Cartel "controlling" onion prices
By Sarbjit Singh
Tribune News Service

CHANDIGARH, Oct 27 — A well-entrenched cartel of onion traders is behind the rise of onion prices beyond the reach of even the upper middle class. This has come to light after talking to a cross-section of those involved in the trade of onions and other vegetables for the past several years.

"Ask Prime Minister Atal Behari Vajpayee to conduct raids at Nasik where the root of the problem lies and the prices of onions will come down within 24 hours", said a trader in the local wholesale vegetable market.

Mr Vajpayee was issuing empty threats and such threats would not work, he further added.

Informed traders in the local vegetable market revealed that the onion cartel was regulating the onion prices from Nasik which is considered the headquarters of the onion trade. Traders operating from Nasik release the onion supply in such a regulated manner that a certain price level is ensured.

Traders said that the onion which was stocked following the arrival of the last rabi crop in the market in Maharashtra and the adjacent states was being released in a very calculated manner. Moreover the cartel was selling the onion throughout the country mainly through the commission agents.

A commission agent told TNS that traders operating from Nasik sent one or two truckloads to each main market in various parts of the country and dictated terms to commission agents in such markets on a day-to-day basis. Every morning they contact the commission agent concerned and direct him not to sell the onions below the price told to him in any case.

For instance today commission agents were told not to sell one bag containing 40 kg of onion less than Rs 1,600. This was the wholesale price for yellow onions while the red ones were sold in the wholesale market at Rs 1200 per bag containing 40 kg. Commission agents said that after getting the red onion at Rs 40 per kg in the wholesale market, retailers were selling it at a price varying between Rs 50 to Rs 60 per kg while the red ones were available at Rs 30 per kg, retailers were selling it at Rs 40 to 45 per kg.

Informed sources said that a myth had been created by the cartel that the onion crop was damaged to a large extent in Maharashtra and other states. According to the Government's information the production was estimated at around 45 lakh tonnes before rains in that region but the figure was brought down to 39 lakh tonnes after reassessing the crop after rains. So, the damage to the crop was not as much as was being projected by the cartel.

Sources said that already the export of onions had been stopped and import allowed but even this had not affected the price graph. Members of the cartel were aware of the fact that it would take time to import onions from other countries and they were taking full advantage of the situation.

A local commission agent said that by now fresh onion should have started arriving in the markets in northern India from Ajmer, Dhulia, Kaithal and some parts of Gujarat but it had been delayed perhaps due to rains in the recent past. He said that kharif onion could not be stocked and when it started arriving in the market prices would fall immediately.

The consumption of onion has come down. A commission agent said that during normal price varying between Rs 10 to Rs 15 per kg he used to sell one truckload of 300 bags. But now he could hardly sell 10 to 15 bags in a day.

Commission agents said that in the past days the potato crop in Punjab was damaged. Otherwise, the supply of fresh potatoes starts immediately after Divali. Now potato was arriving from the Kulu belt of Himachal Pradesh or from cold stores. The wholesale price of "pahari" potato varies between Rs 700 to Rs 900 per bag containing 80 kg but retailers were selling it at Rs 15 per kg, earning about 80 per cent profit.

The commission agent said that potato from Hoshiarpur district arrived in the Delhi market today and these were sold at Rs 1600 per bag containing 80 kg. He said that next week the supply of fresh potato from Punjab would pick up and he was expecting a fall in the price.

The commission agent said that tomato was selling in the wholesale market at Rs 20 per kg as not much supply was coming from Himachal Pradesh.

Onion export ban has come too late
From T.V.Lakshminarayan
Tribune News Service

NEW DELHI, Oct 27 — As people all over the country shed tears over the spiralling prices of onions, layers and layers of reasons are emerging for the great fiasco of this decade.

The ban on export of onions may sound as a big decision at this crucial juncture, but then the fact is it would have little soothing affect for the tearful consumer. Analysts point out that the measure is a wee bit too late as the damage is already done.

Also official experts wonder at the logic of the government to import onions from a source like Dubai, which till the other day was importing onions from India. In all probability the bulk of the onions being imported into India now at an exorbitant rate is what the country exported some months ago.

A Food Ministry official said: “It will not be out of order to say that we are catching the nose from behind the neck.”

Did the BJP-led coalition government sleep over the problem in the initial months of its governance? Pointers say, yes.

Failing to take the cue from the previous Gujral-led United Front Government, which realising an impending poor crop of onions put the bulbous vegetable on the restricted list of exports from January to March this year, the BJP-led coalition government took nearly five months after assuming power to take a similar decision. It was only in the beginning of this month, after prices of onions had increased by nearly 700 per cent, that the Government decided to ban the export of the common man’s vegetable.

The onion crisis has its genesis in the kharif crop of 1997-98 when the output of the crop fell from the estimated 9.37 lakh tonnes in the previous season to 7.8 lakh tonnes. The next season too saw a decline in the production of onion and the total production amounted to only 13.69 lakh tonnes as against 17.64 lakh tonnes in 1996-97.

The quick reaction by the United Front Government had the desired affect and exports fell from a level of 5.12 lakh tonnes in 1996-97 to 4.41 lakh tonnes in the last fiscal. The temporary ban however, lapsed on March 3, and at a time when the new government took over on March 19, the exports had begun in full swing.

It was perhaps the existing market trends and a prospective good rabi arrivals that prompted the BJP-led coalition government to keep quiet.

The rabi produce, sown in November-December of 1997 and harvested in April-June of 1998, was, however, not up to the expectations as the output fell marginally to 23.17 lakh tonnes from 25.08 lakh tonnes in 1996-97.

Lack of action even at this stage seems to be the undoing of the government. NAFED, the sole canalising agency for export of onions, sold 2.06 lakh tonnes of the bulbous vegetable to foreign buyers between April and September. When the prices of onions had skyrocketed beyond the reach of the common man in September, NAFED had exported around 2,000 tonnes in that very month.

By the time the government woke up to the problem it was too late and the prices were ruling at almost 700 per cent more than the retail prices in the previous year. According to trade sources, in any case the domestic market had become profitable in comparison to exports and available produce was being supplied within the country.

There is also the other side to the problem. The exporting community feels the decision of the government to put the export of onions in the restricted list would hurt the reputation of India as a reliable supplier in the international market. “There would be few takers for Indian onions when there is a glut in the domestic market in the future”, a trade consultant warned.

India consumes on an average 40 lakh tonnes of onion a year and the projected imports of around 13,000 tonnes, of which 3000 tonnes has been sought by Delhi, would meet only a day’s demand.

Also, the import of onions is not the only solution as Indian consumers are also selective about the quality of the vegetable. The onions contracted from Oman, Iran and Dubai are white in colour and small in size. The Indian variety, particularly those grown in Nasik (Maharashtra) are sought after the world over for their pungent smell and red colour.

The first consignment of onions which arrived from Iran recently in Delhi are too small and lack the original taste. A South Delhi shopkeeper, who had pegged the price of the imported onions at Rs 40 a kg, said there were few takers for the variety.

There is a general consensus among shopkeepers that more than the exports of onions, it is hoarding by traders which is responsible for the current crisis.

In fact, the opposition Congress has already indicated that the people who have profited from the onion crisis are known supporters of the BJP.

Since the import of onions has been put under the Open General Licence list, it would enable any trader to import the common vegetable. The possibility of the traders sneaking in hoarded onion along with the imported varieties is also not being ruled out.