An Enquiry into the Role of Market Intermediaries in India’s Onion Crisis

Abstract

This paper assesses the extent to which market intermediaries have been responsible for the crisis that onion markets have witnessed in the past few years. The paper found that commission agents and wholesalers frequently indulge in price manipulation to purchase onions at predecided prices instead of at auction prices. Big traders attempt to prevent entry of new traders in the market by utilising their market dominance, in order to limit market competition. Traders may also have resorted to hoarding of onions to take advantage of its price rise. This led to an artificial shortage of onions in the retail markets. Imposing of high margins by retailers also has caused sudden spikes in onion prices in retail markets.