The Onion Price Crisis: A Case of Market Glut, Policy Flaws, and Farmer Distress
UPSC Relevance
Prelims: Indian Economy (Agriculture - MSP, Buffer Stock, NAFED, Price Stabilisation Fund; International Trade - Export Policy).
Mains:
General Studies Paper 3 (Economy/Agriculture): Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System - objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Food processing and related industries in India—supply chain management; Farm distress. This is a classic GS3 topic.
Key Highlights from the News
Farmers in Maharashtra, India's largest onion-producing state, are protesting against the sharp fall in market prices.
The price currently received by farmers is significantly below the cost of production.
Main reasons for the price drop:
Oversupply this year.
Poor quality of stored Rabi onions.
Government agencies like NAFED, NCCF released their buffer stock into the market at low prices to stabilize prices.
Farmers' main demands: Provide ₹1,500 per quintal assistance, stop NAFED/NCCF's market intervention.
Exporters state that due to India's unstable export policy, key markets like Bangladesh and Sri Lanka have been lost, and China and Pakistan have taken their place.
Experts suggest promoting exports and direct government procurement of onions, following the Andhra Pradesh model.
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