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Onion price at nine-month high, traders say no relief expected in the short term

On Tuesday, the average traded price of the bulb at Lasalgaon’s wholesale market, in Nashik district’s Niphad taluka, was Rs 1,800 per quintal, a nearly 125 per cent jump from the Rs 840 per quintal price at which onion was traded on October 8.

Onion is currently trading at Rs 18 per kg in Nashik. Express Photo

After trading below the Rs 10 per kg mark for more than nine months, onion prices in the state have more than doubled in a few days. On October 8, onions were trading at 8.40 per kg, but the price has jumped to Rs 18 per kg by Tuesday. On Tuesday, the average traded price of the bulb at Lasalgaon’s wholesale market, in Nashik district’s Niphad taluka, was Rs 1,800 per quintal, a nearly 125 per cent jump from the Rs 840 per quintal price at which onion was traded on October 8. The price of onions is expected to rise further in the coming days, as moisture stress — caused by shortage of water for the crop — is set to reduce the yield of the bulb.

In Maharashtra, farmers plant kharif onions during June and July, just after the arrival of the southwest monsoon, and harvest these in the end of September. They also sow a late-kharif crop during September and October, and harvest it in December and January. This is followed by rabi onions that are planted in November and December, and harvested over March and April.
The rabi crop is also cultivated in parts of Madhya Pradesh and Gujarat, and it is easy to store. The supply of these onions keeps the trade in wholesale markets going till the end of August.

Since August this year, onion prices have remained below the Rs 1,000 per quintal, a significant decline from the Rs 3,000-per quintal mark it was being sold at in early January. A shortage of the bulb, caused by a drought in Karnataka, had pushed up the price since last year. Higher prices had encouraged farmers to increase the rabi sowing area to over 3.5 lakh hectares and bumper crop had flooded the markets. Prices at Lasalgaon’s markets had started dipping from February, with the average traded price falling below the Rs 600 per quintal mark after March.

To cub distress sale of onions, the government had reduced the Minimum Export Price on the commodity in February, to help farmers export it. A 5 per export incentive was also announced for the bulb in March, which had kept the prices in the Rs 600-800 per quintal range. With Nashik and its neighbouring areas facing another dry spell — they received only 63 per cent of normal rainfall during monsoon — and talks of a lower supply of kharif crop, prices have again started rising. Between October 1 to October 16, the average traded price has more than doubled, amid apprehensions of a shortage due to moisture stress. Sohanlal Bhandari, president of the onion traders’ association of Nashik, said, “At present, the supply of onions to the market is from the stored rabi crop, which the farmers had harvested in March. The kharif crop is supposed to hit the market after Diwali, but there is talk of around 25 per cent reduction in yield,” he said.

Meanwhile, onion prices are expected to keep increasing till the kharif crop hits the market, said Bhandari. “Even later, with arrival of lesser stock, prices may continue to remain high,” he said. As Nashik and surrounding regions grapple with a water crisis, the resultant moisture stress is likely to hit the rabi onion crop as well.