Express View on export ban: The onion diktat

Source– The post is based on the article “Express View on export ban: The onion diktat” published in “The Indian Express” on 24th August 2023.

Syllabus: GS 3 – Agriculture

News– Centre has imposed a 40 per cent export duty on onions.

Why is this move not good for farmers?

Farmers cultivating onion, potato, and tomato do not experience any advantages from government agencies’ Minimum Support Price (MSP) based procurement. These farmers are entirely subject to the forces of the market.

Most farmers who grow rabi onions don’t sell their entire crop immediately after harvesting. Instead, they store the crop to prevent moisture and sprouting.

They then make staggered sales from September to October, before the next kharif crop.

This time, unseasonal heavy rains in March and April caused damage to a significant portion of the harvested onions. It made them less suitable for storage.

Farmers also had to engage in distressed sales of onions prone to rapid quality deterioration.

What are the consequences of imposition of export duty on onions?

This decision has left a negative impression on the growers that the government remains inactive during periods of low prices but take action as soon as prices start to rise.

All recent governmental interventions, including export bans and the imposition of stock limits, openly contradict the farm reform laws that were introduced just three years ago.

The prohibition of export poses a threat to India’s reputation as a dependable global supplier. Restoring that credibility will be a difficult task.