Indian onion farmers are vehemently contesting the recent decision by the government to impose a 40% export duty on onions, sparking worries of oversaturation within the market and a potential decrease in local prices.
The administration led by Prime Minister Narendra Modi unveiled this tax modification over the weekend, outlining its enforcement until December. The primary aim is to stabilize the availability of onions domestically and counteract the inflationary pressures.
This development coincides with nationwide protests that stem from the notably high cost of tomatoes, which have recently soared to 250 rupees ($3) per kilogram – exceeding their standard value by over 10 times.
In an endeavor to mitigate the potential consequences, the government has also disclosed plans to introduce its inventory of onions, a staple ingredient in Indian households, into wholesale markets, aiming to drive down retail prices. Nevertheless, both farmers and onion traders argue that this strategy could have negative repercussions on their capacity to secure favorable prices for their yield.
Throughout Maharashtra, recognized as India's foremost onion-producing region responsible for 30% of total output, farmers have organized protests and temporarily closed wholesale markets.
Sampat Sakore, a farmer from Shirur in Pune, voiced his dissatisfaction, declaring, "The tax will discourage exporters from sending onions abroad, leading to a surplus within the country. This excess supply will inevitably lead to a decline in prices. Farmers are profoundly frustrated with this decision."
Dushyant Pawar, who cultivates approximately 200 quintals (20,000 kg) of onions on half a hectare of land in Maharashtra's Nasik district, highlighted the imminent challenges, noting, "The cost of cultivating onions amounts to around 1,500 rupees ($18) per quintal ... expenses for pesticides, fertilizers, and labor have risen. Adding to the strain, the government has now imposed a 40% tax on exports, further pressuring prices."
The prestigious Lasalgaon onion market in Nasik, renowned as Asia's largest, has suspended trading indefinitely in response to the government's decision. Traders argue that onion prices have fallen from 26 rupees per kilogram last week to a range of 18 to 22 rupees.
India's status as a significant global onion exporter is underscored by its supply to destinations such as Bangladesh, Malaysia, and the UAE. In the current fiscal year, the nation has exported 975,000 tonnes of onions, according to data from the Ministry of Commerce.
Critics, including onion trader Manoj Kumar, contend that the imposition of the tax was unwarranted given the prevailing stability in the market. Kumar proposed alternative measures like capping the number of export containers rather than resorting to a blanket tax, a step that could avert uncertainties in the market.
Piyush Goyal, the Minister of Food and Consumer Affairs, has taken measures to allay the concerns of farmers and traders by unveiling the government's intent to procure 200,000 metric tonnes of onions at 2,410 rupees ($29) per quintal from various centers in Maharashtra. Goyal emphasized the importance of striking a balance between the interests of farmers and consumers.
Despite the government's assurances, some farmers remain skeptical, suspecting that state agencies might not fulfill their purchasing commitments and could exert pressure to sell at lower prices in the open market.