M A I N   N E W S

Onion prices to come down in 2-3 weeks, says govt
Tribune News Service

New Delhi, October 24
Drawing flak over spiralling onion prices, the government today said the shortage was "temporary" and the prices would register a drop in the next two to three weeks.

Crop output was unlikely to drop despite damage due to excessive rain, Agriculture Minister Sharad Pawar said. Pawar, who has been criticised for not anticipating the situation, said though heavy rain had affected crop in Karnataka and Maharashtra, the total area under the crop was higher than last year and, therefore, no drop in production was expected.

Prices were expected to come down in the next 2-3 weeks with arrival likely to increase from Maharashtra, Karnataka and Rajasthan, he said.

"Production is good. The question is when the crop will come in a big way to the markets," he said. In fact, he talked about a possible glut of onions in the coming weeks, which, he said, could lead to price crash and adversely affect farmers.

Delhi Chief Minister Sheila Dikshit met Pawar and Food Minister KV Thomas to find a solution to the crisis. Onion was the reason why the BJP government was voted out of power in Delhi in 1998.

In order to stabilise onion prices in the Capital, which goes to the polls on December 4, Sheila has now asked the ECI to allow sale of onions through mobile vans. "We are trying to stabilise the prices. We will write to the Election Commission to allow us to restart the sale of onions through tempos (mobile vans). Traders and hoarders are taking advantage of the situation. Nafed has been asked to improve supplies on a no-profit, no-loss basis," she said.

Delhi has also sent a team to Maharashtra to negotiate onion prices in the market there.

Commerce Minister Anand Sharma said there was no "real" scarcity of onions in the country and prices were expected to stabilise in the coming few weeks. "We cannot blame exports because minimum export price (MEP) has been raised and there are hardly any exports," he said.

Prime Minister's key economic adviser C Rangarajan attributed the spiralling prices of onions to supply constraints and said it would have only a temporary impact on inflation. "In case of onion and vegetables, it is the supply factor that has been responsible for the push-up in prices. We need to take action on the supply side, increase availability and see that market mechanisms are improved and availability or existing supply is evenly distributed to consumers," he was quoted as saying.

Pawar wondered why onion should sell at Rs 90 a kg when farmers were getting Rs 45 a kg for it here.

Cartels would have made a killing by then

Hoarders, traders and retailers would have made a killing by the time onion prices stabilise over the next two to three weeks, as promised by Agriculture Minister Sharad Pawar.

Though Pawar blames rains for onion woes, the fact of the matter, as also indicated by Commerce Minister Anand Sharma, is that "artificial scarcity" has been a result of hoarding.

Such situations are normal during this time of the year. Officials recount how an artificial scarcity is stimulated in a short window in the period around the time -when monsoon ends and the next crop arrives. This window is tapped by the "powerful traders-middlemen lobby" to strike the windfall.

Production is expected to be 10 to 15 per cent higher than last year. Experts feel prices will come down as soon as fresh onion crop reaches the market, but the entire supply chain would have made a killing by that time. Experts say markets don't react on their own but are manipulated. — TNS