- The government has imposed stock limit norms under the Essential Commodities Act for onions, as prices continued to increase significantly across the country.
- The move comes after the government had recently amended Essential Commodities Act, 1955, to exclude onions, pulses, potatoes, edible oils and oilseed from the list of essential commodities.
- The Essential Commodities Act has a provision to invoke the stock limit clause in extraordinary price-rise situations.
Onion crops in India
- There are three main onion crops — kharif (June-July sowing, post-October harvest), late kharif(September sowing, post-December harvest), and rabi (December-January sowing, post-March harvest).
- The rabi crop has the least moisture content, due to which it can be stored. This crop feeds the markets till the next crop arrives.
- Farmers, especially in Maharashtra, store it in on-field structures (called kandachawls) to protect it from moisture and light.
Reasons for the recent price rise
- Heavy rains in September have affected crops in onion growing regions of states such as Maharashtra, Gujarat, Andhra Pradesh, Karnataka, and Madhya Pradesh. The rains have hit the kharif and late kharif onion crops.
- The heavy rains in September not only destroyed the new crop but also had an impact on stored onions in states like Maharashtra, Madhya Pradesh and Gujarat, as water seeped into the structures where onions were stored.
- Further, the onion crop was affected by Anthronose and Twister bacteria. The growth of the bacteria was aided by rain, humidity and temperature.
Overuse of urea
- Further, the shelf life of the onion is lower this year due to overuse of urea by farmers.
- Last year, onion prices were good, due to which farmers used extra urea to increase the crop yield. However, this reduces the shelf life of onions.
- Shelf life is the length of time that a commodity may be stored without becoming unfit for use, consumption, or sale.
Government’s response to rising prices
- At first, the Centre banned the export of onions on September 14. However, even after the export ban, prices continued to rise due to a supply-demand gap.
- After this, the Centre relaxed the import norms on onions, to allow easy shipping of onions to India from Iran, Turkey and other onion-producing nations.
- Finally, the government has introduced the stock limits on onions. Wholesale traders are now allowed to stock up to 25 tonnes of onion, and retail traders up to 2 tonnes.
- The stock limit restriction will be effective till December 31 to ensure traders do not create artificial conditions to raise prices.
- The Centre hopes that the produce of the kharif crop will soon reach the markets and help to reduce the prices.
- However, the arrival of onions in the market will be delayed till end of November, due to crop damage because of heavy rainfall.
- Farmers have also highlighted the huge shortage of onion seeds. Normally, farmers generate their own seeds by allowing a portion of the crop to flower and then produce seeds.
- However, this season, the farmers skipped this step and sold their entire crop due to good price of onions.
- Non-availability of good seeds has caused concerns and the available seeds are being sold at a premium, which will.