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SEASON OF ONION POLITICS IS IN: MIDDLE CLASS BE AWARE: CAVEAT ISSUED


UPA FACES MOUNTING CRITICISM ON ONION PRICES

Faced with mounting criticism over sky—high onion prices, the government on Thursday asserted the situation will improve “very quickly” thanks to steps taken to increase availability, including transportation of stocks to markets where the commodity is in short supply.

“I think it will ease very quickly. We had a Committee of Secretaries meeting, so we have decided to move onions from different areas… We will certainly do whatever required bringing down the prices of onions,” Cabinet Secretary K.M. Chandrasekhar told reporters here. He said the Railways has agreed to provide the rakes required to move onion stocks from different parts of the country to retail markets worst affected by the supply shortfall.Time for Onion Show Off

Onion prices have skyrocketed in recent days, as crops in the main producing state of Maharashtra have been damaged due to unseasonal rains.

“I understand there is a shortfall in Maharashtra, but Karnataka is reasonably good and Gujarat is producing quite a lot of onions. We will try to make some more movements,” Mr. Chandrasekhar said.

He added that the Commerce Ministry is also scouting for overseas sources to import onions.

With a view to bring down onion prices, which had raced to as much as Rs 85 per kg in some retail markets, the government had on Tuesday night removed customs and countervailing duties on onions. The commodity earlier attracted 5 per cent customs duty and 4 per cent countervailing duty. Furthermore, the government announced an indefinite ban on exports of onions. In addition, consignments of onions have been making their way into the country from neighboring Pakistan at rates almost four times less than the peak rate seen in retail markets like Delhi.

Consequently, wholesale prices of onions have begun to fall rapidly and the effect is also beginning to show in the retail market. Wholesale onion prices rose by 4.56 per cent during the week ended December 11.

PRIME MINISTER ASKS MINISTRIES TO BRING DOWN ONION PRICES

Union government has refused to play Santa Claus and regulate market forces, the merciless rise in onion prices threatens to mar Christmas, New Year and Makar Sankrantri festivities.

Several markets reporting a further rise in prices to about Rs.85 a kg,  has made Prime Minister Manmohan Singh to interven, by directing the Ministries of Agriculture and Consumer Affairs to take steps to bring its prices to affordable levels.

According to sources, the Prime Minister, in his letter, wanted the two Ministries to monitor the situation on a day-to-day basis to bring the prices of onions down. However, the fact was that the common man would not get to sport a smile for at least three more weeks. This was underlined by Union Agriculture Minister Sharad Pawar who declared that the prices of onions would continue to scorch the kitchens as of now.

Onion at Azaadpur Mandi New Delhi - Wholesale Market

He ruled out any intervention through imports and expressed his dependence on the next batch of arrivals of onions, which continued to command a stiff price of Rs.70 plus a kg, without any let-up in retail markets of Delhi and other cities. The Agriculture Minister said that onion prices would remain high for at least the next two to three weeks. He attributed the rise in prices of onions to unseasonal rains in Nasik in Maharashtra damaging onions on a major scale, and said that the prices would come down when the bulbs arrive from Madhya Pradesh, Gujarat and Uttar Pradesh in the next two to three weeks. He, however, hoped that the government’s action of suspending exports till January 15 and doubling export price would help reduce the prices of onion.

FINANCE MINISTERY DESCRIBED RISE IN ONION PRICES AS UNFORTUNATE

Union Finance Minister Pranab Mukherjee described the rise in onion prices as unfortunate and said that he would be talking to ministries concerned to ensure adequate supply of onions in the market. Stressing on the mismatch in demand and supply, Mr. Mukherjee hoped that appropriate steps would be taken to remove the bottlenecks to bring the prices down.

The Union Agriculture Ministry claimed that wholesale prices of onions in Nasik in Maharashtra and Azadpur market declined by 35 per cent and 13 percent respectively on Tuesday, following the decision of the Price Fixation Advisory Committee to voluntarily suspend issuance of no-objection certificates for export of onion.

More Onions

Communist Party of India MP Gurudas Dasgupta said that the rise in prices of essential food items and that of onion was due to excessive liberalization of the market without any required safeguard, excessive export, forward trading and stockpiling, with generous bank advances and hoarding by unscrupulous manipulators of the market.

