Producer vs Consumer: Onion trade faces heat, this time from taxman

Traders and farmers initiating auctions for the day at the Pimpalgaon Baswant onion market in Maharashtra’s Nashik district. (Express photo by Mayur Bargaje)

It wasn’t even seven in the morning last Thursday, when taxmen came knocking —literally — at the door of Sohanlal Bhandari’s home.

“There were about 30 of them, stating they were from the income tax (I-T) department and looking for hoarded onions,” says this 55-year-old from Pimpalgaon Baswant, an agriculture produce trading town in Niphad taluka of Maharashtra’s Nashik district. For the next two days, the officials searched his three godowns and residence premises with a fine-tooth comb. At the end of it, they manage to unearth 400 quintals — roughly five truckloads — of the bulb.

“This is the first time I saw taxmen coming sniffing for onions, as opposed to undeclared incomes. They couldn’t find anything, as I was able to account for every quintal. In any case, the Maharashtra government hasn’t imposed any stocking limits on onions that would qualify as hoarding,” says Bhandari, who is president of the Nashik District Onion Traders Association and also a director of the APMC (agriculture produce market committee) mandi at Pimpalgaon Baswant named after former Union agriculture minister Sharad Pawar.

Bhandari is one of the seven major traders of Nashik — at the district’s APMC mandis in Pimpalgaon, Lasalgaon, Satana, Umarana, Yeola and Chandwad — whose premises were raided on September 14, as part of the “government’s resolve to take stringent action against persons who are indulging in malpractice of hoarding and artificial manipulation of onion prices”. According to a press note that was issued on Friday from the Principal Chief Commission of Income Tax at Pune, information had been received “from very reliable sources” that these traders “were holding large stock of onions, but restricting the supply of the same in the market to create a perception of artificial scarcity”.

The perplexing part about the operations was the timing. Onion prices had, no doubt, risen, particularly in August, when they averaged Rs 1,904 per quintal in Pimpalgaon, as against Rs 757 the month before. But on September 14, the most-traded modal price at this APMC had fallen to Rs 1,051 per quintal, the lowest since July 26 and way below the peak of Rs 2,500 scaled on August 9. Even in Lasalgaon, India’s largest wholesale market for onions, the bulb sold at an average of Rs 1,400 a day before the raids happened, down from the Rs 1,900 levels in end-July.

“Why now, when prices were already trending downwards and are headed for further correction, with the kharif crop almost ready to be harvested?” asks Bhandari. Maharashtra’s farmers plant kharif onions during June-July, just after the arrival of the southwest monsoon rains, and harvest these from end-September. Besides, they sow a late-kharif crop during September-October for harvesting in December-January, followed by rabi onions that are planted in November-December. The latter crop, harvested over March-April while also grown in parts of Madhya Pradesh and Gujarat, is amenable to storage. It is what feeds the market right until end-August.

Nashik’s traders — the district produces about 45 per cent of Maharashtra’s onions, which, in turn, accounts for roughly 30 per cent of India’s total output of 200-210 lakh tonnes (lt) — attribute the spike in prices during August mainly to drought conditions in Karnataka. The latter, with a 15 per cent share of the country’s production, has reported a 50 per cent drop in kharif onion sowing area this year.

“Karnataka onions are the first to hit the market towards end-August/early-September. This time, those arrivals have been affected. Also, the MP government had procured some 9 lt during June-July (after a bumper 2016-17 crop of 32 lt that led to a price crash and a violent farmers’ agitation), much of which got rotted. All this has put pressure on the market, which is now practically being supplied by the stored rabi onions from Maharashtra,” notes Rajendra Chhajed, another trader at the Shri Sharadchandraji Pawar APMC in Pimpalgaon Baswant.

He, like Bhandari, denies any role in the “hoarding” of onions. “The total stored onion from the last rabi crop in Maharashtra was around 18 lt. 90 per cent of it was kept by the farmers themselves at their kanda chawls (on-field raised platform storage structures, typically of 250-500 quintals capacity and designed to prevent moisture ingress that cause the bulbs to sprout or rot). They are still holding some of that crop, which is always gradually offloaded through the summer and monsoon months,” claims Chhajed.

A farmer sitting with his produce. (Express photo by Mayur Bargaje)

Interestingly, on August 18, a two-member team from the Union Ministry of Consumer Affairs visited Lasalgaon to “study” price fluctuations in the onion market. A couple of weeks later, the Nashik district collector was asked to investigate whether, and to what extent, farmers had benefited from the recent price increase.

In between, there was also talk of the Centre imposing trading restrictions, including a ‘minimum export price’ below which overseas shipments wouldn’t be permitted, and importing white onions from Egypt. Then came, of course, the IT raids.

“You can see a clear pattern in all this. This government will leave no stone unturned to control onion prices. With petrol and diesel already on fire, they wouldn’t want any problems next in onion, more so with the upcoming Gujarat Assembly elections,” points out an official at the Lasalgaon APMC, who did not wish to be identified. Incidentally, September 14 was the day when the Ministry of Commerce and Industry also released the latest wholesale price inflation data for August, showing the year-on-year increase in vegetables at 44.91 per cent and 88.46 per cent in onions!

But the government’s actions have seemingly worked. On September 19, the modal price of onion ruled at Rs 1,360 per quintal in Lasalgaon, while Rs 1,301 in Pimpalgaon Baswant. Chajjed, who has been in the business for the last 35 years, declares that he would henceforth restrict his daily trading to 200-250 quintals, from the 500-600 quintals in the pre-raid period. “At this age, attracting the I-T department’s attention is the last thing I want,” he says.

The ultimate loser, however, is the farmer. Vaibhav Chavan produced 410 quintals of rabi onions this time from his 4.5-acre farm at Mulukwadi village in Nashik’s Deola taluka. In early-August, he was able to realise Rs 2,650 per quintal for 30 quintals of his crop sold at the Pimpalgaon Baswant APMC. On Thursday, Chavan had to dispose of a similar quantity at Rs 1,150 per quintal. And he still has 30 per cent of his stored rabi produce to sell, even as the new kharif crop is set to arrive.

“For almost one-and-a-half years till July, we were getting rates of Rs 500-600 and nobody cared. But just when prices were just looking up, they cracked down. Is this government only for people in cities?” is Chavan’s question, echoed by other farmers as well.