Only cold storage can 'cool' onion prices amid unseasonal rainfall, lackadaisical central schemes

Government data has revealed that in the last five years, only 34% of the sanctioned cold chain projects were completed while nearly 24% projects were cancelled.
For representational purposes (File Photo | PTI)
For representational purposes (File Photo | PTI)

NEW DELHI:  Heavy and unseasonal rainfall in key onion-producing states have resulted in the staple’s prices going north, but if two major central schemes were on track and not progressed at snail’s pace then the country would have possibly weathered the current crisis.

Government data has revealed that in the last five years, only 34% of the sanctioned cold chain projects were completed while nearly 24% projects were cancelled. According to the ministry of food processing industry’s submission to a parliamentary standing committee on demand for grants in 2020-21, of the 253 integrated cold storages sanctioned in 2015-16, only 87 were completed while 60 were cancelled. The remaining 106 cold storage projects are in progress.

But even these projects are facing delays. “Projects are delayed due to delay in obtaining statutory approvals like CLU (change of land use), CTE (consent to establish), building plan, power connection, FSSAI licence, final sanction of term loan,” the ministry said.

Besides the delay in the cold storage projects, Operation Greens, a scheme for integrated development of tomato, onion and potato, has made a fitful start. A budgetary allocation of Rs 500 crore was announced in the 2018-19 budget, but only Rs 5.77 crore as has been spent till January this year.

Having a robust cold storage chain is critical for onions, the most market-sensitive agricommodity known for its huge price volatility. This was stressed in a RBI report in 2018 titled ‘A report on the study of onion value chain.’ “The lack of storage facility is one of the prime reasons behind high volatility in onion prices. Additional storage facilities may be planned to store rabi onion (storage facilities to store at least 25% of rabi onion production need to be ensured in all major onion growing taluks),” the report said. Why a good network of cold storage facilities is crucial is because of the nearly sixmonth gap between the rabi and kharif produce. Onion typically is grown three times a year.

The early kharif sowing starts in July and is harvested in October. The late kharif season is September-November while rabi sowing starts in November and is harvested in January-April.

Given the 5-6 months gap between rabi and early kharif, there has to be enough onion stored to keep the supply chain running from April to October.

But this year there was less summer stock while the new onion supply was hit because of heavy rainfall in Maharashtra, Karnataka, Andhra Pradesh, Telangana, Madhya Pradesh and Gujarat, the major onion-producing states.

The RBI report had said that prices tend to rise when rabi onion stock starts to deplete and kharif onion is yet to hit the market. To ensure enough supply, it had called for enhanced cold storage capacity. 

Losses in onion supply due to absence of adequate cold chain infrastructure: Panel

The RBI report also pointed out an asymmetry in production and storage of onion. While onion is cultivated thrice, it is only the rabi onion that is amenable to storage.

About 60% of the onion production takes place in the rabi season, which is stored to meet the domestic as well as export demand till the arrival of the kharif onion in October- November.

The parliamentary standing committee had also observed that “one of the main reasons for high losses in the supply chain of perishables was the absence of adequate and efficient cold chain infrastructure right from the farm gate to the consumers.”

Nanasaheb Patil, a Maharashtra- based farmer and director of the National Agricultural Cooperative Marketing Federation of India, said bad weather was one of the main reasons behind the ongoing onion crisis.

He said onion crop in Karnataka, Andhra Pradesh and Telangana was damaged by the heavy rains. “During August, onion supply is fulfilled by these three states, which was disrupted due to the bad weather,” he said.

Patil said in the first week of October, onion normally starts arriving in the mandis from Maharashtra, Gujarat and Madhya Pradesh.

“But, this year floods in parts of Maharashtra damaged both the old stock and the fresh crop. As a result, new arrivals have been delayed by 40-60 days,” he said.

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