Onion prices soar, to remain high till Oct

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Quaid Najmi and Fakir Balaji | 03 Aug, 2015
Unseasonal rains, lower production and resultant shortages have made the onion dearer again, with prices soaring. Merchants say the prices will remain high till October when the next crop reaches markets across the country.

Of the 20 million tonnes produced last fiscal (2014-15), about 30-35 percent was damaged in unexpected rains from February to April after the January-March) crop was harvested, an apex trade body said.

"The damage was compounded by high moisture content, change in seasonal cropping patterns due to soil conditions and other factors," a leading wholesale onion merchant in Navi Mumbai, Rajeev Maniar, told IANS.

As a result, the bulb price has shot up 50-60 percent in wholesale and retail markets in states despite belated measures by the union agriculture ministry to increase supply by importing about 10,000 tonnes from Pakistan, China, Egypt and other countries.

Fearing a crisis, the Director General of Foreign Trade increased the minimum export price (MEP) on onion to $425 per tonne from $250 in June to curb its export, ensure enough supply and check prices from spiralling.

"Failure of the authorities in building up adequate stocks to make up for short supply and delay in limiting exports are reasons for onion price going up around this time every year," said Srinivasa Gowda, a wholesale dealer in onions and potatoes at the Bengaluru agriculture marketing yard.

The National Agriculture Cooperating Marketing Federation, a state-supported non-profit apex body of farmers, has arranged to supply onions to more consuming states in northern and eastern regions from producing states like Maharashtra, Karnataka, Gujarat, Madhya Pradesh and Andhra Pradesh.

"The prices have been gradually rising and touched 50 percent in the Mumbai wholesale market - from Rs.22 to Rs.32 a kg, and doubled to Rs.42-45 a kg in retail market depending on quality," Maniar said.

The cooperative federation Markfed has procured about 2,500 tonnes of onion using the corpus of the price stability fund.

Though India is the world's second largest onion producer after China, its yield is lowest per acre at 14 tonne per hectare as against 22 in China, 23 in Mynmar and 30 in Turkey, according to the Agricultural and Processed Food Products Export Development Authority (Apeda).

"Absence of timely market intervention and a mechanism to regulate supplies makes farmers and traders hoard the vegetable during summer and cause scarcity to jack up its prices till the next crop is harvested," Gowda told IANS.

Huge quantities of onion are sourced from Lasalgaon and Pimpalgaon villages in Nashik district. They account for the largest crop production in Maharashtra.

Maharashtra alone contributes 40 percent to the national onion basket.

With a third of the stock damaged due to moisture, the 50 onion markets of the total 232 APMC markets across Maharashtra have no stocks currently.

In producing states, onion price shot up during July -- 37 percent in Gujarat, 36 percent in Andhra Pradesh, 32 percent in Madhya Pradesh and 17 percent in the National Capital Region (NCR).

Price of large onions ranged from Rs.2,800 to Rs.5,000 per quintal (100kg) across the country on August 1, as per the agriculture ministry's directorate of marketing and inspection.

In Uttar Pradesh, the price doubled to Rs.40 a kg from Rs.20 a year ago. Absence of rains in many parts of the state during the last fortnight also led to prices of many vegetables soaring 50-100 percent.

In Karnataka, the second largest producer, onion price doubled to Rs.50-55 from Rs.25-30 a kg in the last one month.

This was primarily because supplies from the state's northern region and Maharashtra dwindled due to stock diversion to northern and eastern states facing shortage, a horticulture department official told IANS.

According to Agriculture Produce Marketing Committee (APMC) estimates, supply will ease only by October when the next crop will be able to meet the demand expected in the coming festival season.

(With inputs from Arvind Padmanabhan in Delhi and Mohit Dubey in Lucknow)