Amid the final stretch of Lok Sabha elections, onion farmers in the key producing districts of Nashik are cast their votes under the cloud of economic distress and policy dissatisfaction.
| Photo Credit: B. Jothi Ramalingam

In India, the rise in the price of onions has reportedly been a factor that influenced the outcomes of some elections in the past. This time, it is not the price of onions which has the potential to have an electoral impact but the export policy of the Centre.

Chart 1 | The chart shows the average retail price for 1kg of onions in Mumbai and the quantum of onions (in tonnes) that arrived in the city’s markets, month-wise.

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In December 2023, the Centre imposed a ban on the export of onions to stop surging local prices. Onion arrivals slumped in November-December 2023, leading to a demand-supply mismatch. This resulted in a surge in onion prices to over Rs. 60 per kg and led to the export ban. Many farmers in the onion-growing districts of Maharashtra, especially Nashik, protested on the streets, blocked a national highway at three spots, and disrupted auctions in wholesale markets.

Editorial | A sob story: On onion exports 

On April 25, 2024, in a surprise move, the Centre partially relaxed the indefinite ban on onion exports and allowed the “immediate” export of 2,000 tonnes of white onions, mostly grown in Gujarat. The State went to the polls 12 days later. This decision was criticised by the Opposition leaders and the onion farmers of Maharashtra.

On April 27, the Centre allowed the export of more than 99,000 tonnes of onions, mainly sourced from Maharashtra to six neighbouring countries. On May 4, the Centre lifted the ban on onion exports. It also imposed a minimum export price of $550 per tonne and an export duty of 40%. The onion-growing districts of Maharashtra voted on May 13 and May 20.

These continuous flip-flops have not gone down well with the onion farmers of Maharashtra, suggest reports. On May 15, more than 50 farmers were detained in different police stations in Nashik, ahead of Prime Minister Narendra Modi’s visit to the city. They had planned a protest along with the Opposition against the decisions regarding onion exports. Onion farmers and traders, especially in Nashik, have been up in arms for months now and have shown their anger by suspending onion auctions and going on a strike.

Chart 2 | The chart shows the top onion-exporting districts in India and their share in onion exports.

It is understandable why Nashik in particular is worried about the changing export policy, as the district is responsible for about 90% of onions exported from India (Chart 2). Given the circumstances, it will be interesting to see whether this will have an electoral impact in the 12 parliamentary constituencies, including the Dindori and Nashik seats in the Nashik district, which fall in the ‘onion belt’ of Maharashtra. The other seats are Shirdi, Ahmednagar, Dhule, Nandurbar, Jalgaon, Raver, Shirur, Baramati, Maval, and Pune.

Past election results in these seats show that the voters increasingly supported the Bharatiya Janata Party (BJP). The BJP’s vote share increased from 25% in 2009 to 33% in 2014 to 36% in 2019. The Nationalist Congress Party (NCP) and the Shiv Sena also have significant vote shares in the region ranging from about 15% to 27%, but their vote shares have stagnated in the last few years. The NCP and the Shiv Sena have both split into two parties each. While the NCP led by Ajit Pawar and the Shiv Sena led by Eknath Shinde support the National Democratic Alliance, the NCP led by Sharad Pawar and the Shiv Sena led by Uddhav Thackeray support the INDIA bloc. In Nashik, the two factions of the Shiv Sena are in a direct fight in 2024. In Dindori, Sharad Pawar’s NCP is fighting against the BJP.

Table 3 | The table shows the party-wise vote share split in the onion belt constituencies in the last three Lok Sabha polls.

^ Vanchit Bahujan Aghadi, * Independent, # The NCP and the Shiv Sena have split into two parties each

While the Congress’ vote share is relatively low in these seats, it has increased across elections. The past vote share and seat share in these constituencies are shown in Tables 3 and 4, respectively.

Table 4 | The table shows the seats secured in the onion belt constituencies in the last three Lok Sabha elections.

Also read |Lifting of ban on onion export pushes up prices

 The decision to lift the ban on exports of onion was on the recommendation of the Department of Consumer Affairs, which monitors the availability and price situation of onion in the country. File
| Photo Credit: PTI

The Centre has taken permission from the Election Commission of India to lift the onion export ban as the Model Code of Conduct is in effect due to the Lok Sabha elections, sources said.

The government lifted the ban on onion exports, a decision that can help boost farmers’ incomes ahead of the Lok Sabha polls in key producing regions, including Maharashtra.

The government has imposed a minimum export price (MEP) of $550 per tonne (around ₹46 per kg) and 40% export duty. Taking duty into account, the shipments will not be allowed below $770 per tonne (around Rs 64 per kg).

The decision to lift the ban on exports of onion was on the recommendation of the Department of Consumer Affairs, which monitors the availability and price situation of onion in the country.

