State polls may be teary

Shivaji Sakar *

“Kya pyaj rulayega” – Would the onion bring tears! – is the common refrain in poll-bound states of Haryana, Jammu and Kashmir and Maharashtra, and many a time it has hit not only the common man but even the political masters. Indian Pyaj is being taken note of even in international scenarios and is important to the political scenario, one likes it or not.

The Reserve Bank of India tasked with keeping prices under check is also shedding pungent tears as food prices once again shoot up. Onion is sparing none. Rise in Indian onion prices are feared to spurt international prices and food bills. Food inflation expected to cool to 3.2 percent of the consumer index in August is rising as vegetable and fruit prices shoot up.

Could the prices come down to wipe off tears? Maybe not. Its support prices have increased manifold. The Centre is procuring onion at a price 74 percent higher than last year in Maharashtra, the highest onion growing state. Last year, onion was procured at Rs 16.93 per kg. This year it is being procured at Rs 29.5 per kg through direct benefit transfer (DBT) to eliminate middle men.

The centre is not taking any chances. It is sold through NAFED outlets, mobile vans and others at Rs 35. For how long it could sustain it? Even at Rs 16.93 per kg procurement, national prices rarely came down below Rs 30 a kg. The spurt in the market is difficult to contain, more so as transportation is hit in many parts due to heavy rains and floods. Onion prices hover around Rs 60 and 70 a kg.

The overall national prices are unlikely to come down as the Maharashtra government is investing Rs 1500 crore to buy onion from the state to keep its farmers and traders happy to secure a political future.

The government imposed a ban on onion exports in December 2023 to curb rising retail onion prices, ahead of the Lok Sabha election. It led to a fall in onion prices by approximately 40 percent from Rs. 42.2 a kg in December 2023 to Rs. 24.5 kg in March 2024. On 23rd March 2024, the ban was extended indefinitely to the Lok Sabha election. Prices lowered.

The declining onion prices continued to create uproar among the farmers and traders. The government lifted the ban with the third phase of polling on May 4 to six countries - Bangladesh, the United Arab Emirates (UAE), Bhutan, Bahrain, Mauritius, and Sri Lanka.

Historically, high onion prices have led to discontent among consumers, whereas lower onion prices have upset a large voting bloc of farmers, making the onion market a crucial topic for the government, especially around elections.

India is one of the largest producers and consumers of onions and fluctuations in onion prices have large-scale socio-economic impacts on the domestic and international markets. Onions are a staple in Indian cuisine and a vital ingredient for taste-making not only in households but also at politically sensitive elections.

Of around 30 million tonne maximum production in 2022-23, major producers are Maharashtra, Karnataka, Madhya Pradesh and Gujarat. In 2023-24 yield came down by 15 percent to around 25.47 million tonnes (MT), compared to the previous year's production of about 30.21 MT, according to an official release. The production may further fall this year.

Traders fear that despite the lifting of the ban with 40 percent export duties Indian onion remains highly priced at $ 770 per MT (Rs 64 a kg). The Egyptian onion is sold at $ 387 per MT, almost half of the Indian price making it uncompetitive. Countries such as Egypt, Pakistan and China compete with India in the Asian onion export market.

The onion has been a political game-changer since 1980 general elections when rising onion prices contributed to the return of Indira Gandhi to power wiping out the Janata Party. Again because of high onion prices in 1998, the BJP lost to the Congress despite having changed its chief minister a few months before.

In the 2024 Lok Sabha 2024 elections, the BJP has significant losses in Maharashtra’s onion-growing belt. With the exception of one seat, National Democratic Alliance (NDA) has been completely trounced in this crucial agricultural region.

Out of the 13 Lok Sabha constituencies where the majority of onion farmers are concentrated, 12 have been won by the opposing INDIA bloc. This is a stark contrast to the 2019 parliamentary elections, where NDA — comprising BJP and formerly united Shiv Sena — won 11 out of these 13 seats, with BJP alone securing seven.

Since the extension of the export ban, there has been simmering anger among onion cultivators of Nasik, which has the largest Asian onion market at Lasangaon. The export ban led to significant financial losses for farmers, who struggled to recover their cultivation costs as wholesale prices nosedived.

Other major constituencies with significant onion grower populations, such as Dhule, Ahmednagar, Nandurbar, Baramati, Beed, Latur, Maval, Shirur, Solapur, Shirdi and Osmanabad, also saw NDA’s influence wane.

The government has also decided to fill in the state emergency reserves with 500,000 tonnes of onions for the 2024-25 period. This initiative aims to mitigate future price volatility and protect farmers from sudden market fluctuations. It is also planning to increase 27 percent onion acreage during kharif season for onion in addition to rabi crop.

According to food analyst Mintec Analytics of UK, BJP has historically invested more in manufacturing and infrastructural development than in agricultural growth. Agricultural exports reached $ 48.9 billion in 2023-24, a decline of 8 percent from $ 53.2 billion in FY 2022-23.

The export value in FY 2023-24 is significantly short of the ambitious target of $ 60 billion set by the BJP government. Also, the agri-exports during the last 10 years grew by 1.9 percent since 2014 against annual average growth rate of 20 percent during 2004-14.

The onion is a staple vegetable for the poor, indispensable to many Indian cuisines and recipes, from spicy curries to tangy relishes. “In Maharashtra, if there are no vegetables or you can't afford to buy vegetables, people eat 'kanda bhakari' (onion with bread),” says a food historian Dr Mohseena Mukadam.

It is more than a butter for politicians, whose success depends on how they can handle the onion. The cheers and tears of impending state elections are closely linked with onion.