Onion prices soar, to remain high till October

New Delhi/Mumbai, Aug 2

Unseasonal rains, lower production and resultant shortages have lead to spiralling onion prices, with traders expecting the cost of the bulb to remain high until 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, said

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 said.

Large quantities of onion are sourced from Lasalgaon and Pimpalgaon villages in Nashik district.

Maharashtra alone contributes to 40 per cent of the national onion basket — the bulbs account for the largest crop production in the state.

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 (100 kg) 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.

Karnataka, the second largest producer, also saw onion prices double — from Rs 50–55 from Rs 25–30 a kg — in the past 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 said.

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.

Spiralling prices of onion leave Delhiites in tears

The soaring price of onions seems to have hit hard everyone in Delhi, where the price has simply doubled in retail markets.

"Sir, you can take a samosa for free but please don't ask for onion salad," Ramanand, who runs a roadside eatery in Jungpura in south Delhi, tells customers.

To those who are surprised at the offer, Ramanand explains his logic: "Sir, onions used to cost Rs 20–25 a kilo until last week. Today, I bought it for Rs 50, which makes it difficult to give it away as salad."

Onion prices have recorded as much as a 50 percent surge in wholesale markets compared to the rates in early July, according to the Delhi Agricultural Marketing Board.

"There is a real shortage due to crop damage in the last rabi season following unseasonal rain and hail in April-May, the crop maturing time," said Ajit Shah, president of the Horticulture Exporters Association.

According to the marketing board, onion rates as on July 31 were Rs 1,125–3,250 per quintal against Rs.750-2, 063 per quintal on July 2 in Delhi's wholesale market at Azadpur Mandi.

Delhiites are naturally not happy.

"Rising prices are a matter of serious concern for us. It takes a toll on the monthly budget," Nishita Mishra, 27, a human resource professional with a private company, said.

"We have cut down on our onion usage. While we are still using it for cooking, which is practically impossible without onions, we have started taking tomatoes and other vegetables in salad," she added.

Shubhra, 19, a Delhi University student, said the prices had affected her "directly and indirectly".

"I have bought a kilo of onions for Rs 55, which cost Rs 30 last week. It burns a hole in my monthly spending, ultimately leaving less for me to spend as my pocket money," a visibly upset Shubhra said.

Traders say Delhiites cannot expect to get relief anytime soon.

Asked about the steps being taken to check the rising prices, officials at the Delhi Agricultural marketing Board declined to comment. — IANS