The government may resort to distress sale of about 34,000 tonne of onions it has imported from countries such as Turkey and Egypt because they are not pungent enough for the Indian tongue, and, consequently, not wanted by the states, according to two people aware of the matter.
With no takers for the onions, the government is considering selling a huge pile of imported onions at Rs 25 per kg, which is less than half the cost, including transportation, the two added on condition of anonymity.
The government’s original plan was to sell imported onions at an average of Rs 55 per kg on a no-profit-no-loss basis.
Onion is a perishable commodity, and particularly the imported onions are susceptible to moisture if kept outside a controlled environment. The government is, therefore, exploring several options, including selling at a discount in the domestic market and exporting to neighbours such as Bangladesh, Sri Lanka, Nepal and Maldives, one of the two persons said.
Some states want huge discounts given the flavour (or lack of) of the onions; they are also larger than Indian onions, which buyers find disconcerting; and on the export front, Bangladesh wants discounts for purchasing these onions, the second person said.
Most of the imports are from Turkey. Turkish onions are larger in size, nearly four times the size of onions from Nashik, but significantly less pungent, he added.
“The stock of imported onions is piling up. We already have a stock of 22,000 tonne as on January 16. Another 8,000-9,000 tonne are expected to be added by January 25, which will be followed by 5,000-6,000 tonne by the end of this month,” the first person said.
The government has so far been able to sell only 2,000 tonne of imported onions to agencies such as the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) and to Andhra Pradesh (900 tonne), Uttar Pradesh (220 tonne), Telengana (120 tonne), West Bengal (125 tonne), Uttarakhand (265 tonne).
The two people mentioned above said a decision on discounts cannot be taken unilaterally by any arm of the commerce ministry or the Price Stabilization Fund Management Committee (PSFMC). The decision will be taken by interministerial committees such as cabinet secretary-headed Committee of Secretaries (CoS) or a Committee of Ministers (CoM), headed by the home minister.
The two people explained that the Centre’s decision to import onions was based on requests from states to meet the acute shortfall of onions that drove the price of the commodity to up to ~150 per kg in various retail markets. Last week, consumer affairs secretary Avinash Srivastava said that various states submitted a requirement of 33,000 tonnes of onions. However, some states, including Assam, Maharashtra, Haryana and Karnataka, later withdrew their demand.
While the government has deployed the Metals and Minerals Trading Corporation (MMTC), the country’s largest state-owned trading company, to contract imports, private traders have imported about 75,000 tonne since the crisis unfolded, Srivastava said.
Average prices of the vegetable are still high at ~78 per kg in Delhi, and Rs 80 in Mumbai, but they have softened from about Rs 100-115 last month following imports and fresh harvests.
Onion cultivation is concentrated in Maharashtra, Karnataka, Andhra Pradesh and Madhya Pradesh, regions which witnessed several spells of flooding this summer, resulting in a supply shock.
Wild swings in onion prices have now become fairly entrenched. Every alternate year, there is at least one price spike. Given their political significance, onion prices are emblematic of India’s larger food-inflation battle. Between January and May last year, farmers faced huge losses when onions sold for a wholesale rate of Rs 5-6 a kg at Lasalgoan, Asia’s largest onion market in Maharashtra, against an average cost of cultivation of Rs 9.