Covid-19 impact: Farmers panic as onion slips to season's lowest of Rs 3/kg

The benchmark Lasalgaon mandi remained closed for four days following an order from the local administration after a Covid-19 patient was isolated last week and entire taluka was quarantined.
The mad rush by farmers to sell late the kharif variety of onion has pulled down the crop's price to the season's lowest of Rs 3 a kg in Vinchur mandi near Lasalgaon, Asia's largest spot onion selling market yard. Lasalgaon is in Maharashtra's Nashik district the country’s largest onion growing region. Prices now are trading below the cultivator's cost of production.

With export quality onion selling in this mandi at Rs 9 a kg, its model or average price is Rs 6 a kg, the lowest so far in this late harvesting season. Farmers seemed to be in a hurry to sell off their produce, especially of the late kharif variety, due to its low shelf life and fear of spoilage. Onion demand has fallen by 30-40 per cent due to closure of hotels, restaurants and  road side eateries following the countrywide lockdown to prevent the spread of the coronavirus (Covid-19) pandemic.

The benchmark Lasalgaon mandi remained closed for four days following an order from the local administration after a Covid-19 patient was isolated last week and entire taluka was quarantined. The administration ordered people not to gather even in the market yard to maintain social distancing.

"Farmers are in a hurry to sell onion especially of late kharif variety due to fear of spoilage. With most market yards remaining closed, farmers have pushed their supplies to Vinchur mandi. As a result, model onion prices have fallen to as low as Rs 6 a kg. While poor quality slipped to Rs 3 a kg, the export quality bulb was quoted at Rs 9 a kg on Monday in Vinchur agricultural produce market committee (APMC)," said Naredra Wadhvane, Secretary, Lasalgaon APMC.

Total arrivals at Vinchur jumped unusually to 2,400 tonne on Monday, twice that on normal days.

India is currently passing through a 21-day countrywide lockdown to prevent the spread of Covid-19. Hence, transport movement is restricted within and outside the state. With onion being an essential commodity, transportation continues but with limited movement. Interestingly, exports are currently at a standstill due to few order from abroad. Since importing countries are also struggling with Covid-19, India's onion export is unlikely to revive in the near future.

"Onion prices have declined sharply over the past few days. There is a bumper output in Nashik which feeds onion to the entire country. Currently, we are supplying onion to Gujarat, Madhya Pradesh among others," said Arun Kale, Secretary, Nashik APMC.

Poor quality (small size and some spoiled numbers in the lot) and good quality onion were quoted at Rs 6.50 and Rs 12-13 a kg, respectively, in the Nashik mandi on Monday. In retail, onion is selling currently at Rs 30 a kg on weak supply following nationwide lockdown. But, the impact of current price decline would be seen in retail consumers in the next 7-10 days.

Onion farmers are currently passing through deep distress due to not being able to recover even the cost of cultivation. With seed, irrigation and labour costs continuing to move up, the cost of onion cultivation stands at Rs 5.50-6 a kg in most parts of Nashik. However, in some areas where irrigation facility is unavailable, the cost of cultivation goes up to Rs 7-8 a kg.

"Farmers are not even recovering the expenses they incur on growing onion. Since, cultivators, especially of small and medium size landholders, do not have adequate storage capacity and cannot afford to pay huge sums to public warehouses due to their poor financial strength, they have little option but to sell the produce. Large corporates, stockists and warehouses take advantage of such a distress situation to buy and store it for selling in lean season," said Wadhvane.

The situation has turned unfavourable for farmers again. Nearly five months ago, onion prices were selling at a historical high of Rs 80 a kg in the wholesale Nashik mandi and Rs 130-140 a kg in retail. Prices went up due to the delay in sowing and harvesting of kharif crop due to uneven weather conditions. At that time also, large traders and stockists made huge gains from record high onion prices. Since, farmers had sold their inventory to stockists and bulk consumers, they could not take advantage of the record high prices.

This time again farmers are bleeding due to a sharp decline in onion prices, said Wadhvane.

The Union Ministry of Agriculture in January this year had forecast India's onion output to rise by 7 per cent to 24.45 million tonnes for the crop year 2019-20 (July-June) compared to 22.81 million tonnes reported in the previous year. Total acreage was reported at 1.29 million hectare (ha) in the 2019-20 crop year as against 1.22 million ha recorded in the last season.

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