Onion Crisis: Farmers in Maharashtra Make Near-Zero Profits Despite Sky-high Prices

Despite onion being an important ingredient in Indian kitchens, the crop has been hit by plummeting prices and low profits. While retail prices of onions have skyrocketed, farmers who grow the crop, get as little as Rs 1 or Rs 2 per kg as profits.

Vendors at a wholesale market wait for customers to buy onions.

In the second week of February, onion farmer Rajendra Tukaram Chavan sent 512 kgs of onions from his farm in Barshi tehsil of Solapur district in Maharashtra to a trader to sell it in the market yard in the district. He received a post-dated cheque of Rs 2 from the trader as profit for the 512 kgs that were sold. Chavan had travelled over 70 kilometres to the market of the Agriculture Produce Market Committee (APMC) in Solapur to auction the produce. The trader he had entrusted the job to managed to sell 512 kgs at Rs 1 for a kg.

Of the Rs 512 Chavan had earned, Rs 509.50 was spent on transportation, head loading and weighing charges. He had spent Rs 40,000 to grow about 500 kgs of onions, said Chavan speaking to Outlook from Barshi.

Dhondu Hajare harvested about 800 kgs of onions from his farm in Nashik. He had spent over Rs 60,000 to rear the crop. However, when the first batch of 400 kgs that he took to the market, sold for Rs 1.50 paise a kg, Hajare destroyed the rest of his produce.

In the first week of March, about 20,000 farmers from villages across Maharashtra marched to Mumbai from Nashik - under the banner of the Kisan Morcha - demanding state intervention and a higher price for the onion produce. They also demanded compensation for the onion crop destroyed by unseasonal rains that hit many parts of Maharashtra.

However, after assurances from chief minister Eknath Shinde the ‘Long March’ was called off and did not proceed to Mumbai. The Maharashtra Government will give a compensation of Rs 300 per quintal to the onion farmers amid the plummeting price of the produce, promised Shinde.

“If they do not keep their promise, we will take the government to task,” said Ajit Navle, general secretary, Kisan Morcha.

Despite onion being an important ingredient in Indian kitchens, the crop has been hit by plummeting prices and low profits. While retail prices of onions have skyrocketed, farmers who grow the crop, get as little as Rs 1 or Rs 2 per kg as profits. The massive drop in prices in the wholesale market due to the glut in yield and low demand has led to a severe crisis across the country. In many states, onion farmers are either destroying the crop or throwing their produce away. In Maharashtra, the onion farmers dumped the produce onto highways across the state, leading to traffic blockages everywhere.

According to onion farmers who spoke to Outlook, such a crisis can lead to low yields in the following crop season which can trigger another surge in the prices of the produce.

The World Bank too has issued a warning regarding a large-scale onion crisis. The Central Government has intervened to bring stability into the market by directing the National Agricultural Cooperative Marketing Federation of India (NAFED) to buy out the surplus produce from the farmers, particularly from the market in Nashik, Maharashtra, which is the largest onion trading market in Asia.

Former member of Parliament and farmers’ leader Raju Shetti pointed out that the present onion produce which was coming into the markets was a Kharif crop, thereby drastically reducing its shelf life. “The produce has to be purchased immediately. It has already started spoiling and rotting,” said Shetti, who called for a consistent export and import policy by the central government. According to Shetti, onion farmers in India had two permanent international markets, Pakistan and Bangladesh. Due to the political and economic crisis in Sri Lanka – which is the third market for Indian onions – farmers are not sending the produce there. Shetti pointed out that instead of buying the produce of the Indian farmers, the central government had bought onions from Iran. This had compounded the onion crisis across the country, said Shetti. Many farmers told Outlook that NAFED was not buying the produce.

A rerun?

No other vegetable has been so political, made politicians cry and brought down governments. In 2010 too, there was a grave onion crisis which led to a huge upward spike in prices across India. That year, unseasonal rains and hail storms in the onion-producing regions had caused a severe shortage of the crop, driving the prices sky-high. The onion crisis of 2010 had also developed into a political crisis in the country.

In India, onion prices have been at the centre of political tensions many times and have also been a decisive factor in elections. While an onion crisis brought down the central government in 1980, the issue was also an important deciding factor for the 1998 Assembly elections in Rajasthan and Delhi.

In 2015 and 2019, the onion crisis in India forced the governments of the day to ban exports to strengthen domestic prices. In 2013, when the prices had shot through the roof, a gang of thieves had tried to steal a truck loaded with onions. However, they were caught in the act.

On the global front, India is the largest producer of onions after China. Maharashtra, Karnataka and Gujarat are the largest producers of onion in India with an estimated 60 per cent of the produce coming from these states. 

Now, with Karnataka heading for Assembly polls in May, the onion widely seen as a poor man’s vegetable has started occupying centre stage in campaigns.