On the rise again: Onion prices threaten to skyrocket

Come October-November, onion prices may skyrocket, like they did last year and around the same time in many of the previous years, exposing the absence of a policy paradigm to ensure price stability of India’s staple vegetable, despite it being a political hot potato.

Already, wholesale onion prices have nearly doubled within a span of 10 days at Lasalgaon, the country’s largest wholesale market for the bulb. Retail prices have touched `50 per kg in Mumbai and Pune, and even `70 per kg in Delhi. Yet ironically, farmers are complaining as large-scale crop damage has dented their profitability.

The current upward trend in prices is due to a decline in arrivals and excessive rains damaging onion crop stored across Maharashtra, Karnataka and Andhra Pradesh, three major producer states.

As retail prices of onion touched `50-60 per kg in October last year, the government imposed minimum export price, put stocking limits on wholesalers and retailers and banned export. However, these steps yielded little and the retail prices went up to even the `100-120 per kg range in many places, including Delhi, by December-January. Now that the Essential Commodities Act has been amended via an Ordinance, removing onion from the Act’s purview along with other food stuff, the government no longer has the option of imposing stock limits.

On Friday, onion prices at Lasalgaon touched a minimum of Rs 1,000 a quintal and a maximum of Rs 2,411 per quintal with modal price at Rs 2,000 per quintal. Prices were similar on Thursday at the Mandi. Last week, arrivals dipped to 7,800 quintals per day from a level of 15,000 quintals per day a week before, with average price at Rs 1,640 per quintal and a week before, average price was at Rs 750 per quintal.

With the fresh crop expected to hit the markets only in mid-October, consumers may have to put up with high prices, Bharat Dighole, president, Maharashtra State Onion Growers’ Association, said. “Farmers are getting good prices for the first time this season. Any attempts made by the government to bring down prices will be met with resistance,” he said. “The cost for growing onions is around Rs 900 per quintal. Farmers incur losses if the product fetches anything below this. Farmers have incurred heavy losses in the last four months due to the lockdown as they sold 70% of the produce in the price range of Rs 400-700 per quintal,” he said.

According to market sources, onion supplies in the market at present are of summer variety, harvested in March and April and stored by farmers. “Around 30-40% of the stored produce has already rotted. Hence, we want the Centre and the state government to take measures to give relief to onion farmers and compensate them for the produce sold in the lockdown period,” Dighole said. Even at the current prices of Rs 2,000 per quintal, farmers are not making profits since most of their produce has been spoiled, he said. Dighole’s association has been visiting farmer sites across Nashik — Maharashtra’s biggest onion belt to assess damage to the stored onion.

Experts like agriculture economist Ashol Gulati have written against kneejerk policy response to the high volatility in onion prices. Rather than sudden export bans, the government must keep imports open, scale up storage facilities for rabi crop and promote use of dehydrated onions that has longer shelf life, Gulati said.

Suvarna Jagtap, chairperson, Lasalgaon Agriculture Produce Market Committee (APMC), said prices have gone up due to a decline in supplies. “This time of the year, onion crops from Karnataka and Andhra usually hit the markets and these are nearly 70% of the total arrivals. But the excessive rains in these states have affected supplies putting pressure on stocks in Maharashtra. Farmers in the state usually store the summer onions for a period of five to six months to feed the market until October-November. But the summer onion stored in onion chawls has rotted because of excess moisture. Around 35-40% of the onion stocks with farmers are rotted,” Jagtap said. She added that around 50% of the farmers do not have proper storage facilities and store their onion in open spaces.

The unseasonal rains in March and April this year with hailstorms caused rotting in storage. At present, the onion arrivals in the market are not of top quality but are commanding good prices due to the decline in arrivals.

Jaydutta Holkar, former chairman, Lasalgaon APMC, agreed and said the climate has not been conducive throughout the year for onions. There was an extended monsoon last year which led to late sowing in December and this was followed by unseasonal rains in March and April, which led to rotting. The early kharif planting (Rangda onion variety) was also hit due to excess rains to the tune of 40% and kharif planting is still in progress. This means the new onion may enter markets by late November or early December, market committee officials said, adding that this could lead to a panic situation.

Meanwhile, the National Agricultural Marketing Federation of India (Nafed) has procured around 86,000 tonnes of onions from Maharashtra from farmers at the prevailing market rates. The onion stocks have been procured for creating a buffer stock for the government.