Onion prices have been particularly volatile in India, reaching an all-time high of Rs. 100 in the month of October 2013 in certain parts of the country. The core of the onion price problem appears to stem from massive hoarding by cartels of intermediaries. How can this be stopped? Are there deeper problems with India’s agricultural policies that belie the onion market failures?
Onion is an important commodity for Indians of all classes; it is also the one that has swung political fortunes in India. The state of affairs in the onion market is indicative of gaping policy holes in the Indian agricultural markets. As India gears for the national elections in 2014, there is heightened interest in policy manifestos of the competing political parties.
A history of policy measures adopted by past governments of India and the effects of these measures are outlined in this case. The case provides a platform for students to discuss the appropriateness of various policy measures with respect to agricultural produce marketing in India.
The case is appropriate for an MBA/BBA-level course in Economics or Pricing. It best fits in a class that intends to discuss commodities markets and price formation. It is particularly relevant to discuss agricultural commodities markets, the role of government and policy in shaping the agricultural supply chain, export policy, etc.
The specific teaching objectives include:
Assessing the role of private players and large retailers in dampening price volatility