Barely days after imposing a 40 per cent export tax on onions to cool down prices, triggering protests across the main growing belts, the Central government today attempted to quell both the political and economic unrest that has affected parts of Maharashtra.
It decided to procure an extra 200,000 tonnes of onions at Rs 2,410 per quintal for its buffer stock from farmers. This rate is tantalisingly close to the rate at which they were being exported before the 40 per cent duty was levied on August 19. The export price before the duty was around $320 per tonne FOB (approximately Rs 2,650 per quintal).
“Some political opponents have been attempting to present a misleading picture about export curbs. I would urge all farmers in onion-producing states not to worry or indulge in any panic selling. NCCF and NAFED have been directed to procure onions from farmers,” Food and Consumer Affairs Minister Piyush Goyal informed reporters.
The decision to purchase additional onions came amid protests from farmers in Maharashtra’s main growing belts, who feared a sharp drop in income because of the substantial duty.
The Centre already has a buffer stock of 300,000 tonnes of onions, which it has now decided to expand to 500,000 tonnes.
On Monday, traders decided to halt onion auctions indefinitely in all the Agriculture Produce Market Committees (APMCs) in Nashik, including at Lasalgaon, the largest wholesale onion market in India.
Raju Shetty, head of Swabhimani Shetkari Sangathan, a prominent farmers group in Maharashtra, stated that the agitation would continue until the duty is lifted.
“The government was not buying onions at the rate of Rs 24 when farmers needed them most, in the month of June, when almost 40 per cent of the crop was damaged due to rains. Now, when they were getting some price due to a rise in exports, it has clamped down with a hefty export tax. This shows that it does not have a policy,” Shetty told Business Standard.
Shetty further added that if the government genuinely wanted to help consumers, it could have purchased onions from the open market and sold them at a subsidised rate.
Politically, top central ministers have been in touch with senior functionaries of the Maharashtra government, including Chief Minister Eknath Shinde and deputy chief minister Ajit Pawar, to address the situation.
Calls were also made to deputy chief minister Devendra Fadnavis, who is on an official trip to Japan.
Fadnavis later posted on social media platform X, stating that he had spoken to Union Home Minister Amit Shah and Union Commerce Minister Piyush Goyal regarding the onion issue, and the Union government would procure two lakh metric tonnes of onion at the rate of Rs 2,410 per quintal.
“There will be special procurement centres set up in Nashik and Ahmednagar districts for the same. It would offer some relief to the onion growers in the state,” the deputy CM added.
A delegation of senior leaders from Maharashtra, led by the minister of agriculture Dhananjay Munde, met top ministers of the Central government on Tuesday to highlight the problem.
In Mumbai, Chief Minister Eknath Shinde said that cold storages could provide a permanent solution to onion farmers’ woes, and he has directed officials to work on the issue.
He also mentioned that the government is working on the concept of an ‘onion bank’, and a panel headed by senior scientist and former Atomic Energy Commission chairman Anil Kakodkar has been set up for it.
The Centre’s coordinated action from Delhi to Mumbai aimed to prevent any escalation of the crisis in Maharashtra, where newly joined coalition partners NCP (Ajit Pawar) faction control most of the APMCs and are engaged in a fierce battle with the rival faction led by Sharad Pawar.
In addition to Nasik and Ahmednagar, Nafed and NCCF have opened procurement centres in various locations to benefit farmers.
Meanwhile, in Delhi, Piyush Goyal asserted that the decision to impose a 40 per cent export duty on onion was taken to protect consumers’ interests, but the Centre has also decided to purchase an additional 2 lakh tonnes of onion from farmers to avoid panic selling.
“Both consumers and farmers are important for us. …The government has been making decisions in the interest of both farmers and consumers,” he said.
Regarding export shipments stuck at ports, the Directorate General of Foreign Trade (DGFT) will decide on those shipments whose bills were generated prior to the imposition of the export duty.
Goyal also commented that sowing of kharif onion is underway, and if the total coverage remains the same as last year’s level, production is expected to be better.
“In the last two years, onion production was around 31.7 and 31.8 million tonnes, and with the acreage higher in kharif, we are hopeful that production will also be good this year,” Goyal noted.
Between April 1 and August 4 this fiscal, 9.75 lakh tonnes of onions have been exported from the country. The top three importing countries in value terms are Bangladesh, Malaysia, and the UAE.