Pakistan Floods Bring Onions Back in Focus

Last Updated on Aug 30, 2022 by

Amid a massive surge in the prices of various vegetables and fruits in Lahore and other parts of Punjab province due to devastating floods, the Pakistan government is considering the import of tomatoes and onions from India.

Wholesalers in Lahore say that in the coming days the prices of commodities will increase further as the supply of vegetables from Balochistan, Sindh and south Punjab has been severely affected.

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A key ingredient in politics

Onion plays a key role not only as a kitchen staple but also in economics as well as politics. It has the ability to change the course of elections, or even dethrone governments.

In the 1980 general elections, rising onion prices contributed to the ouster of the first non-Congress government since Independence.
In 1998 – the last time BJP held power in Delhi – onion prices shot up. Despite efforts to set up Fair Price Shops, prices did not come under control which led to the downfall of the BJP’s government.
In 2010, errant rainfall led to a shortage of onions. Along with this, illegal hoarding led to the downfall of the BJP’s government in Rajasthan.
Rising onion prices in 2013 were a key reason behind the Congress governments failing to retain power in Delhi and Rajasthan.

Understanding the demand-supply landscape

Prices of food items like onions, where seasonality plays a big role, tend to be volatile. The onion’s price spirals are almost an annual feature. Vegetables have a weightage of 6.04% in the Consumer Price Index and onions contribute significantly to it.

The average Indian consumes between 14-15 kg of onions a year
In FY 2022, the volume of onion production in India is estimated to have amounted to nearly 32 mn metric tonnes. There was a constant growth in production in recent years across the country except for in 2019.
Indian onion has two crop cycles, the first harvesting starts in November to January and the second harvesting is from January to May. The onion is a hardy cool-season biennial but is usually grown as an annual crop.
Onion is a semi-perishable vegetable produce and post-harvest losses due to weight loss, rotting and sprouting are substantial.
Winter-sown onion harvested during April-June accounts for 65% of India’s onion production and meets demand till the summer crop is harvested in October. Therefore, storage of onions in order to ensure a regular supply is essential.
The major onion producing states are Maharashtra, Karnataka, Madhya Pradesh, Gujarat, Bihar, Andhra Pradesh, Rajasthan, Haryana and Telangana. Maharashtra ranks first in onion production with a share of 39%, followed by Madhya Pradesh with a share of 17% in 2020-21.

Building a buffer

The Union government has built a reserve of 2,50,000 tonnes of onions for 2022-23 to deal with price spikes during August-December. The move aims to keep prices stable — critical at a time when inflation is already in excess of 7%.

Past data show onion prices usually peak around September because stocks from previous crops deplete. Fresh harvests usually arrive in markets only in January.
Open-market releases will be targeted towards places where prices show an increase over the previous month and also in key agricultural markets to boost supplies after August.

Global production according to Atlas Big

9,32,26,400 tonnes of onion are produced worldwide per year.
China is the largest onion producer, with 2,39,07,509 tonnes per year.
India comes second with an average yearly production of 1,94,15,425 tonnes.

Keeping inflation, economic, and political factors in mind, it is unclear if India will agree to meet Pakistan’s import needs.

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