OPPOSITION GETS MORE AMMUNITION SUPPLY TO FIRE AT GOVERNMENT

The skyrocketing onion prices have provided more ammunition to critics of the government in the Opposition, who were already protesting the decision not to constitute a Joint Parliamentary Committee to probe the 2G telecom scam. As Onion prices skyrocket across the country, the Opposition BJP and the Left closed ranks to slam the UPA government accusing it of remaining a “mute spectator” while the ruling alliance’s key ally Trinamool Congress also showed signs of discomfort.

The opposition parties also accused the Government of surrendering before market forces for the extraordinary increase in prices of the bulb. With the price of onions — which is perhaps the most essential ingredient for any Indian food — a matter of extreme political sensitivity, state governments vowed to take stern action against those involved in hoarding and black-marketing of onions.

“As the prices go higher and higher, the government stands as a mute spectator, reflecting its helplessness before the market forces. The government has totally surrendered before the market forces,” CPI leader D Raja said. “It (Government) is making excuses that hoarding is the reason for the high prices of onions. If that is true, then it should have taken action,” he said.

BJP president Nitin Gadkari faulted the “wrong” economic policies and “bad governance” of Congress party and the UPA for the sudden surge in onion prices which has nearly doubled to touch Rs 80 per kg in the last few days in several parts of the country. Mr. Gadkari accused the government of being a failure in taking timely steps to check onion prices.India-Pakistaan-Onion Trade

With Assembly elections in West Bengal due next year, Mamata Banerjee’s Trinamool apparently does not want surging prices of the bulb to be an issue. “We have always been against price rise be it for petrol or anything… We are against it (rise in onion prices),” TMC MP Partha Chatterjee said.

IMPORTED ONIONS ARRIVE FROM PAKISTAN THROUGH THE ATTARI-WAGAH LAND ROUTE

Soaring prices of onion in the country witnessed truckloads of the commodity arriving from Pakistan through the Attari-Wagah land route for supply to northern markets in India on Monday. As many as 13 truck loads (5 to 15 tons per truck) of onion have arrived from Pakistan, a senior official of Customs Department in Amritsar told PTI without quantifying the total import consignment.

“About five (Indian) importers have brought in onion from Lahore today for supply in the markets of Ludhiana,Amritsar, Jalandhar in Punjab and Delhi,” the official said. The landed cost of onion from Pakistan stood at Rs. 18-20 per kg, he said adding this included custom duty, cess, transportation and handling charges.

According to importers, it was for the first time in this year, onions are being imported from Pakistan. “We, this year exported onion to Pakistan in the month of March and April. Now we are importing it from them (Pakistan),” Rajdeep Uppal, the MD of a leading Amritsar trading company Narain Exim said.

Mr. Uppal said, as far as his company is concerned, it imported 100 Metric Tonne (MT) of onion today at a rate of USD400 per MT.  He said it would import 500 MT of onion in coming days from Sindh provision in Pakistan.  India and Pakistan agreed to commence truck movement from Attari Check post in Oct. 2007, after a gap of sixty years to boost bilateral trade.Pakistani Onion

Vegetable traders imported onion at USD 400 a tonne (around Rs 18,000 a tonne) from Sindh provision in Pakistan. “The size of crop in Pakistan is also not very huge… therefore rising demand from India has pushed up the rates, which will result in higher payment for imported onion,” he said. After the arrival of 13 truck loads (9 Tonne) of onion at Amritsar via Attari-Wagah land route, 38 trucks carrying fresh consignment of onion today entered Indian Territory at Amritsar, official of the Custom Department at Amritsar said. According to traders, close to 450 tonnes of onion has arrived from Pakistan within a day or two. The landed cost of onion from Pakistan was Rs 18-20 per kg including custom duty, cess, transportation and handling charges, he said. Though arrival of onion from Pakistan could not rein in commodity prices in local markets of Amritsar, yet the onion from Lahore commanded lesser rates compared with Indian onion.

“Onion from Pakistan was being sold at Rs 36-37 per kg in wholesale market while Indian onion was fetching Rs 45-50 per kg in wholesale market,” said Kailash, a vegetable merchant in Amritsar. Majority of commodity supply came from Pakistan was consumed in local market of Amritsar, traders said. “The quality of imported onion (from Pakistan) was inferior to Indian onion, resulting into getting less prices,” he said. Pakistani traders are exporting onions to India despite a drop in domestic production due to unprecedented floods and a surge in prices in markets across the country, traders said today. Prices of onions have maintained high levels due to crops being affected by the floods, especially in the southern Sindh province, where agricultural lands were devastated by heavy rains and swollen rivers during July-August this year. The exports began earlier this week after the price of onions registered a sharp rise in India.

