The volatility in onion prices can be managed through a multi-pronged strategy including creation of adequate public stocks, NITI Aayog member Ramesh Chand said on Friday.
Among other steps, Chand suggested extension of the right technology, spread of onion-farming in other states such as Uttar Pradesh and gathering appropriate market intelligence.
"The primary factor for triggering abnormal hike in prices is production shock generally caused by weather related events. Studies show that this situation is aggravated by further exploitation by a section of traders and middlemen through stocking and market manipulations," Chand stated in the NITI Aayog's blog.
According to Chand, to reduce the effect of weather shock, concentration in area under onion cultivation in six states needs to be diluted by promoting onion cultivation in other states like Uttar Pradesh. The other possibility is to popularise onion production in the kharif season.
He said these changes would require suitable varieties for new areas. "While some varieties are already available, they need further improvement."
"ICAR (Indian Council of Agricultural Research) and other research organisations and private sector R&D firms have an important role to play in it. Efforts will also be needed from extension agencies of states and central government to take these technologies to farmers," Chand added.
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He suggested that besides central agencies like NAFED, state-level agencies should also be involved in holding larger volume and to have larger coverage of stabilisation.
Beside physical stabilisation, it would also keep check on exploitation and market manipulation by private trade, he pointed out in the blog post.
While stabilisation through trade is another option, Chand said it would be costly and serve a limited purpose as India itself is a major onion exporting country.
He added that public agencies like Directorate of Economics and Statistics in the Ministry of Agriculture and Farmers Welfare should constantly monitor crop area, conditions and prices to know about the undercurrent and evolving market changes.
"It should also develop reliable price forecast model and come up with early warning systems to enable the government to take appropriate measures in advance like procurement, regulating export, arranging imports and putting check on hoardings," he said.