Collapse in India’s onion, potato prices could leave Modi smarting in election
NEW DELHI, Dec 28: A spike in the price of onions has led to the ouster of governments in Indian elections in the past. Now, prices of the staple have collapsed, and many impoverished farmers are saying they will make Prime Minister Narendra Modi pay in next year's general election.
Steep drops in recent weeks in the prices of onions and potatoes, both staple foods for India's 1.3 billion people, have badly hit the rural economy in large states.
In interviews with dozens of farmers last week, Reuters reporters found resentment welling against Modi's Hindu nationalist Bharatiya Janata Party (BJP) for not helping support incomes in the countryside, where a majority of the population lives.
In the 1998 state elections, a sharp spike in onion prices led to the fall of the BJP government in the capital New Delhi. In the 1980 general election, sky-high onion prices helped former Prime Minister Indira Gandhi dislodge a coalition government that had included politicians who later formed the BJP.
Perhaps most important of all, the BJP came into office in 2014 determined to shift away from subsidies. That may have been fine when crop prices were relatively high but as they crashed it has exposed the party in farm areas.
Many farmers blame Modi for not fixing a price protection programme which barely covers 7 percent of India's 263 million farmers, leaving most growers at the mercy of middlemen.
They also criticize him for not setting up more food processing and cold storage facilities, which would allow them to store their crops without having to sell immediately after the harvest.
"Expecting good days, as promised by Modi, we voted for the BJP, but now we are going through the worst phase," onion farmer Madhav Pawase said, pointing to his rotting crop stocked in a temporary shed in Hivargaon village, about 230 km (140 miles) northeast of Mumbai, India's financial hub.
Some farmers have decided to let onions rot in the field, saying that harvesting and transporting the produce to wholesale markets would only add to their losses.
The BJP was defeated by the opposition Congress party in three major states in local elections this month because of rural anger, and Modi's government is under pressure to come up with measures to placate farmers. -REUTERS
Congress wrote off farmers' loans in the three states which it won and has demanded the federal government do the same across the country.
Although the BJP has so far not commented on the issue of farm loan waivers, Rajiv Kumar, the head of government think-tank NITI Aayog, has said that writing off debt is not the solution for the problems of the farm sector.
The crash in vegetable prices hasn't helped consumers either thanks to the chain of middlemen.
In Lasalgaon, the country's largest onion trading hub, most farmers are selling their produce at 2 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 say onions pass through at least four layers of middlemen, adding a hefty margin at every stage.