According to government sources, the Department of Revenue under the Finance Ministry took permission from the ECI to lift the ban on onion exports.

The decision assumes importance as it comes before the crucial Lok Sabha polls in key onion belts like Nashik, Ahmednagar and Solapur in Maharashtra. Farmers of this region have been demanding a lifting of the ban so that they can get a better price for their produce.

Impact on prices

On December 8 last year, the Centre had banned onion exports in early December to control retail prices amid concerns over likely fall in production. During the last 4-5 years, the country annually exported between 17 lakh and 25 lakh tonnes of onions.

Consumer Affairs Secretary Nidhi Khare on May 4 said the lifting of the ban would not lead to any price rise in retail markets. “Prices will remain stable. If at all there is any increase, it should be very marginal,” she said, while asserting that the government is committed to protect the interests of both consumers and farmers.

The Directorate General of Foreign Trade (DGFT) in a notification on May 4, said that “the export policy of onions is amended from prohibited to free subject to MEP of USD 550 per metric tonne with immediate effect and until further orders.” On May 3, the Finance Ministry imposed a 40 per cent export duty.

Explaining the rationale behind the decision, Ms. Khare said the “ban on onion exports has been removed from today (Saturday) because the supply situation is comfortable and prices are stable in both mandies as well as retail markets.” The modal price at Lasalgaon mandi in Nashik was Rs 15 per kg in April.

She said the decision has been taken after considering the latest estimates of onion production in rabi season at 191 lakh tonnes, which is comfortable. Availability and prices of onion in global markets were also factored in while taking this decision.

The Secretary said the monthly domestic demand for onion is around 17 lakh tonnes. “Lifting the ban would also encourage the farmers to put more area under onions. The monsoon forecast is above normal,” she said.

She noted that the decision was taken after wider discussions with stakeholders. A high-level team also visited key onion-producing belts in Maharashtra to assess the ground situation.

Ms. Khare also pointed out that the shelf life of onions is less and therefore a need was felt to export onions. She said that the government is procuring 5 lakh tonnes of onions as buffer stock, and it can intervene in the market in case of price rise.

“We are continuously monitoring the prices of all essential food items. We will continue to keep a watch on the availability and price situation,” she said.

A senior government official explained that there is an inter-ministerial committee (IMC) which reviews the prices, production, availability and exports of essential food items, including onions. “So do not think of this as an isolated instance of decision making by IMC,” the official said, when asked whether the decision has been made in view of general elections.

The official said the IMC has been taking a series of steps in various commodities including wheat and rice to boost domestic supply and keep prices under check.

In March, the Union Agriculture Ministry released the data for onion production. As per the data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes compared to around 302.08 lakh tonnes last year. This is due to a decrease of 34.31 lakh tonnes output in Maharashtra, 9.95 lakh tonnes in Karnataka, 3.54 lakh tonnes in Andhra Pradesh and 3.12 lakh tonnes in Rajasthan, the data showed.

Last month, in an official statement, the Ministry of Consumer Affairs, Food and Public Distribution said the government has allowed export of 99,150 tonnes of onion to six neighbouring countries of Bangladesh, UAE, Bhutan, Bahrain, Mauritius and Sri Lanka.

The Congress last month accused the Narendra Modi government of “callously neglecting” Maharashtra’s onion farmers affected because of the ban on onion exports. In its manifesto, the party promised a predictable import-export policy to prevent such catastrophic last-minute policies being imposed on farmers.

On December 8, 2023, the government put a domestic ban on the export of onions.
| Photo Credit: ANI

The Centre on April 27 said it has allowed exports of 99,500 tonnes of onions, mainly sourced from Maharashtra, to six neighbouring countries despite the ban on shipments.

The Centre has also allowed exports of 2,000 tonnes of white onion cultivated, especially, for export markets in the Middle East and some European countries.

On December 8, 2023, the government banned export of onions.

Also Read: Parliamentary proceedings | Government defends onion export ban

In an official statement, the Ministry of Consumer Affairs, Food & Public Distribution said the government has “allowed export of 99,150 tonnes of onion to six neighbouring countries of Bangladesh, UAE, Bhutan, Bahrain, Mauritius and Sri Lanka”.

The export prohibition has been imposed to ensure adequate domestic availability against the backdrop of estimated lower Kharif and Rabi crops in 2023-24 compared to the previous year.

The ban was imposed amid an increase in demand in the international market, it added.

The National Cooperative Exports Limited (NCEL), the agency for the export of onion to these countries, sourced the domestic onions to be exported through e-platform at L1 prices.

NCEL has supplied to the agency or agencies nominated by the government of the destination country at the negotiated rate on a 100 per cent advance payment basis.

The offer rate of NCEL to the buyers takes into account the prevailing prices in the destination market and also international and domestic markets.

The quota allocated for export to the six countries is being supplied as per requisition made by the destination country.

