Export duty hike on onion sparks fury among Maharashtra farmers

The Central government’s decision to levy 40 per cent export duty on onion has dashed the hopes of farmers expecting to profit from rising prices.

Published : Aug 22, 2023 00:32 IST - 7 MINS READ

Farmers sort onions after the auction held at APMC Lasalgaon in Nashik. The union government has opted to impose a 40 per cent export duty on onion exports until December 31.

Farmers sort onions after the auction held at APMC Lasalgaon in Nashik. The union government has opted to impose a 40 per cent export duty on onion exports until December 31. | Photo Credit: EMMANUAL YOGINI

Nivrutti Nyaharkar, a farmer from Vahegaon Saal village of Chandwad tehsil in Nashik, expressed his anger at the Agriculture Produce Market Committee (APMC) Chandwad on Monday, August 21. He had stored onions for the past five months after harvesting them. “I was waiting for the prices to go up. Just when the market seemed promising, the government dampened the momentum with a hike in export duty. Is this what we were promised as ‘Acche Din’ (good days)? It appears the union government is determined to undermine the country’s farming,” Nivrutti stated. The farmer’s words mirror the sentiments of Maharashtra’s onion-growing farmers. The union government has opted to impose a 40 per cent export duty on onion exports until December 31, which essentially amounts to an export ban. Just as the onion market was flourishing, this duty increase doused their hopes.

The onions that flood the market during the monsoon season are primarily Rabbi crops. Up until the last week of July, onion prices remained relatively modest, fluctuating between Rs 800 and Rs 1,200 per quintal. However, from the last week of July onwards, onion prices began to surge. According to data from the Lasalgaon market, Asia’s largest onion market, prices during the second week of August ranged from Rs 2,300 to Rs 2,500 per quintal.

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As prices surged, numerous farmers who had stored their crops in chawls (a Marathi term for onion storage spaces) began selling their produce. Diwakar Jagtap, an award-winning farmer from Niphad tehsil in Nashik district, transported two tractor loads of onions to Niphad APMC, totalling around 100 quintals of onions. Diwakar had hoped to receive at least Rs 2 lakh, but due to the rapid drop in prices within 24 hours of the export duty hike decision, he only received Rs 1,200 per quintal, and he suffered a loss of around Rs 1 lakh within a single day. Diwakar expressed his bewilderment at how the government acted swiftly as soon as farmers started seeing some profit. “For nearly four months, onion prices remained stagnant. During that period, the government didn’t intervene. But the moment prices rose, the government stepped in immediately,” he lamented.

Protests spread

In protest, all APMCs in Nashik and Ahmednagar districts were closed on Monday. Reports emerged from across North Maharashtra of farmers’ organisations burning copies of the government resolution on export duty. Farmers in various regions, including Satana, Niphad, Chandwad, Deolali in Nashik district, and Sangamner, Shirdi, Rahata, and Akole in Ahmednagar district, blocked State highways in protest.

Bharat Dighole, President of Maharashtra’s Onion Growers Association, urged the union government to reconsider its decision. He remarked, “Farmers had hopes of good earnings, but the government’s decision has betrayed them. They should revoke the escalated export duty; otherwise, farmers will intensify their protest.”

According to union government data, onion prices in the retail market were almost 19 per cent higher than the average. On Sunday, prices reached Rs 29 per kg, compared to Rs 25 per kg on the same day the previous year. The Ministry of Consumer Affairs announced on Monday, August 20, that having successfully procured three lakh tonnes of onions for the buffer stock, the department decided to increase it to five lakh tonnes.

The National Cooperative Consumer Federation (NCCF) and the National Agricultural Cooperative Marketing Federation of India (NAFED) were tasked with expanding the procurement efforts. These actions are likely to further impact onion prices on the ground. “Now the government wants to sell the onions. But then, who will buy them from the farmers? This very government touts the concept of a market-driven economy. However, when farmers begin to profit, the government intervenes to tighten the noose on them. We protest against such an attitude and will take to the streets if the decision isn’t revoked,” said Raju Shetti, former MP.

