The phrase “Kya pyaj rulayega?” – “Will the onion bring tears?” – has become a frequent topic of discussion in the election-anticipating states of Haryana, Jammu and Kashmir, and Maharashtra. This concern has not only affected everyday citizens but has also impacted political figures.
The surge in onion prices in India is expected to drive up international costs and food expenses. Will prices fall enough to bring relief? Unlikely. The support prices for onions have skyrocketed, with the Centre purchasing them at a rate 74 per cent higher than last year in Maharashtra, the nation’s top onion-producing state.
Last year, onions were bought at Rs 16.93 per kg, but this year’s procurement price has risen to Rs 29.5 per kg, with payments made directly to farmers through the Direct Benefit Transfer (DBT) system to cut out intermediaries. To manage the situation, the Centre is distributing onions through NAFED outlets, mobile vans, and other channels at Rs 35 per kg.
The question remains: how long can this be maintained? Historically, even when procurement prices were as low as Rs 16.93 per kg, national prices seldom fell below Rs 30 per kg. Currently, onion prices are hovering between Rs 60 and 70 per kg.
National onion prices are expected to remain high, as the Maharashtra government is allocating Rs 1500 crore to purchase onions from local farmers and traders, aiming to maintain their support for upcoming elections. In December 2023, the government imposed an export ban on onions to tackle escalating retail prices ahead of the Lok Sabha elections. This measure led to a drop in onion prices by around 40 per cent, from Rs 42.2 per kg in December 2023 to Rs 24.5 per kg by March 2024.
On March 23, 2024, the export ban on onions was extended indefinitely in response to the Lok Sabha election. This move led to a decrease in prices.
Falling onion prices sparked protests among farmers and traders. To address this unrest, the government lifted the export ban on May 4, during the third phase of polling, allowing exports to six countries: Bangladesh, the United Arab Emirates (UAE), Bhutan, Bahrain, Mauritius, and Sri Lanka.
Historically, high onion prices have angered consumers, while lower prices have dissatisfied farmers, making the onion market a sensitive issue for the government, particularly during election periods.
As one of the world’s leading producers and consumers of onions, India experiences significant socio-economic impacts from fluctuations in onion prices, affecting both domestic and international markets.
In the 2023-24 season, onion yields dropped by 15 percent to approximately 25.47 million tonnes (MT), down from the previous year’s 30.21 MT, as reported by official sources. There are concerns that production could decline further this year.
Despite the ban being lifted and a 40 percent export duty imposed, Indian onions are still priced at $770 per MT (Rs 64 per kg), which remains high. In comparison, Egyptian onions are available at $387 per MT, nearly half the price of Indian onions, making them less competitive. India faces competition in the Asian onion export market from countries like Egypt, Pakistan, and China.
Onions have proven to be a pivotal political issue since the 1980 general elections. During this election, soaring onion prices played a significant role in bringing Indira Gandhi back to power, effectively ending the Janata Party’s influence.
In 1998, high onion prices contributed to the BJP’s defeat by Congress, despite the party’s attempt to shift political strategy by changing its chief minister shortly before the elections. Fast forward to the 2024 Lok Sabha elections, and the BJP has suffered significant losses in Maharashtra’s key onion-growing regions.
The National Democratic Alliance (NDA) has been decisively defeated in this vital agricultural area, securing only one seat out of 13 constituencies heavily populated by onion farmers. The remaining 12 seats have been claimed by the rival INDIA bloc.
In sharp contrast to the 2019 parliamentary elections, when the NDA — comprising the BJP and a formerly unified Shiv Sena — secured 11 of the 13 seats in Maharashtra’s onion-growing regions, the 2024 elections have seen a dramatic shift. The BJP alone won seven seats in 2019, but this time, the NDA has faced significant setbacks. Since the export ban was extended, onion growers in Nasik, home to Asia’s largest onion market at Lasangaon, have expressed growing frustration.
The ban caused substantial financial losses for farmers, who struggled to cover cultivation costs as wholesale prices plummeted. Other major onion-growing constituencies, including Dhule, Ahmednagar, Nandurbar, Baramati, Beed, Latur, Maval, Shirur, Solapur, Shirdi, and Osmanabad, also witnessed a decline in NDA support. In response, the government has decided to stockpile 500,000 tonnes of onions for state emergency reserves for the 2024-25 period.
This measure is intended to stabilise future onion prices and shield farmers from abrupt market shifts. Additionally, there are plans to expand onion cultivation by 27 percent during the kharif season, complementing the rabi crop. According to Mintec Analytics, a UK-based food analysis firm, the BJP has traditionally prioritised investment in manufacturing and infrastructure over agricultural development.
In the fiscal year 2023-24, agricultural exports totaled $48.9 billion, marking an 8 per cent decrease from the $53.2 billion recorded in FY 2022-23. This figure falls notably short of the ambitious $60 billion target set by the BJP government. Over the past decade, agricultural exports have grown by just 1.9 percent since 2014, in stark contrast to the annual average growth rate of 20 percent observed from 2004 to 2014.
The onion is a fundamental ingredient in Indian cooking, essential to a variety of dishes ranging from spicy curries to tangy pickles. According to food historian Dr. Mohseena Mukadam, “In Maharashtra, when vegetables are scarce or unaffordable, people often rely on ‘kanda bhakari’ — a simple dish of onions served with bread.”
It is a crucial element for politicians, whose fortunes often hinge on their ability to manage onion prices. The outcome of upcoming state elections is intricately connected to the onion, with its impact evident in both the triumphs and setbacks of political campaigns.
(The writer can be reached at dipakkurmiglpltd@gmail.com)
