Onion crisis: Maharashtra farmers are paying the price for a misguided attempt to control inflation

The Centre lifted the ban on onion exports but imposed steep export duties, which have made Indian onions too expensive for the global market.

An onion farmer in Beed, Maharashtra, in May 2024. The Indian onion farmer has lost a big opportunity to capture the international market. | Photo Credit: JOTHI RAMALINGAM B

Maharashtra’s second Deputy Chief Minister Ajit Pawar has started his statewide tour ahead of the Assembly election. He opened his yatra with an apology to onion farmers. North Maharashtra is at the centre of the country’s onion production. And as falling prices have angered farmers, Pawar said: “I admit that the onion export ban was a mistake and apologise for that. There will be no onion export ban again. I have told the Central government and we in the State government have agreed that there will be no onion export ban.”

But his assurances are nothing but hollow words. In fact assurances given by everyone from Union ministers to the Chief Minister of Maharashtra and other BJP leaders, have borne no fruit.

Rajaram Jamdade, an onion grower from Chombhut village in Ahmednagar has been forced to reduce the cultivation area this year to half an acre (from one-and-a-half acres last year) due to falling prices. “I still have eight quintals of onions in my yard. The rate is around Rs.2,600 per quintal. My cultivation and transport cost together is Rs.3,500 per quintal. So, what is the purpose of selling? I am waiting for the rates to go up. But these government policies are against us,” he said.

Lost opportunity

The Central government banned onion export on December 7, 2023. This was a bizarre decision because the expected onion production for 2023-24 was 270 lakh tonnes; India needs around 200 lakh tonnes. However, experts explained the reason behind the ban. Yogesh Bidwai, an expert and the author of a book in Marathi on the onion business said, “Inflation was the talking point in the Parliamentary election. To keep it under control, the government banned onion exports. As a result, the prices fell, and farmers suffered,” he said.

Of India’s onion production of around 250 to 300 lakh tonnes per year, almost 65 lakh tonnes are produced in Maharashtra. Nashik, a North Maharashtra district, produces 20 to 22 lakh tonnes. Nashik, Dhule, and Ahmednagar are the hub of onion production and related businesses.

As the Lok Sabha elections approached and the BJP leadership realised the anger among North Maharashtra’s farmers, they changed the policy on May 4, 2024. North Maharashtra has eight Lok Sabha constituencies, of which six—Shirdi, Ahmednagar, Nashik, Dindori, Dhule, and Nandurbar—have the highest concentration of onion cultivation.

But this decision had conditions. The government put the minimum export price at $550 per tonne and introduced a 40 per cent export duty. This means that onion had to sell at Rs.46,500 per tonne. And then there was an export duty of Rs.18,480 per tonne. So, Indian onions sell up to Rs.70,000 ($680) per tonne in the international market. In contrast, onions coming from Pakistan, Egypt, Turkiye, and Iran are sold at $500 per tonne. And this is why there are no buyers for Indian onions in the international market.

Nashik’s Atish Borate, an onion grower, said: “Give me one Indian product with a 40 per cent export duty. There are none.” So, lifting the ban on May 4 did not yield the expected results for the BJP. In 2014 and 2019, the BJP-led NDA had won all six Lok Sabha seats in this onion belt. This time in 2024, they lost all six.

Beyond politics, the Indian onion farmer has lost a big opportunity to capture the international market. There is still a huge scope. Generally, till July, at least 15 lakh tonnes of onions are exported. But this year, till July 31, only 2.60 lakh tonnes were exported, as per the government records.

To give the onion-growing farmers so-called relief, the Maharashtra government in February 2024, announced the procurement of onions by the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED). But this was only two lakh tonnes of onions, while almost 50 lakh tonnes lay in the yards of farmers. The procurement price was Rs.2,410 per tonne compared with the Rs.3,500 market rate. This was no relief for the farmers.

The State government also declared Rs.300 per quintal subsidy for the onion growers. But later, it amended the decision saying that the subsidy will be for 200 quintals.

Crops before sops

Against this backdrop, the State is going into the Assembly election later this year.

As Pawar started his statewide tour, his party people organised mega rallies of women to woo them ahead of the election. A video clip from the Marathi news channelABP Majha has gone viral: here, a group of women in Nashik district are asked if they are satisfied with the promise of Rs.1,500 per month. The women replied that this was welcome, but added: “The government should first give us good rates for our crops. That is more important than these mere 1,500.”

Is Maharashtra listening?