Onion Case

Group – 5
Viekram, Naresh, Anant, Sumeet,
Nishit
Q1- Critical factors for Onion Storage
expansion
Onions are highly perishable items and cannot be stored for a long time due to sprouting and
rotting of the bulb
Due to lack of storage, farmers get the Onions directly to the Market which creates a Supply
shock and hence impacts the market price. This is more important for Kharif as it has a shelf of 1
month only
Post harvest losses due to weather
60% onions are produced in Maharashtra, but the demand is across the country.
Will help to create buffer stock

The government should incentivize storage to help stabilize the volatility in the prices of a product
that is considered a basic commodity of this country
Q2 – Scrapping of MSP
 Scrapping of MSP for export will help the –
 Exporters
 World market as India is the second largest producer of Onions and hence can flood the
international market and reduce global prices – which will help the government ForX
reserves
 This will help with the Market Clearance Process as the Onion market will be more in Market
control
Q3 – What to do for Stability in the Onion
Prices and Income of the farmers and traders
 Inter sale of Onions to be permitted
 Enable better infrastructure and scientific ways to store Onions
 Farmers have to do Vertical storage integration and processing can be done via setting up co-
operatives
 To do this we will need to help better educate the farmers
 Elimination of Middle-men wherever possible to help pass on reduced cost benefits to the
customer and the farmers
 Restrict Import of Onions to protect farmers price
CQ1 – Demand and Supply Curve
• Below are the charts –
CQ2 – Subsidize vs Storage Investment
 The government should invest in Scientific storage of Onions

 Subsidize of Onion prices increases government debt which is costly in the long run
 Cost of this Government debt is going to be passed on to the Tax payers and have a greater
opportunity cost as the same amount could be used for other infracture project investments