Onion prices rise by up to 76% on reduced supply from flood-hit states

Onion prices jumped by up to 76 per cent in the last one month due to reduction in arrivals in the agricultural mandis across the country, following floods in major supplying states such as Maharashtra, Karnataka and Madhya Pradesh.

Data compiled by Nashik-based National Horticultural Research & Development Foundation (NHRDF) showed the highest jump of 76 per cent in bulb prices in Mumbai. The crop is currently trading at Rs 22 a kg compared to Rs 12.50 one month ago.

In the benchmark Lasalgaon mandi, Asia’s largest onion selling wholesale market, onion prices shot up by 71 per cent to trade at Rs 20.50 a kg on August 20 from a Rs 12 a month ago.

In this market, however, farmers ramped up supply to take advantage of the current price rise, which they say they have seen after several years. Total onion arrivals in Lasalgaon mandi jumped to 2,545 tonnes on August 20 from about 1,500 tonnes a month earlier.

Arrivals of early season crop are low this year from Madhya Pradesh and Karnataka, due to flood there. Also, sowing of normal variety kharif onion was delayed due to late onset of monsoon rainfalls. Apart from that, kharif crop is reported to have severely damaged in states like Maharashtra and Gujarat. All these factors are contributing to the current price rise.

Meanwhile, rising onion prices have forced market participants to seek prompt government intervention, with the measures like levy of minimum export price (MEP), duty-free import and release of buffer stock to cool down onion prices. The government had created 50,000 tonnes of buffer stock when prices were hovering at around Rs 6 a kg in June this year.

As reported here earlier, the Department of Consumer Affairs (DoCA) today did take some measures. A meeting consisting of NABARD, National Cooperative Consumers Federation (NCCF) of India and Mother Dairy’s Safal was called along with others.  It was decided that retail price of onion at Safal would be capped at Rs 23.90 per kg (for Grade A variety). This was the price prevailing at Safal outlets on August 21.

Normally, early season onion arrivals begin around this time from Madhya Pradesh and Karnataka, which contribute nearly 15 per cent of the annual supply. Harvesting of normal kharif season crop begins towards the end of October, but is expected to get delayed by three weeks this year.

The Ministry of Agriculture has estimated India’s onion output at 23.62 million tonnes, marginally higher from 23.26 million tonnes last year.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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