After tomato, surge in onion price likely: Here’s why

Traders estimate that Maharashtra farmers would have stored some 1.8 mt of onions from the last rabi crop which they sell in a staggered way.

Written by Partha Sarthi Biswas | Pune | Updated: August 4, 2017 12:33 pm
tomato price, tomato cost, onion price, indian express news Omprakash Ratanlal Raka, a Lasalgaon-based onion trader and exporter attributed the firming up of prices to drought in Karnataka which has reported 26 per cent deficient rainfall so far in the current monsoon season. (File Photo)

After tomatoes, it is onions that are threatening to turn the tide of low – actually negative — food inflation. On Thursday, the bulb was trading in Maharashtra’s Lasalgaon wholesale market at an average price of Rs 23 per kg. This was as against Rs 12.70 per kg just a day before which also saw the Reserve Bank of India cut its benchmark repo lending rate by 0.25 percentage points to 6 per cent. Like in the case of tomatoes, the spike in onion prices has been sudden.

Since February 2016, onions were selling in Lasalgaon at below Rs 10 per kg, averaging as low as Rs 4.50-5.50 only this May-June. The modal or 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.

A labourer of onion at Azadpur Sabzi mandi on Sunday. Express photo by Amit Mehra. (File)

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. The bulb was, in fact, quoting in the Delhi market at an average of only Rs 13.75 per kg today although official arrivals there were just 14,263 quintals.

Omprakash Ratanlal Raka, a Lasalgaon-based onion trader and exporter attributed the firming up of prices to 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 dip in onion acreage in the state and that is what is driving prices”, he said. In Bengaluru, too, onion prices rose from Rs 15.80 to Rs 20.20 per kg today.

“The sudden price jump is only a result of demand and supply factors. Traders expect that the demand for onions from North India will pick up once the Shravan month gets over after Raksha Bandhan which is August 7. On the other hand, with the drought in Karnataka, there isn’t going to be any immediate source of supply till about mid-September”, said Nanasaheb Patil, director of the agriculture produce market committee at Lasalgaon.

The wholesale onion prices at Vashi Agricultural Produce Market Committee(APMC) are down by 1200 rupees a quintal since Tuesday. The reason: a glut of fresh stock that’s flooded the market from China, Pakistan and Egypt. A spike in fresh supply from Karnataka has also contributed to the fall in the wholesale rates. Photo by Narendra Vaskar. 26.04.2016. Mumbai.

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

In Maharashtra, farmers also plant a late-kharif crop during September-October, which is harvested in December-January, and rabi onion that is sown in November-December and harvested over March-April. The rabi crop, which is also grown in parts of Madhya Pradesh and Gujarat, is amenable to storage. Maharashtra farmers store this crop in structures called “kanda chawl” to prevent moisture causing the bulbs to sprout or rot. The stored onions are what feed the markets right until end-August when the fresh Karnataka crop would have arrived.

Traders estimate that Maharashtra farmers would have stored some 1.8 mt 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 mt and 0.4 mt respectively. “This time, most of them made heavy losses on the stored onions, as prices ruled rock-bottom. In MP, the state government was actually forced to buy over 0.8 mt at Rs 8/kg. The farmers who hadn’t yet sold are obviously making money now”, a trader pointed out.

An old woman sits amidst sacks of onion at Okhla Mandi on Monday. Express photo by Oinam Anand.

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.

“We hope the Centre will not take steps like export ban and imposing stockholding limits, as in 2014 and 2015. High domestic prices will automatically put a brake on exports. Moreover, should not the farmer be entitled to some price increase after almost one-and-a-half years of losses?” asked Patil. 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.

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  1. B
    Bharat Maa
    Aug 4, 2017 at 12:27 pm
    GST will reduce the prices that was told by feku and team. where are the bhakts who were asking about price rice of Onion in UPA time.
    1. R
      Aug 4, 2017 at 12:21 pm
      Some people decided to give their votes to BJP and accept their slavery. They forgot too much power to one party will lead to the dictatorship and will make the any party or government arrogant will harass normal people with their ordinance and misuse of law. Keep our voting power and have a Congress as a strong opposition so they can represent us at least as an opposition. Dont forget democracy is by the people, for the people and to the people.
      1. K
        Kamal Pasha
        Aug 4, 2017 at 12:15 pm
        GST has reduced the inflation Said finance minister of India Mr. Jaitley yesterday. Will somebody check his qualificatios?
        1. T
          Tit for tat
          Aug 4, 2017 at 11:44 am
          Vegetable ders and traders are creting artificial shortage and raising prices. If we stay united and dont byuy onion and tomato what will happen in 5 days they will rot and traders will have to throw them. STAY UNITED DONT BUY LETS TEACH THEM A LESSON
          1. J
            Jai hind
            Aug 4, 2017 at 1:18 pm
            U speak asif farmers and vegetable sellers are coming from Pakistan. . haha bakth hoga Tum . Ur ignorance is indicating that .. when farmers throw rotten onion .Government is losing it. .. farmers loss is Governments loss ... There are many middle men and they are controlling the price get only some penny
          2. Damodar Biswal
            Aug 4, 2017 at 11:21 am
            We never hesitate to spend hundreds of rupees on pizza for our children.But when it comes to paying the farmers we shout at the top of our voice.Why?However,if the price rise does not help the farmers but the middlemen,then immediate steps should be taken to to check the ding.
            1. B
              Bharat Maa
              Aug 4, 2017 at 12:29 pm
              aaaauch bhakt in demage control mood, where were u with this logic when UPA time prices were rising. since when did you becme concerned about fathers. the prices are for middle man and nothing goes to farmers as you know well.
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