About 100 trucks carrying thousands of tonnes of onions have been sent through the Wagah land border in Punjab and Khalil Bhatti, a leading exporter in Lahore, said exports to India are likely to continue till January 15.There is no specific agreement with Indian importers on the quantity of onions to be supplied by Pakistan and exporters in Lahore were filling orders as and when they are received from importers. “About 400 to 500 tonnes of onions are being sent across the border daily from Wagah at the rate of between Rs44 and Rs48 a kilogramme,”.

Due to the floods, onion production in Sindh alone registered a decline of 500,000 to 600,000 tonnes this season, traders at Karachi’s main vegetable market said. The southern province caters for most of Pakistan’s requirement of onions during the winter. Pakistan’s annual onion yield is estimated at five to six million tonnes.

Since exports to India began, onion prices in Pakistan’s retail markets surged from Rs60 a kg to Rs70 a kg. However, this is almost half the current price of onions in India. Exporters have also been buoyed by the Indian government’s decision to abolish a seven per cent custom duty on onion imports to provide relief to people hit hard by a steep rise in the price of onions.

This is the first time in a decade that India has imported onions from Pakistan and Pakistani exporters are hopeful of making good financial gains. Ironically, the Pakistan government was forced to allow the import of vegetables, including onions, from India earlier this year after the floods caused by unusually heavy monsoon rains devastated thousands of acres of agricultural land.

SUSPENSION OF ONION EXPORTS TILL JANUARY 15

The government announced suspension of onion exports till January 15 in a last-minute effort to cool prices of the poor man’s essential vegetable from the prevailing high of Rs. 60-70 a kg. In a twin strategy, while the farm cooperative major and regulating agency NAFED (National Agricultural Cooperative Marketing Federation) and 12 other agencies have been directed to halt issuance of export clearance, the MEP (minimum export price) for onions has also been raised more than double from $ 525 a tonne to $1,200 with immediate effect.

As a result, even those onion exporters who have already secured NOCs (no objection certificates) from the regulating agencies but have not executed their export orders will not be able to do so below the increased price. “We have decided to voluntarily suspend issuing NOC to onion exporters till January 15 and have also raised the MEP to US$ 1,200 per tonne for those NOCs which are yet to be executed,” a NAFED official said after the decision to suspend exports was taken at an emergency meeting here. Within a couple of days, retail price of onions soared to Rs. 60-70 a kg across the country from an existing high of Rs. 35-40 a kg. While wholesalers have been attributing the earlier high prices to supply constraints owing to unseasonal rains in Maharashtra (especially Latur where the crop was impacted), Gujarat and southern States, the sudden surge in prices is owing to a sharp increase in exports, apart from various stakeholders holding back the produce from entering the market.

AGRICULTURE CO-OPERATIVE NAFED DEFERS ONION IMPORTS FROM PAKISTAN

Agriculture co-operative NAFED has said that it has deferred onion imports from Pakistan as the domestic prices have started softening. “NAFED defers plan to import onion as its prices have begun to soften in the domestic market,” NAFED chairman Bijender Singh told reporters in New Delhi. NAFED is the regulator for onion exports from the country.

NHRDF CONCERNED ON HIGH PRODUCTION COST

This is evident from the fact that way back in May this year, Nasik-based National Horticulture Research and Development Foundation (NHRDF) Additional Director Satish Bhonde had gone on record saying that although the country’s onion production this year was likely to touch a record 95 lakh tonnes, it may not result in a sharp fall in prices due to high investment costs involved.

In a clear indication that high yield would not mean lower prices, Mr. Bhonde had said: “Use of crop technology and irrigation have improved onion yields, though acreage remained at last year’s level of 5.5 lakh hectare…The wholesale prices of onions are unlikely to fall significantly because farmers are storing the crop in a big way. Also, higher production cost may not allow them to sell at lower rates.” According to NHRDF data, wholesale price in late May for onions were at Rs. 6-7 a kg at Lasalgaon in Maharashtra, Asia’s biggest onion market.

Onions have soared despite of the fact that India has three seasons for onion — kharif (winter), late kharif and rabi (summer).

Agribusiness Management

 

Always Yours—As Usual—-Saurabh Singh

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One response to “SEASON OF ONION POLITICS IS IN: MIDDLE CLASS BE AWARE: CAVEAT ISSUED

  1. ip January 20, 2011 at 11:11 PM

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