After tomatoes, onion prices begin to skyrocket in India

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Onion prices in India have rebounded to hit their highest in six weeks. Photo/IAC

By IAC Staff

After tomatoes, it is the turn of onions now to start hurting an average Indian’s pocket.

Average onion prices at the Laslagaon wholesale market in Maharashtra have jumped over 75 per cent during the past few days. Traders are expecting that the government may soon resort to importing onions from neighbouring countries to rein in ballooning prices.

Onion prices at the key wholesale market in Nashik shot up to a minimum of Rs 8 per kg and maximum of Rs 26.31 per kg this week, up from Rs 5 per kg and Rs 19 per kg earlier.

The present wholesale prices in Lasalgaon are higher than in Delhi. Traders increase prices on a daily basis so that by the time their cargo procured at lower prices reaches its destination, its selling price increases substantially.

Since February 2016, onions were selling in Lasalgaon at below Rs 10 per kg, averaging as low as Rs 4.50-5.50 a kg this May-June. The most-quoted rate at the country’s largest market for the bulb was Rs 5.70 per kg even as late as July 17. On July 26, it crossed Rs 10 and has more than doubled since then.

The interesting part about the price spiral is that it has come despite Lasalgaon recording about 22,000 quintals of onion arrivals on Thursday, compared to 13,000 quintals in the preceding two days. Also, this happens to be the month of Shravan in the Hindu calendar when onion consumption is supposed to be low.

Traders are attributing this rise in prices to feared drought in Karnataka which has reported 26 per cent deficient rainfall so far in the current monsoon season. The fresh kharif crop from Karnataka normally starts arriving towards mid-August and peaks by the first week of September. This time, there are reports of a 50 per cent decline in onion acreage in the state. A possible supply crunch is what seems to be driving prices up.

Imports expected

With the rise in domestic prices, exports have almost stopped, while some traders are gearing up to import onions if prices remain above Rs 25 per kg in the domestic market. India, in 2016-17, shipped out 2.42 mt on onions valued at Rs 3,106.50 crore. During the previous financial year, these amounted to 1.38 mt and Rs 3,097.21 crore, respectively.

If domestic prices remain between Rs 25 per kg and Rs 30 per kg, imports will become feasible. It is likely that the government might allow imports to curb this sudden spurt in prices so soon after tomato price hike.

Karnataka produces around 2.7 million tonnes out of India’s total annual onion output of 20-21 million tonnes, making it the third largest after Maharashtra (6.5 million tonnes) and Madhya Pradesh (2.8 million tonnes).

Onions are grown mostly during the kharif season with sowing in June-August following the monsoon rains. This crop arrives first in Karnataka from mid-August and in Maharashtra after mid-September.

Traders estimate that Maharashtra farmers would have stored some 1.8 million tonnes of onions from the last rabi crop which they sell in a staggered way. The corresponding figures for MP and Gujarat are in about 1.2 million tonnes and 0.4 million tonnes respectively.

The high prices should induce farmers to sow more area in the ongoing kharif season. Till date, Maharashtra has reported only around 10,000 hectares of onion planting, as against the normal 30,000 hectares during kharif.

Sowing has been lower partly because of the main Nashik belt receiving torrential rains during July and also un-remunerative prices. That could change in the coming weeks, with both prices and the weather looking up.

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