Oct 27, 2013

What a stupid idea, Sir ji. Dehydrated onions is not what Indians need.

Chopping onions, and dehydrating them is not the answer to the price spiral India witnessed recently

Not only far-fetched, it's a stupid idea. I am referring to Ashok Gulati (who happens to be the chairman of the Commission for Agricultural Costs and Prices) article: Onions at Rs 20/Kg? Not so far-fetched (Times of India, Oct 27, 2013,http:// bit.ly/HmuTtG ). The article begins by saying: "If I say that I am ready to supply onions, in an improvised form, at Rs 20 Kg home delivered, and round the year, people may think I have gone crazy or I am dipping into the general exchequer to pull off a massive subsidy scheme for onions. Wrong. I will make a cool profit of 15-20 per cent in this deal, do a great service to consumers and farmers of this country, and perhaps also help our policy makers under tremendous pressure following public outrage sparked by the rising onion prices."  

I know there would many takers among policy makers for this idiotic idea. Anything that is linked to industry, and in this case it is agribusiness industry, is something that the policy makers keenly fall for. I will therefore not be surprised if Ashok Gulati's stupid idea finds favour. Moreover, it does just the opposite of what he is trying to tell us in the beginning. At the end of the article he is seeking appropriate public policy to incentivize the setting up of such plants to create a win win situation. Incentivize means providing land and subsidy support.

Onion prices were at Rs 15/Kg before the recent spike. We all know it wasn't because of any shortfall in production, but because of manipulation and hoarding. After all, this year the production was higher than the total consumption by approximately 27 lakh tonnes. And as Business Standard (Hindi) has estimated, the traders have profiteered by at least Rs 8,000-crore in the past four months. So the challenge is to discipline the trade. 

There is nothing wrong in Jain Irrigation dehydrating onions and exporting it to Japan. That may be what the Japanese prefer, and so Jain Irrigation is meeting their requirement. But the food habits of Indian's is quite different from that of the Japanese. Indians love fresh onions, which as we all know are cooked into various dishes and are also consumed fresh. Moreover, if Jain Irrigation is purchasing 1.5 lakh tonnes of onions, and after dehydrating, exporting it to Japan, I wonder what stops them to supply in the domestic market? If Jain Irrigation can set up a dehydrating plant for export purposes, why cant it do the same for the domestic market? 

But if you have followed the reports/analysis of the Commission for Costs and Prices (CACP) what is very clear is that it has always lobbied for subsidy support for the industry (calling it incentives) while decrying subsidies being given to farmers. I am not in any way surprised at this suggestion. 

Some years back, when Pepsi Foods made a backdoor entry into India, it had come up with the proposal to import tomato varieties suitable for processing. The policy makers were swayed by this idea, technology introduction sells very well in this country. Eventually, Pepsi Foods relied on a tomato variety developed by Indo-American Hybrids, a Bangalore-based firm. No one ever questioned Pepsi as to what happened with their promise of importing improved tomato varieties. Nevertheless, just like the idiotic suggestion of Ashok Gulati, even at that time the company had maintained that by setting up a processing plant to make tomato puree, Pepsi will help provide tomato to the Indian consumers at a cheaper price. 

Well, tomato puree has been in Indian market for quite sometime now. But has it in any way reduced the demand for fresh tomatoes? The answer is: No. So will dehydrated onions, that Ashok Gulati is advocating primarily to seek State subsidies for the industry, reduce the demand for fresh onions? Well, you know the answer. 

Onions can be made available cheaper throughout the year provided the government chops the onion cartels.

By the way, what happened to the claims that organised retail can provide competition to the fruit and vegetable trade that exists in the country? Weren't Reliance Fresh, Big Bazaar, Easy Day, Metro and the likes supposed to eliminate middlemen and thereby provide cheaper vegetables to the consumers? If these retail chains had marketed cheaper onions, I am sure we would have seen long queues before the stored. We didn't see any such rush outside these stores. I remember the CACP has been a strong votary of the organised retail, including FDI in retail. So why did it fail to deliver? Shouldn't CACP be questioning that now, and shouldn't CACP itself be questioned to know whose interests it is working for.

Moreover, how will the processing of onions that provides onions at Rs 20/Kg help the farmers? Who are you misleading, Mr Ashok Gulati?  

1 comment:

Anonymous said...

Its a big lobbying..,

the price goes equal to the Rice or wheat. What a common man do? Stop eating??

studies say, that 30% of the onion production going waste by means of transport, storage or marketing.

what the Govt do?

it does in the Tomato also.,

no matter its an onion or tomato.. everything is a profit mean of Lobbing... :(