Onion and Cotton Prices and Government’s response

Two-three years ago there was bumper crop of onion. Onion prices crashed and in spite of very good crop, the farmers could not make more money than in the previous years. The consumers had very good time. The government did not take any action to give incentives to producers to export onions to ensure that the local prices did not crash. Government kept quiet.

This year, due to heavy rains and other reasons the production has done down steeply. The prices in the local market increased and the farmers who had very poor crop had some satisfaction that the prices are high. But the government would not allow them to be happy. On the basis of consumers’ complaints against high prices, the government disallowed export of onion and allowed import of onions free of any restrictions and without duty. The prices will come down and the farmers would suffer as usual.

While the consumers have good time through out their life, the producers of onions as also other agricultural produce will have bad or not so good time through out their life.

There is no rationale in the government’s action. The argument that due to high prices only merchants profit and not the farmers is not convincing.

The same is the case with cotton and cotton yarn. If producers of fabrics and ready made garments had good time- high profits- when cotton production was high and the prices were low, why not they have low profits or even small loss when cotton prices are high?


One Response to Onion and Cotton Prices and Government’s response

  1. P Radhakrishnan says:

    At the outset I congratulate Mr. Govindan for the very apt and well thought out general title of the blog – A diplomat’s view of an undiplomatic world.
    On Onion and Cotton prices and government’s response the blogger gives a new perspective.
    All along we have been, and the media for that matter, worried only about the impact of price rise on the consumers, and have left the producers to fend for themselves. Since Mr. Govindan has gone into details, I would urge him to spend a little more time and write a sequel on how best the interests of various stake-holders can be protected under normal circumstances and otherwise – role of the market which is seldom regulated, role of the minister concerned who seldom shows any concern, role of the media which is often after sensational issues, etc. Should there not be a consumers’ and producers’ federation in a context where everything else has been a failure, and if so how do we go about it.

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