Onion prices set to soar further in coming weeks; expect stability in rates only after Diwali with arrival of new crop, say traders

Onion producing districts and states like Nashik, Pune, Lasalgaon in Maharshtra, Gujart, Andhra Pradesh are unable to send onions partly due to logistical issues

Sulekha Nair September 25, 2019 01:44:12 IST
Onion prices set to soar further in coming weeks; expect stability in rates only after Diwali with arrival of new crop, say traders
  • Lasalgaon, the country's largest wholesale market for onions in Maharashtra, witnessed a rapid rise in the price of onions from Rs 1,200-1,300 per quintal two months ago to Rs 4,300 per quintal this week

  • Onion producing districts and states like Nashik, Pune, Lasalgaon in Maharashtra, Gujarat, Andhra Pradesh are unable to send onions partly due to logistical issues

  • The government on 13 September imposed a minimum onion export price (MEP) of $850 per tonne to curb its shipments and help bring down spiralling domestic prices

Onion prices will continue to soar across the country as the traders are selling onions from the reserves they hold. The new crop is awaited but it will hit the market only after 15 November from Karnataka, Rajasthan and Madhya Pradesh. Until then, choose onions your wisely to use it either as the base for your curries, vegetables or to sink your teeth into some raw crunchy ones in your salad.

Prices have shot up across the country ranging from Rs 60 to Rs 80 depending on the region and may go up further, said traders to Firstpost.

The reasons for the price hike is multiple. Primarily, the heavy rainfall experienced this monsoon and which continues to lash some parts of India has led to damage in onion crops. The onions from Karnataka has been spoilt by the unseasonal rains leading to a dearth in supply across the country.

With the rise in prices, some farmers have resorted to hoarding in the expectations of a further hike in price.

Onion prices set to soar further in coming weeks expect stability in rates only after Diwali with arrival of new crop say traders

Costly commodity in the country. PTI

The retail price of onions has remained unchanged in Mumbai  where price continue  to be pegged at Rs 60 in (same like yesterday), while it was available  at Rs 50-60 per kg in Delhi, Rs 42-45 in Hyderabad and Chennai, and at around Rs 60 per kg in Bengaluru. Last week, the prices were lower compared to this week at Rs 57 per kg in Delhi, Rs 56 per kg in Mumbai, Rs 48 per kg in Kolkata and Rs 34 per kg in Chennai, according to data maintained by the Consumer Affairs Ministry.

Lasalgaon, the country’s largest wholesale market for onions in Maharashtra, witnessed a rapid rise in wholesale price from Rs 1,200-1,300 per quintal two months ago to Rs 4,300 per quintal this week. Speaking about the rise in prices, Somnath Bodke, a wholesale trader at Gurukrupa Traders in Lasalgaon, said the reasons for the hike is the unseasonal rainfall that continues in some parts of the country. This has led to a scarcity in supply and the current stock of onions available in the market are from the reserves held by stockists and farmers. However, this is also depleting and will result in a further hike in prices, said Bodke.

Onions were sold in the wholesale markets in Delhi between Rs 40-42 on Tuesday. The prices have fluctuated but not wildly, said Parikshit Sawhney, proprietor, Gujarat Onion Company, Delhi. He said there is a genuine shortage of supplies. "The new onion crop from Rajashtan and Madhya Pradesh is expected only in November. Delhi receives 100-120 truckloads of onion from the mandis (marketplace) daily. However, this huge volume, which is the daily demand in Delhi is not being fulfilled on the supply side.

Onion prices set to soar further in coming weeks expect stability in rates only after Diwali with arrival of new crop say traders

The Centre will consider imposing a stock limit on onion traders if retail prices continue to remain high even after exhausting the buffer stock, Food and Consumer Affairs Ram Vilas Paswan said on Tuesday.  The government will "wait and watch" the price situation for some time for imposing the stock limit as it is equally concerned about the interest of farmers, he said, according to PTI.

Agriculture Minister Narendra Singh Tomar said onion prices will calm down in the next few days as supply is being improved in the domestic market by agencies like NAFED. To give relief to consumers, central agencies NAFED and the NCCF have been selling onion from the buffer stock at Rs 22-23/kg, while Mother Dairy's SAFAL stores are selling it at Rs 23.90 per kg in the national capital.

Trade data revealed that retail prices have shot up to Rs 70-80 per kg in the capital owing to tight supplies. A similar price trend prevails in other parts of the country.

Unlike other states in the country, Maharashtra is not facing a shortage of onions but the demand and high price it commands is leading to much of the stock being diverted to the southern parts of the country. "If you compare the stock and supplies in the last two months in Lasalgaon in 2018 and same period this year, the supply has been 5 lakh quintals and this has not wavered. The farmers bring in 10,000 to 15,000 quintals of onions in tractors to the market daily. However, the shortage faced by consumers in other parts of the country has led to a rise in prices here as well," said Jaydutt Holkar, chairman, Lasalgaon Agriculture Produce Market Committee (APMC). This was evident in retail prices hovering around Rs 50-60 in Mumbai currently from around Rs 20 to Rs 30 a week ago.

Rajendra Shelke, president, Onion Potato Traders Association, Vashi said the price of onions stabilised at Rs 35-40 per kg in the wholesale market and Rs 55-60 in the retail markets in the last two-three days. Shelke said there were enough stocks to cater to Mumbai's requirement of 70 trucks of onions per day. Earlier, the requirement was 125 trucks of the produce to the city. Yet, he insisted there was no shortage of onions. "Traders are able to get their supplies from Nashik, Jalgaon, Lasalgaon and Pune and that is taking care of the needs of Mumbai currently," Shelke said.

Onion cultivation

Onion producing districts and states like Nashik, Pune, Jalgaon, Lasalgaon in Maharashtra; Gujarat, Andhra Pradesh and Karnataka are unable to send onions to other states partly due to logistical issues caused by unseasonal rainfall, said a trader in Delhi. The onions thus forcibly stored as has had a 10-20 percent wastage due to dampness and improper storage facilities, he said.

On 13 September, the government imposed a minimum onion export price (MEP) of $850 per tonne to curb its shipments and help bring down spiralling domestic prices.  The Minimum Export Price (MEP) is the rate below which no exports are allowed.

The Centre last month warned of strict action against hoarding of onions amid supply disruption fears due to floods in parts of major growing states - Maharashtra and Karnataka. Holkar from Lasalgaon APMC said there was no need to export onions as the demand in the country is high which is not being fulfilled by traders. "Where is the need for an MEP," he said.

However, some traders felt the MEP has also affected the prices of onions. Delhi trader Sawhney said. "With the shortage of onions due to delay in new crop which is expected to enter the market only mid-Noember provided it is not impacted by rainfall, the MEP has made the situation worse," he said. The only possibility would be to import onions from Afghanistan instead, he said, to ease the current shortfall in the country.

The government has been talking about improving the plight of the farmers. Soaring onion prices can fulfill that plan of the government currently, said onion traders. Shubham Khandelwal, a wholesale at Shubham Trading Company, Indore, said the rapid rise in prices began after Raksha Bandhan around mid-August. The current price of onions in the wholesale market in Indore is around Rs 35-42 per kg and could go up to Rs 50 per kg in the coming days due to a wide mismatch between demand and supply, he said. The retail price of onions in Indore ranges between Rs 40-45 a kg, he said.

Khandelwal expects retail prices to soar to around Rs 75 a kg in the coming weeks until the new crop enters the market. "Farmers will get good rates for their crop. Since the farmer is the focus of the government, that section of the populace will be taken care of," he said.

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