The whole of last week, the onion surpassed all political scamsters, Bollywood idols and IPL century scorers in capturing the headlines, in both the print and the electronic media.

The previous peak onion prices had reached was around Rs 40-60. That led to an electoral setback for the BJP. Ever since, ‘onion price' has been a sensitive political issue.

Onions started making political news in the late 1970s under the regime of the Janata Party. The Janata Party government started the practice of banning the export of onion at harvest time and lifting the ban after the stocks had passed into the hands of the traders and exporters.

...

Forty per cent of the nation's onion crop is from Maharashtra, particularly Nashik and Pune.

... ...

Onion is not an easily storable agricultural produce. In 1980, farmers took advantage of the special position of Nashik and Pune districts in the production of onion to control supply, to the point where the government would be willing to purchase onion from the farmers at the price they demanded.

...

The 1980 onion situation was radically different from the present situation.

In 1980, the cost of cultivation was around Rs 60 per quintal; this year, in the areas where the crop was badly damaged by unseasonable rains, the cost is as high as Rs 60 a kg.

...

In 1980, the then government banned onion export when the retail price in Delhi reached Re 1 per kg; the price of the balcony tickets in common cinema houses was Rs 2.50.

If one discounts the present price at the rate of inflation during this three-decade period, the price of onions at Rs 60 is well short of two-fifth the current price of balcony ticket of Rs 250.

...

The export ban imposed this time is qualitatively different from that imposed by the Government in 1980. The 1980 ban was termed indefinite though everybody knew it would be lifted once traders had control of the stocks; the UPA ban is limited to a period extending up to January 15, 2011. Even in 1980, the ban was unreasonable because the domestic price was still barely equal to the cost of cultivation.

...

This has caused an extraordinary bloating of demand. On the other hand, the untimely rains have destroyed 80-90 per cent of the kharif rangda and pol onion crop in Nashik , apart from Lonand area in Satara district.

...

For example, the Prime Minister, on the lines of Lal Bahadur Shastri, could have announced his decision to abstain from consumption of onion till January 15, 2011, thus setting an example to the nation. The blanket ban on export will result in permanent loss of some markets abroad as it will affect the credibility of the Indian traders in those markets. Opening the door to Pakistani onion will encourage Pakistan to capture traditional Indian markets.

Blanket bans are certain to harm the long-term interests of the Indian onion and the Indian farmer.