“As the largest producer of onion in the country, Maharashtra is the major supplier of onions sourced by NCEL for export,” the statement said.

The government had also allowed the export of 2,000 tonnes of white onion cultivated, especially for export markets in the Middle East and some European countries.

“Being purely export-oriented, the production cost of the white onion is higher than other onions due to higher seed cost, adoption of good agricultural practice (GAP) and compliance to strict maximum residue limits (MRL) requirements,” the statement said.

The procurement target for onion buffer out of Rabi crop 2024 under the Price Stabilisation Fund (PSF) of the Department of Consumer Affairs has been fixed at 5 lakh tonnes this year.

The Central agencies, like NCCF and NAFED are tying up local agencies like FPOs/FPCs/PACs to support the procurement, storage and farmers registration to begin the procurement of any store-worthy onion.

A high-level team of the Department of Consumer Affairs, NCCF and NAFED visited Nashik and Ahmednagar districts of Maharashtra from April 11-13, 2024, to create awareness among the farmers, FPOs/FPCs and PACs about the procurement of 5 lakh tonnes of onion for buffer stock.

To reduce the storage loss of onions, the department has decided to enhance the quantum of stocks to be irradiated and cold stored from 1,200 tonnes last year to over 5,000 tonnes this year, with technical support from BARC, Mumbai.

The pilot of onion irradiation and cold storage taken up last year has been found to have resulted in the reduction of storage loss to less than 10 per cent, the statement said.

In March, the Union Agriculture Ministry released the data for onion production.

As per the data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes compared to around 302.08 lakh tonnes last year.

This is due to a decrease of 34.31 lakh tonne output in Maharashtra, 9.95 lakh tonne in Karnataka, 3.54 lakh tonne in Andhra Pradesh and 3.12 lakh tonne in Rajasthan, the data showed.

Image used for representative purpose only
| Photo Credit: PTI

The government on February 22 permitted traders to export 54,760 tonnes of onion to Bangladesh, Mauritius, Bahrain and Bhutan till March 31.

“We have allowed export of 50,000 tonnes of onion to Bangladesh, 1,200 tonnes to Mauritius, 3,000 tonnes of Bahrain and 560 tonnes to Bhutan with immediate effect,” Consumer Affairs Secretary Rohit Kumar Singh told PTI.

Also Read: Parliamentary proceedings | Government defends onion export ban

Traders are allowed to export this quantity till March 31. The modalities are being worked out, he said.

Mr. Singh said the decision has been taken following a recommendation from the External Affairs Ministry.

Currently, there is a ban on onion exports till March 31. The ban was imposed on December 8, 2023, in order to boost the domestic supply and check price rise.

Workers at Vinchur onion market in Nashik. File
| Photo Credit: PTI

The Centre has imposed a ban on the export of onions until March 31, 2024, to curb the surging local prices of the product.

A Directorate General of Foreign Trade (DGFT) order late on Thursday said: “Export policy of onions… is amended from free to prohibited till March 31, 2024.”

Earlier, on August 19, the Union government had imposed a 40% duty on the export of onions (minimum export price of $800 per metric ton) until December 31, to increase domestic availability amid signs of increasing prices and provide relief to local consumers.

In its order, the DGFT also said that the onion exports, however, will be allowed based on permission granted by the government to other countries based on their request and that shipments, whose loading had commenced before the fresh notification, are allowed to be exported.

In response to the Centre’s announcement of a ban on the export of onions until March 31, 2024, farmers in Maharashtra’s Nashik district took to the streets, blocking the Mumbai-Agra National Highway at three locations and disrupting auctions

The farmers also halted auctions in Lasalgaon, Asia’s largest wholesale onion market, Chandwad, Nandgaon, Dindori, Yeola, Umarane, and other places in Nashik.

Stating that the ban would adversely impact farmers, protesters staged road blockades with tractors for hours. With no auction at the Lasalgaon APMC, over 600 onion-laden vehicles were redirected to Vinchur with wholesale prices ranging from ₹1,500 to ₹3,300 per quintal.

Lasalgaon APMC chairperson Balasaheb Kshirsagar condemned the government’s decision, claiming it was unfavourable to farmers.

“Onion prices had recently come down, and the ban would lead to losses. Presently, onion prices range from ₹1,000 to ₹1,200 per quintal, despite some selling at ₹3,000 per quintal,” he said, alleging middlemen for artificial price inflation.

Mr. Kshirsagar demanded direct government sales without the involvement of middlemen.

“Farmers had already suffered losses due to unseasonal rainfall and hail. It must revoke its decision on the ban to support farmers,” another farmer said.

The farmers and traders associations are likely to meet Chief Minister Eknath Shinde, his deputy Ajit Pawar, and Nationalist Congress Party (NCP) president Sharad Pawar to express their concerns.