After tomatoes make Indians see red, are onions set to make them cry?

In India, onion prices are following the trend for tomatoes. According to a CRISIL study, the price of this key kitchen essential is expected to hit Rs 60–70 per kilo in September as a result of lesser sowing during the Kharif season and storage-related problems. The modal average retail price for onions currently is about Rs 25 per kilo. The supply-demand imbalance is anticipated to show up in onion prices by the end of August, per a Topical analysis of food prices report published by the research and analytics company CRISIL. “The supply-demand imbalance is expected to reflect in onion prices towards end-August. As per our ground interactions, prices are expected to show a significant increase from early September in the retail market, reaching up to Rs 60-70/kilo during the lead patch. However, prices will remain below the highs of 2020,” the report said. Let’s take a closer look. Also read: Seeing Red: Why tomato prices are likely to hit Rs 300 per kg Onion price hike There are two primary causes for the potential increase in onion prices. First, rabi-season onions have a short shelf life, and second, kharif-season seeding is poor. [caption id=“attachment_12976522” align=“alignnone” width=“640”] Trends indicate that once onion inflation as a problem takes hold, it takes a long time to pass. PTI[/caption] According to Financial Express, unseasonal rainfall in March had an impact on the quality of onions and shortened the rabi onion’s shelf life from six months to four-five months, heightening storage concerns and prompting farmers to sell their crops in a panic. The rabi crop, which is typically available in the market starting in March, was harvested earlier than usual this year due to the extreme weather, and selling began in February. When compared to February of last year, there were 13 per cent more onions available on the market. Last week on Thursday, the benchmark price for quintals of onions at Maharashtra’s Lasalgaon, the country’s onion trade centre, was Rs 1,300, up from Rs 1,250. The costs were approximately Rs 950/quintal two months ago. For those unversed, India generally has three onion seasons: kharif, late kharif, and rabi. The rabi crop, which is harvested between April and June, accounts for around 65 per cent of the nation’s onion production and satisfies consumer demand until the kharif crop, which is harvested between October and November, is ready. Prices are expected to remain high until late kharif varieties are available on the market, “in a throwback to the tomato story for Indian households,” CRISIL observed in the study. Also read: Rising prices: Why India is in tomato trouble again Trend reversed The winter crop this year was reportedly less robust than the crop the year before, according to people in the onion business. India frequently buys onions during economic downturns, however in 2021–22 and 2022–23, no such imports occurred. According to the central government’s monthly inflation figures based on the Consumer Price Index (CPI), the retail price of onions was 32 per cent lower in February of this year compared to the same month last year. In comparison to the same months last year, the price of onions was 21 per cent lower in March, 13 per cent lower in April, and two per cent lower in May. [caption id=“attachment_12976332” align=“alignnone” width=“640”] Graphic: Pranay Bhardwaj[/caption] On a year-over-year basis, this trend changed course in June, rising 1.65 per cent. Between September 2021 and May 2023, onion retail inflation was negative. Numbers on inflation for July are expected to be revealed later this month. According to official statistics, the average retail price of onion in India in 2020, 2021, and 2022 was Rs 35.88, Rs 32.52, and Rs 28.00 rupees per kilo. As a result of the fall in onion prices during the rabi harvest, farmers sowed less during the kharif season, according to Deccan Herald. In terms of area, onion seeding in this kharif season is probably going to be eight per cent lower than it was last year, while production is probably going to go down five per cent year over year, per CRISIL data. Also read: Not just tomatoes: Why are vegetable prices seeing a rise? Price stabilisation According to the CRISIL report, once Kharif arrivals begin in October, onion supply would decrease. The survey noted that the price movement throughout the holiday season (October to December) is anticipated to stabilise. When it comes to onions, unlike tomatoes or other green veggies, where household budgets have been impacted by rising prices, the government keeps close to 250,000 tonnes of reserves that it releases to the market when demand peaks, according to NewsBytes. [caption id=“attachment_12976532” align=“alignnone” width=“640”] In India, onion prices are following the trend for tomatoes. PTI[/caption] Nevertheless, price volatility is a feature of the main component in the majority of Indian meals. In addition, trends indicate that once onion inflation as a problem takes hold, it takes a long time to pass. “The government is monitoring onion demand and supply as we do in the case of 22 essential items across 536 points across the country. We have enough stocks to intervene in the market and there is no concern,” Hindustan Times quoted a government official as saying. Also read: Tomatoes more expensive than petrol: How viruses have destroyed the crop Tomatoes under pressure In the past few months, the cost of tomatoes has considerably increased. At Mother Dairy’s Safai retail stores in Delhi this year, tomatoes were priced at Rs 259 a kilo. Depending on quality, wholesale tomato costs at Delhi’s Azadpur Mandi, the biggest wholesale market for fruits and vegetables in Asia, ranged from Rs 170 to Rs 220 per kilo. Prices are anticipated to reach Rs 300 per kilo and have recently reached all-time highs across the nation, according to Livemint. Rain fury exacerbated the supply, pushing up prices even more. “There is a lot of difficulty in the transportation of vegetables due to landslides and heavy rain in Himachal Pradesh. It takes six to eight hours more than usual in the exportation of vegetables from the producers due to which the price of tomato might reach nearly Rs 300 per kilo,” Azadpur Mandi wholesaler Sanjai Bhagat told PTI. In Karnataka and Maharashtra, wholesale tomato prices for good qualities reached fresh highs of Rs 180–200 per kilo at the beginning of August. With inputs from agencies