On August 19, 2023, the Centre announced a 40% duty on the export of onions until December 31, 2023. This announcement comes in the midst of the Rabi season, during which the government expects a shortage in the supply of onions until the upcoming Kharif Season. Prices are expected to skyrocket in the month of September.
According to the most recent data from the Department of Commerce portal, India exported onions to 65 countries from April to June, with the top 5 destinations being Bangladesh, Malaysia, the United Arab Emirates, Sri Lanka, and Nepal. Onion exports have increased by 26.51% compared to last year.
This year, the Central government maintained strategic reserves of 3 lakh tonnes of onions, which will be released through various modes such as the open market, auctions, and retail.
Traders attribute this scarcity in onion supply to the rising heat, which has caused damage to the harvested onions. While there was no decline in the harvest, the demand-supply mismatch has resulted from the country's poor post-harvest infrastructure.
India's post-harvest losses account for almost 40% of GDP, resulting in a loss of 92,651 crores for farmers. With 86% of farmers in the country being small and marginal farmers, these losses affect them the most.
Due to a shortage of reefer vans, underdeveloped post-harvest infrastructure, a lack of cold storage facilities (with a capacity of only 32 million metric tonnes compared to the required 35 million metric tonnes), and insufficient upstream and downstream integration of agricultural commodities, coupled with the absence of private and public investment in long-term agriculture infrastructure, such instances of price hikes and harvest losses will continue to persist.
The Dalwai Panel in 2018 had stated that India's agricultural transformation could be achieved by reducing input costs, increasing productivity, and doubling farmers' incomes. Thus, in order to bring about structural reform in the agricultural sector of the country, it is imperative to address the gaps in the farm-to-market process and enable the agricultural sector to reach its full potential.
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