Managerial Economics

Case Study 1

1.
• India being the 2nd largest producer of onions in the world following China was
exporting almost 41% of its production to the world.
• Onion price runs on a higher side in the month of December-January and fall deeply
in April-May.
• Fungal diseases like “purple anthracnose” and “purple blotch” affected the crop in
Maharashtra which was major growing region for onion.
• The monsoon taking place after the purple affect to crops worsened growth for the
saplings.
• The unexpected rains in Karnataka and Tamil Nādu turned the mountain down on the
head of farmers destroying 40% of the crops.
• Even though sufficient stock was available, lack of storage facilities resulted into
insufficient meeting of demand.
• Fast growing GDP in 2008 increased the income of citizens in India which increased
the consumption of veggies as their diet plan.
• Traders worsened the situation by amplifying demand supply gap causing divergence
between wholesalers and retailers.
• When prices soared, public of India started purchasing more than required and
stockpiling assuming the prices will soar again in near future.
• The opposite to the ruling parties whistle blowed that the ruling party was exporting
more than required and stealing the reserved product of the citizens, but the truth was,
12.4% of the onion produce was being exported.
• The unexpected rain happened in the late November 2010 to early February 2011
destroying 40% of the onion saplings which turned mountains down on the heads of
the poor farmers.
• Pesticides spraying became totally ineffective due to heavy rains and humid weather.
The chemicals were being washed off by rain resulting into affected crop yield.

2.
• the fungal diseases like “purple anthracnose” and “purple blotch” severely affected
the onion crop yield and saplings which caused a very extreme damage to the farmers
resulting into increase in the market prices. It is short run-in nature.
• onion prices gain hike in the month of December-January as these months give a start
to the rabi crop yield of onion which can be stored for up to 6 months. As these rabi
onion crop has a greater shelf life than kharif onion crop yield, people tend to buy and
store the onions in this time. It is short run-in nature.
• The monsoon season gave birth to floods in the southern India which had extreme
damage on the onion crop yield. It is short run-in nature.
• The onion is a kind of a vegetable which is added in almost every Indian dish. This
vegetable is the reason for the perfection in the taste of Indian cuisines. This factor of
onion forces the Indians to buy the onions irrespective of the hikes in the price or
whatever it might be. This results in increase in demand. it is long term in nature.
• The increase in GDP of India in the year 2008 by 8%-9% increased the earning levels
of Indians leading to upgraded diet plans, luxury cuisines, etc which included
maximum consumption of onion in their everyday meal. Though this will go for long
term in nature, it is also a short term as humans tend to start something quickly but
also give an end to it quickly.
• Excessive buying of onions to just store them in case of price hike is not only limited
to onions but also to other veggies which have a good shelf life. This attitude of
Indians also leads to heavy increase in demand and price hikes. Again, long term in
nature.
• India being the 2nd largest producer of onion exports 41% of its produce all over the
world. Which sometimes leads to the shortage in its own country resulting into hikes
and instability in supply and demand.
• The wedding season in India takes place between late November and early February which is
winter season. It is also a festive season which has Christmas, new years eve and 2 other
Hindu festivals which immensely increases the onion consumptions in these events.

Mohammed Yaseen Qureshi

PES1202202920

MBA ‘C’ Section