The Union Consumer Affairs Minister said that export restrictions and other recent measures are stabilizing onion prices, even as pulses remain expensive; He stressed that the restrictions will not affect the rural economy and the purchasing power of farmers; All the ingredients needed to prepare Deepavali sweets are available in abundance.
With the festive season approaching and Assembly elections approaching in five states, the rise in prices of several essential commodities is causing a headache for the BJP-led governments. For example, onion prices, according to government data, have more than doubled what they were last year. The Union government has taken several measures to combat this phenomenon, including restricting exports of onions, food grains and sugar.
Union Consumer Affairs Minister Rohit Kumar Singh monitors the prices of most daily essential groceries, vegetables and dairy products through the Price Control Unit of his ministry. Singh said that the recent measures are starting to bear fruit and that prices have become more stable. Edited excerpt:
Onion prices rose again. What causes this situation and what steps have you taken to correct it? Prices are subject to availability. Availability is based on domestic prices minus our exports. Exports are determined by global prices and international demand, and come mainly from countries such as Bangladesh, Sri Lanka, Malaysia, Qatar and Indonesia. Production is good, but onions are a perishable commodity. 70% of onions come from the spring season and 30% from the fall. We cannot store green onions for more than four to five months. The fall harvest is often delayed and supplies are low during these months.
Traders take advantage of the situation during this short period of time. It is not only about supply and demand, but also about manipulation on the part of traders. Not all traders are bad, but some of them take advantage of the situation. This is not hoarding, but speculation: disseminating information about shortages. There was no case of intentional hoarding.
To test this, we increased our stock of onions to 5,000 tons. If the government has enough buffer reserves, the market will be very cautious. This will also help farmers get the best prices. We operate in the retail and wholesale markets. We check prices across 550 sites daily. This database reflects the entire country. On the retail front, we sell onions through about a thousand stores in 100 cities across the country, at a price of about INR 25 per kg.
These measures have an impact on prices. Prices began to rise in mid-October, partly due to surplus exports to Bangladesh. We tested this by imposing a 40% export tax, but it didn’t work. We then implemented minimum export prices by making onion trade unviable in countries where exports take place. The Center maintains monitoring of tomato, onion and potato (TOP) prices as a top priority. But critics say the policy has failed. Price fluctuations have nothing to do with politics. It has to do with how these products work and how they are produced in different geographical areas of the country at different times as well as how perishable these products are. Sudden changes in rainfall can harm these crops. But we intervene through a market intervention program to obtain these products.
Onions, rice and sugarcane are all profitable crops for many farmers. So, will export restrictions affect the rural economy and purchasing power of farmers? of course not. The government will need to prioritize domestic consumption. Export can only be done after meeting the local environment. We have business relationships and export commitments but only when the products are available. Availability and affordability are fundamental principles of government. Local supply is mainly available. Farmers do not sell it in times of hardship. They get reasonable prices and profits. But they did not continue killing, which could have happened because of the conflict.
They may not benefit from this unfair advantage because of the government’s approach to protecting national interests.
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