The Ministry of Consumer Affairs possesses a Price Stabilisation Fund (PSF) designed to stabilise prices. During the fiscal year 2022-23, the government maintained a buffer stock of 2.51 lakh tonnes of onions. The decision to raise export duty stems from the recent political challenge in handling the tomato price crisis. From May onwards, tomato prices soared, reaching up to Rs 220 per kg in some parts of the country. It wasn’t just tomatoes; numerous other food items experienced price hikes since May.

Stocks of onion from Maharashtra arrive in Malakpet, Hyderabad on March 11, 2023. Maharashtra contributes more than 40 per cent to the total onion production in India.

Stocks of onion from Maharashtra arrive in Malakpet, Hyderabad on March 11, 2023. Maharashtra contributes more than 40 per cent to the total onion production in India. | Photo Credit: NAGARA GOPAL

According to Consumer Food Price Index data, the inflation rate rose from 2.96 per cent in May to 4.49 per cent in June. Unseasonal rains in Southern and Western India adversely affected the prices of vegetables, cereals, pulses, and other food items. Tomatoes, in particular, drew attention due to their price surge. In an attempt to prevent a tomato-like crisis, the union government took a precautionary approach by increasing the export duty on onions.

The 40 per cent duty is so high that the international market might favour Pakistani onions over Indian ones, said farmers, and this fact has made it challenging for the BJP and its alliance partners in Maharashtra to justify the decision to farmers. Bharati Pawar, Union Minister of State for Health and representative of the Dindori Lok Sabha constituency in Nashik, stated that the union government would safeguard both farmers’ and consumers’ interests with this decision. She said, “This decision was made for the benefit of the common people. It falls under the Price Stabilization Act, and we will take all necessary measures to assist both farmers and consumers.”

Chhagan Bhujbal, an NCP leader from the Ajit Pawar camp and Maharashtra’s Minister of Food and Civil Supplies, had no choice but to align with the government’s stance. He said, “Such heightened taxes do not aid the farmers. I will attempt to bring the concerns of Lasalgaon farmers to the Chief Minister and communicate their sentiments. We will head to Delhi, involving all political parties in the process.”

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Maharashtra’s Agricultural Minister, Dhananjay Munde, said, “Farmers are demanding a rollback of the onion price hike. I am confident that the union government will find a solution,” he affirmed. On August 22, Munde met Union Consumer Affairs Minister Piyush Goyal in Delhi and sought immediate relief for onion growers. Goyal announced that NAFED will procure onions at Rs 2,410 per quintal, but only 2 lakh tonnes. This is just a partial relief to the farmers, as the estimated onions ready for sale in Maharashtra is around 14 to 15 lakh tonnes.

Meanwhile, officials in the Lasalgaon APMC and Jawaharlal Nehru Port Mumbai said that almost 15 to 17 thousand quintals of onions which are already bought by agents are in containers at the port or in trucks outside. This is ready for export.

Hitting the farmers where it hurts

Maharashtra contributes more than 40 per cent to the total onion production in the country. When onion prices plummeted in March 2023 for the Kharif crop, the State government pledged a subsidy of Rs 300 per quintal for farmers. However, many farmers have yet to receive this subsidy. Ajit Nawale, General Secretary of All India Kisan Sabha, observed, “Only a handful of farmers have received the subsidy promised by the State government. Moreover, the declared amount was insufficient. Farmers who struggled to even earn one rupee per quintal during the February-March crisis suffered significant losses and debt. Against this backdrop, the export duty hike feels like denying onion growers their right to livelihood.”

Sharad Pawar, former Union Minister of Agriculture, criticised the Modi government for intruding into the lives of poor farmers. He remarked, “By increasing export duty, the union government is closing off the global market for Indian farmers. It has witnessed the downfall of onion prices in the market. This stance goes against the interests of the farmers.”

These strong political reactions are already unsettling the ruling alliance in the State. In the previous fiscal, Maharashtra had cultivated onions in 54.30 lakh hectares. The regions of North Maharashtra, Marathwada, and Western Vidarbha predominantly cultivate onions. Consequently, the issue could quickly evolve into a political matter. Rising inflation and declining agricultural prices have placed the government in a precarious position, and the situation could impact the ruling parties on both fronts—farmers and consumers. Even though the decision to increase export duty is purportedly aimed at appeasing consumers, it remains to be seen whether it will succeed.

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