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172 Economic Survey 2021-22

Table 1B: Incidents of price shocks in onion during the last five years

Incidents identified Reason
January 2018 Fall in production in 2017-18 as against the previous year. Weather
conditions in Maharashtra including cyclones and low pressures
forming along the west coast, production of onion was adversely
affected in areas like Sholapur, Nasik, Ahmednagar and Lasalgaon.
November 2019-January Untimely and prolonged rains during month of September and
2020 October 2019 caused damage to Kharif onion crop leading to short
supply and increase in its prices.

October-November 2020 Heavy rainfall in September in Karnataka - responsible for a
bulk supply ahead of the kharif crop from Maharashtra towards
the end of October - has upset the calculations. September rains,
according to reports, have hit not only the supply from Karnataka,
but Maharashtra too where heavy rainfall in onion belt comprising
Ahmednagar, Nashik and Pune affected the storage with water
seepage.
February 2021 Delay in arrivals of the late kharif crop as the growing regions
experienced rains in January 2021.

Conclusion
Both seasonal as well as shock components contribute in the spikes of the tomato and onion prices.
Seasonality in prices resulting from seasonal production patterns require policy attention. Strategies
to incentivize production during lean season should be designed. Investments in processing of surplus
production of tomato, and processing and storage infrastructure of onion must be promoted. Cutting
wastage of the production, better supply chain management will also help in meeting the demand.
Government is implementing various measures to overcome these challenges. The Mission for
Integrated Development of Horticulture (MIDH) envisages holistic development of horticulture and
provides assistance at 50 per cent of total cost of Rs. 1.75 lakh per unit for low-cost onion storage
structure having a capacity of 25 tonne each. Government also procures onions directly from farmers
at farm gate prices for the buffer. Schemes such as Agricultural Marketing Infrastructure (AMI)
for rural godowns enables small farmers to enhance their holding capacity to sell their produce
at remunerative prices and avoid distress sale. “Operation Greens” for integrated development of
Tomato, Onion and Potato (TOP) value chain. It provides 50 per cent subsidy for the transportation
and storage from surplus producing areas to consuming centres. Kisan Rail service, was launched
on 7th August 2020 to enable speedy movement of perishables including fruits, vegetables, meat,
poultry, fishery and dairy products from production or surplus regions to consumption or
deficient regions.

5.15 ‘Oils and fats’ contributed around 60 per cent of ‘food and beverages’ inflation despite
having a weight of only 7.8 per cent in the group. Inflation of the sub-group has risen sharply
since mid-2019; remained in double digits since April 2020 and witnessed further uptrend in