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Surge in Onion Price

Surge in Onion Price

Tag:GS 3|| Economy|| Agriculture|| Agricultural Production & Productivity

Why in News?

Onion is the most fundamental ingredient in the everyday life. Recently Retail price of onion went up to Rs 80 per Kilogram.

According to Price Monitoring Cell (PMC) of commerce affairs department the retail price of the onion has increased by Rs 20-25 per Kg in the last six months.

Reasons

Bottlenecks from the supply sides of the commodity caused this Inflation.

  • Drought in the previous season coupled with the delayed monsoon this year has reduced the Onion production.
  • There was torrential downpour in onion growing areas, which has delayed the harvest period and destroyed some amount of production.
  • Illegal hoarding of the commodity in the festival season. This creates artificial shortfall in supply.

Onion is being grown in three seasons,

  • Kharif : Sown in May-July, Harvested in October-December.
  • Late Kharif : Sown in August-September, Harvested in January- March.
  • Rabi : Sown in October- November , Harvested in April.

Of these three seasons Kharif and Late Kharif crops can’t be stored for long days because they contain more amount of moisture which makes them to perish early. Rabi season crops can be stored and can be used as buffer stock as they have less moisture. But area under Rabi cycle in Maharashtra  has decreased from 3.54 lakh Hector in 2017-18 to 2.66 lakh Hector in 2018-19.This lead to the drastic buffer stock reduction.

 Measures taken by Government

Government is taking measures to mitigate this price rise problem.

  • Govt initiated the process of import from the countries like China, Afghanistan, Egypt etc.
  • Government increased the Minimum Export Price (MEP) to $850 per tonne. This is to reduce the export of onion and make them to sell in domestic market where supply is low.
  • Govt decided to end export subsidies to reduce the Export.
  • A buffer stock of 57000 tonne of onion has been created.
  • Stringent action against the illegal hoarding of the commodity.
Inflation: Persistent and appreciable rise in the general level of prices.

Two type of Inflation:

1.       Demand Pull Inflation: Higher Demand for the goods and services over available supply leads to Demand Pull inflation.

2.       Cost Push Inflation: Price rise due Increased cost. i.e cost of production.

Onion(Allium cepa) is the second most important vegetable after Potato. India is the second largest producer of the Onions after China.        

Top Onion producing states

·         Maharashtra (4905.0 thousand tons)

·         Karnataka (2592.2 thousand tons)

·         Gujarat (1514.1 thousand tons.)

·         Bihar (1082.0 thousand tons.)

·         Madhya Pradesh (1021.5 thousand tons.)

Minimum Export Price : Minimum Export Price (MEP) is the price below which an exporter is not allowed to export the commodity from India. MEP is imposed in view of the rising domestic retail / wholesale price or production disruptions in the country.