Thursday, March 30, 2023
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If 10 years from now you see 30 types of onions in Indian markets, this is how it happened

In 2019, people think lakhs of voters will ignore their community, leaders, party, promises and freebies, to vote against a government under which onions became expensive.

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It might appear bizarre to you, but there was a time, not so long ago, when media headlines in India claimed that onion prices could overthrow governments. As recently as 2019, merely 10 years ago, the rising price of onions worried politicians and policymakers across the country.

Political analysts issued dire warnings of how rising onion prices toppled governments since 1980, never mind that they cherry picked anecdotes and presented them as empirical evidence. It’s now hard to believe that back in 2019 there were people who thought that hundreds of millions of voters would ignore their community, film star, great leader, party, promises of development and freebies, and a few thousand rupees in cash merely to vote against an incumbent government during whose time onions became expensive. Yes, people would believe anything in those days.

But children, just as your parents do not remember waiting for 20 years to get a telephone connection, you probably do not remember the era when we used to have fearsome Onion Crises. You know why? Because 10 years ago, the government decided to do nothing about it. No, not nothing as in inaction, not nothing in the way that philosopher Nagarjuna would have meant it, but nothing in the sense that it decided that government would get itself out of the messy cobweb of the onion business. The government’s clever trendmakers even came up with catchy slogans such as “Onion business is not government business!”, “Minimum government in onion is maximum onion in nation!” and “Hamari yeh sarkar, nahi pyaaz ki dalal”. Few people now remember the outcry it created.

Also read: Modi govt extends stock limits on onion traders to check price rise

The opposition accused the government of first abandoning the consumers by letting prices go up, and then abandoning the producers by letting prices fall. Experts argued that getting the government out of onions will disrupt the ecosystem of prices, subsidies, APMCs and government warehouses that were built over the past decades.

A celebrity journalist-activist from a reputed Chennai publishing house declared that more farmers will now commit suicide, but it was hard for anyone to disprove him because statistics were no longer available. Those days, I used to write a column for ThePrint where I argued that the government did the right thing. I was set upon by the zealous supporters of the government who thought I was criticising the government, and lashed out against by the hapless supporters of the opposition who thought I wasn’t. But let’s move on to the important things.

Because the government decided to do nothing when the retail prices were high, a lot of businesses decided to import onions from the international market. Part of the reason why prices were high late-2019 was because unseasonal rainfall had reduced the domestic production; but it was also because there were rent-seeking fat cats in the onion supply chain who wanted to recover their losses from the previous year (when prices had plunged) by hoarding stocks. However, as soon as they found out that thousands upon thousands of tonnes of onions were coming from Egypt, Turkey and China in huge container ships, they decided to liquidate their stocks as fast as possible. Prices came down pretty fast — this didn’t make much of a difference to the farmers who’d already been paid. That year, they took home a fraction of the retail price, as usual.

Also read: Tackling onion price rise leads to policy distortions, but it seems nothing will change

In the meantime, some of the chaps in Bengaluru and Hyderabad who were pitching the next home-delivery app to venture capitalists saw an opportunity and ‘pivoted’ to onion technology. Why are you surprised? Why do you think you can have paneer do pyaza and Kerala egg roast whenever you want, wherever you want? It was because they invented ways to desiccate onions, process onions in a number of ways and package them for supermarkets. Of course, there’s an app for that. Curmudgeons, snobs and purists will claim that packaged onions lack the same flavour as freshly chopped onions, but I say only idiots sprinkle Onion 2.0 on bhel puri.

If consumers and restaurants stopped worrying about onion prices that year, farmers’ fortunes began to improve soon after, albeit slowly. What happened was that Gujarati and Sindhi trading houses in Singapore figured out that they could exploit the difference in prices between what Indian farmers were getting and what consumers around the world were paying, and began to source from India. Karnataka was the first to get out of their way, and very soon onions from Dharwad, Chitradurga and Davanagere were making their way to the plates of East Asian and Middle Eastern diners. Of course, the old political economy didn’t give way easily, but once farmers got a taste of economic freedom, it was hard for the fat cats to put hurdles in their way.

Also read: IB, RAW, ED and Income Tax dept get SOS from Modi govt to help check soaring onion prices

Then Maharashtra discovered that its farmers were selling onions through Karnataka and decided that it might as well get out of the way. In fact, Maharashtra did one better by setting up and supporting a farmer-oriented onion futures market, which allowed farmers to smoothen their cash flows. It’s still not easy being a farmer, but compared to what it was back in 2019, it’s a different world for them now. To his credit, even the celebrity journalist and the Chennai newspaper accept that things have changed for the better.

So, the next time you go to the supermarket and see 30 types of onions and half-dozen brands of packaged onions, remember it was not always this way. There was a time, now happily past, when we believed unalterable forces of nature, nefarious tactics of greedy traders and ham-fisted reactions of politicians combined together to bring down governments.

The author is the director of the Takshashila Institution, an independent centre for research and education in public policy. Views are personal.

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