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View: Forget onion export ban, invest in storage and processing.


Date: 01-10-2019
Subject: View: Forget onion export ban, invest in storage and processing
The government obviously does not want to take any chances when it comes to a politically sensitive crop like onion. It has banned exports to tame onion prices that have surged owing to depleted supplies after months of incessant rainfall in producing states. A ban is an irrational, and sub-optimal solution. Instead, efforts should be channelized into investing in scientific storage and processing facilities that will help augment supplies during a crisis.

In the past too, successive governments resorted to banning exports whenever prices surged. Without a doubt, a flawed policy option. Onions needs minimum investment and can be grown all-round the year, but precious little has been done to usher in an onion revolution.

Last week retail prices soared to Rs 70-80 per kg in the national capital Delhi and other parts of the country. Food and Consumer Affairs Minister Mr Ram Vilas Paswan has said “to augment onion supplies to the markets, a team of two joint secretary-level officers have been sent to Maharashtra to talk to farmers, traders and transporters to assess the availability of onions and to persuade them to bring more onions to the market”. But should’nt an assessment be available real-time?

Of course, onion growers will be miffed if prices are supressed artificially. But state governments also cannot act complacent when prices rise due to, say, artificial shortages. They must launch a concerted intelligence drive to crack down on hoarders and bring the stocks to the market swiftly.

Meanwhile, policy makers would do well to look at the reported suggestions offered by Ashok Gulati, former Chairman of Commission For Agricultural Costs and Prices to tackle the onion crisis. He has underscored the need to promote modern cold storages and develop a system similar to that of the warehouse receipt system for farmers.

Encouraging imports, not banning exports, is the remedy to augment supplies. But then, as he says, this must be done in ahead of time which is seldom the case.

Another sound suggestion is to set up onion dehydrating units and promote demand for dehydrated onions amongst large consumers. Maharashtra, the largest onion producing state, should vastly increase the number of such units.

Clearly, more policy making and political attention should be devoted to raising onion output, or for that matter farm output in general. Complacency on the farm front is wholly avoidable.

Source: economictimes.indiatimes.com

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