Current Affairs

ONION

TAG: GS-3: ECONOMY

THE CONTEXT: Recently, the Central government has decided to upscale the disposal of the bulb, including offloading buffer stocks. A press release from the Ministry of Consumer Affairs, Food & Public Distribution said on November 12, 2024.

EXPLANATION:

Table of Contents

Causes of Rising Onion Prices

Supply-Demand Mismatch: The old stock from the March 2024 rabi season has nearly depleted, while the new kharif crop has been delayed, creating a supply shortage.
Lower Supply at Markets: In Maharashtra’s Nashik district, the main onion market at Lasalgaon has seen daily arrivals drop to 200-250 tonnes from the usual 1,000 tonnes.
Weather Disruptions: A spell of rain in mid-October delayed the kharif harvest, further reducing the supply to markets.
Election Significance: With Maharashtra elections approaching, high onion prices have added political significance, especially as Maharashtra is the largest onion-producing state.

Government Response to Stabilize Prices

Buffer Stock Release: The Central government is releasing buffer stocks to control prices and prevent further spikes.
Monitoring and Intervention: The Ministry of Consumer Affairs, Food & Public Distribution is closely monitoring the onion market for timely intervention.

Future Supply Outlook

Three Onion Crop Cycles: Onions in India are grown in three cycles — kharif, late kharif, and rabi. The delayed kharif harvest is expected to normalize within the next 10 days.
Increased Kharif Sowing: Kharif sowing this year was over 3.82 lakh hectares (higher than last year), which may help stabilize prices in the short term.
Lower Late Kharif Sowing: Late kharif sowing is down to 0.55 lakh hectares compared to last year’s 1.66 lakh hectares, which could affect supply next year if rabi yields don’t compensate.

External Factors Impacting Onion Prices

Export Demand: Export demand from countries like Sri Lanka, UAE, and Bangladesh has risen, although current stocks are inadequate to meet this demand.
Export Ban History: A previous ban on onion exports, later lifted, was seen as a cause of farmer dissatisfaction in Maharashtra’s onion belt, affecting the Mahayuti government’s performance in previous elections.

What are the Key Facts About Onion?

The onion is an herb that belongs to the lily family. It is an important horticultural commodity grown worldwide for their culinary purposes and medicinal values.
Major Producer: India is the world’s second-largest onion producer.
Maharashtra, Karnataka, Orissa, Uttar Pradesh, Gujarat, Andhra Pradesh, and Tamil Nadu are the major onion-producing states.
Maharashtra ranks first in Onion production with a share of 42.53% followed by Madhya Pradesh with a share of 15.16% in 2021-22 (3rd Advance Estimate).
Export Destination: Major export destinations of Indian onion include Bangladesh, Malaysia, United Arab Emirates, Sri Lanka and Nepal.

SOURCE:

https://indianexpress.com/article/explained/explained-economics/onion-prices-rise-reason-9666371/

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