HIVARGAON/MUJAHIDPUR,India: A spike in the price of onions has led to the ouster of governments inIndian elections in the past. Now, prices of the staple have collapsed, andmany impoverished farmers are saying they will make Prime Minister NarendraModi pay in next year's general election.
Steep drops inrecent weeks in the prices of onions and potatoes, both staple foods forIndia's 1.3 billion people, have badly hit the rural economy in large states.In interviews with dozens of farmers last week, Reuters reporters foundresentment welling against Modi's Hindu nationalist Bharatiya Janata Party(BJP) for not helping support incomes in the countryside, where a majority ofthe population lives.
The Indiangovernment on Friday doubled export incentives for onion farmers to 10 percent,following steep drops in recent weeks in the prices for onions, a staple foodin India. The move will result in better prices for onions in the domesticmarket, the government said in a statement. The export incentive program allowsfarmers to get a credit from the government, which can be used to pay varioustaxes. "Whatever they do in the coming months, I will vote against theBJP. I won't repeat the 2014 mistake," said Madhukar Nagare, an oniongrower from Nashik in Maharashtra state, referring to his backing the BJP atthe last general election.
In the 1998 stateelections, a sharp spike in onion prices led to the fall of the BJP governmentin the capital New Delhi. In the 1980 general election, sky-high onion priceshelped former Prime Minister Indira Gandhi dislodge a coalition government thathad included politicians who later formed the BJP.
In recent weeks,loss-stricken farmers have staged protests, blocked highways and dumped onionson the road after prices plunged to as low as one rupee (1.4 US cents) per kgfor a crop that costs about 8 rupees a kg to produce.
But because oflarge cuts taken by middlemen, consumers have not benefited from the lowprices.
In Maharashtra,the top onion producing state, farm prices have fallen 83 percent, dragged downby surplus supplies from the previous season's crop and lower export ordersfrom the Middle East and Southeast Asia. And in India's most populous state ofUttar Pradesh, which was crucial in Modi's election win in 2014, there is asimilar problem with low potato prices. Maharashtra and Uttar Pradesh are bothdominated by rural voters and together send 128 lawmakers to the 545-memberlower house of parliament. It means that big losses in these two states couldeither see Modi lose the next election which is due by May or his party beforced to form a coalition government.
Farmers sayshortcomings in a government crop support programme, and weak overseas demandhave combined to produce the current glut of onions. And as prices haveplunged, fertiliser and crop nutrient costs have risen, thanks in part to aweak rupee. Perhaps most important of all, the BJP came into office in 2014determined to shift away from subsidies. That may have been fine when cropprices were relatively high but as they crashed it has exposed the party infarm areas. The prime minister's office did not respond to a request forcomment on this story.
Not 'good days'
Many farmersblame Modi for not fixing a price protection program which barely covers 7percent of India's 263 million farmers, leaving most growers at the mercy ofmiddlemen. They also criticize him for not setting up more food processing andcold storage facilities, which would allow them to store their crops withouthaving to sell immediately after the harvest. "Expecting good days, aspromised by Modi, we voted for the BJP, but now we are going through the worstphase," onion farmer Madhav Pawase said, pointing to his rotting cropstocked in a temporary shed in Hivargaon village, about 230 km (140 miles)northeast of Mumbai, India's financial hub.
"I've spentmore than 80,000 rupees to produce 15 tons of onions from my two acres of land,but I won't recover more than 3,000 rupees at the current market price,"he said. Some farmers have decided to let onions rot in the field, saying thatharvesting and transporting the produce to wholesale markets would only add totheir losses. The BJP was defeated by the opposition Congress party in threemajor states in local elections this month because of rural anger, and Modi'sgovernment is under pressure to come up with measures to placate farmers.Congress wrote off farmers' loans in the three states which it won and hasdemanded the federal government do the same across the country.
Although the BJPhas so far not commented on the issue of farm loan waivers, Rajiv Kumar, thehead of government think-tank NITI Aayog, has said that writing off debt is notthe solution for the problems of the farm sector. Syed Zafar Islam, a spokesmanfor the BJP, said the government had initiated a number of steps to helpfarmers get remunerative prices, including a project to electronically providefarmers with real-time market prices and help them directly sell to buyers,eliminating middlemen.
"It's anongoing process and the results will not just start reflecting in fouryears," he said. In a sign that the Modi administration is beginning totake the crisis seriously, the government on Friday doubled export incentivesfor onion farmers to 10 percent. The move will result in better prices foronions in the domestic market, the government said in a statement.
Potato prices
In Mujahidpurvillage of Uttar Pradesh, India's biggest potato growing state, farmerslamented that prices have dropped by 86 percent to 2,500 rupees a ton. "Ilost my entire investment of 100,000 rupees to grow potatoes on onehectare," said Gopi Chand, 55, sitting next to bright yellow mustardfields. He said he and some other farmers in the area had dumped potatoes infavour of growing mustard. Farmers in the two states also complained of risingoperating costs.
Prices of cropnutrient diammonium phosphate, popularly called DAP, have gone up by 400 rupeesto 1,450 rupees for a bag of 50 kg, said Babloo Singh in Mujahidpur village.DAP rates have gone up because of higher overseas prices and India's weakercurrency. "Higher input costs and record low potato prices have left us indeep debt," said Singh. "The situation would have been different hadthere been more cold storage facilities and food processing plants in ourstate." The crash in vegetable prices hasn't helped consumers eitherthanks to the chain of middlemen.
In Lasalgaon, thecountry's largest onion trading hub, most farmers are selling their produce at2 rupees a kg. But consumers in Mumbai are still shelling out 20 rupees.Between Lasalgaon and Mumbai, a distance of 220 km (135 miles), traders sayonions pass through at least four layers of middlemen, adding a hefty margin atevery stage. - Reuters