Lessons not Learnt: Onion Prices

Abstract

This paper looks at the phenomenon of sharp spikes in onion prices almost every alternate year. The paper shows that acreage and production of onions have increased over years, thus there seems to be no problem of supply shortages. The shortages are created by some weather event, which leads to onion shortages that do not last for more than 3-4 months. To get over this problem, government usually resorts to instant export bans, jacking up of minimum export price and strict implementation of storage limits. The paper shows that this hurts India’s exports. It gives some recommendations to deal with the situation better.