The volatility in onion prices can be managed through a multi-pronged strategy, including creation of adequate public stocks, extension of the right technology, spread of onion-farming in other States such as Uttar Pradesh and gathering appropriate market intelligence, said Ramesh Chand, Member, Niti Aayog.
“The primary factor for triggering abnormal hike in prices is production shock generally caused by weather related events. Studies show that this situation is aggravated by further exploitation by a section of traders and middlemen through stocking and market manipulations,” Chand said in a blog post published on the web-site of Niti Aayog on Friday.
In order to reduce the effect of weather shock, concentration in area under onion cultivation in six States needs to be diluted by promoting onion cultivation in other States like Uttar Pradesh. The other possibility is to popularise onion production in the kharif season, he said. These changes will require suitable varieties for new areas. While some varieties are already available, they need further improvement. “ICAR and other research organisations and private sector R&D firms have an important role to play in it. Efforts will also be needed from extension agencies of states and central government to take these technologies to farmers,” Chand added.
Besides Central agencies like NAFED, state-level agencies should also be involved in stock holding to hold larger volume and to have larger coverage of stabilisation. Apart from physical stabilisation it will also keep check on exploitation and market manipulation by private trade, the blog post pointed out.
While stabilisation through trade is another option, but Chand said that it would be costly and serve a limited purpose as India itself is a major onion exporting country. He added that public agencies like Directorate of Economics and Statistics in the Ministry of Agriculture and Farmers Welfare should constantly monitor crop area, conditions and prices to know about the undercurrent and evolving market changes. “It should also develop reliable price forecast model and come up with early warning systems to enable the government to take appropriate measures in advance like procurement, regulating export, arranging imports and putting check on hoardings,” he said.