he added.

Strengthening the Uzhavar Sandhai (farmers market) concept is one option to check the periodic hike in prices of perishables, said P. Govindaraj, a farmer of Thozhagiripatti in Thanjavur district. When the Uzhavar Sandhais were opened about 15 years ago, farmers were allowed to bring their produce from their fields to nearby sandhais in State Transport Corporation buses free of charge.

At the market, the Agriculture Department officials fixed the price for the vegetables based on the previous day’s wholesale market price. What drove these beneficial Uzhavar Sandhais out of business was insufficient varieties and quantities of produce. He also suggested that the price should be fixed, based on cost of raising the crop, maintenance and working capital requirements such as harvesting and transportation costs on a per-acre basis, with a marginal profit for the cultivators. The sandhais will then begin to determine prices in a region.

Curbing hikes

Mr. Sabnavis has suggested that ideally, if a crisis is anticipated, the government can import without any impediments. Hoarding should be contained and cooperatives should be involved in procurement and distribution so that price increases are less sharp. The State government, for its part, has asked the Centre to allocate more onions to Tamil Nadu. It has also begun selling imported onions through its Pannai Pasumai (farm fresh) outlets. “The government is ensuring free supply of onions, and we are selling at a lower price. The rates will stabilise soon,” said Fisheries Minister D. Jayakumar.

Agriculture Secretary Gagandeep Singh Bedi said that the government was taking steps to increase the production of onions by increasing the area under cultivation from 75,000 acres to 1,25,000 acres. A total of 25 tonnes of seeds of improved varieties have been procured and will be provided to farmers at subsidised prices. Already 50,000 acres have been covered till date and 2.5 lakh tonnes are expected to hit the market during January and February. In addition to this, 5 lakh tonnes of onions will be obtained through more coverage and the price of onions will be stabilised, he added.

Where does Tamil Nadu get its vegetables from?

Drumsticks: Dharapuram, Dindigul, Chidambaram, Tirunelveli

Potato: Udhagamandalam, Mettupalayam, Punjab, Haryana

Small onions: Perambalur, Thoothukudi, Namakkal, Virudhunagar, Dindigul, Tiruchi, Coimbatore

Bellary onions: Tirunelveli, Tiruppur


(With reporting by K. Lakshmi, Deepa H. Ramakrishnan and Sangeetha Kandavel in Chennai, S. Ganesan and C. Jaisankar in Tiruchi, V. Venkatasubramanian in Thanjavur, M. Soundariya Preetha and Karthik Madhavan in Coimbatore, Sanjana Ganesh in Madurai and T. Madhavan in Vellore)

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