New Delhi: Onion prices are witnessing a steep rise in retail and wholesale markets in several parts of the country with excessive monsoon rains causing crop damage in some states and affecting the quality of stored items in some others.
The early-kharif onion crop in the two southern states of Andhra Pradesh and Karnataka, which is usually supplied across the country in the July-September period, has been badly damaged due to flooding in farmlands due to incessant rains, according to traders.
Heavy rains in Gujarat, Maharashtra and Madhya Pradesh, the other major onion producing regions, have also hit the quality of onions stored from the bumper rabi harvest earlier this year, said several traders ThePrint spoke to.
As a result, the wholesale and retail onion prices have more than doubled in several markets as well as in major producing areas of the country over the last couple of weeks, shows data from the markets.
Retail prices have touched Rs 50 per kg in Mumbai and Kolkata, and Rs 60/kg in Delhi from the mid-20s range. Similarly, the wholesale rate in Nashik’s Lasalgaon, the country’s largest wholesale market of onions, has doubled to Rs 29/kg as of 8 September from Rs 12/kg on 28 August.
In Delhi’s Azadpur Mandi, the biggest vegetable and fruits market in Asia supplying Delhi and nearby states, onion prices have risen rapidly even as supply has dwindled almost 50 per cent. On 9 September, the wholesale onion price in Azadpur stood at Rs 23/kg with a supply of 628 tonnes as compared to Rs 8/kg on 27 August with a supply of 1,069 tonnes to the market.
Many traders said the prices are further expected to skyrocket to Rs 100/kg over the next month.
Also read: Agriculture can’t rescue Indian economy, it can only be a safety net
New crop expected in November
Buddhi Raja Singh, a wholesale trader of onion and garlic in Azadpur Mandi, said, “The current increase in onion prices is due to a decline in arrivals and excessive rains damaging onion crops stored across Maharashtra, Karnataka and Andhra Pradesh, three major producer states in this season.”
Singh said retail prices may touch “Rs 100/kg in October as the new crop is expected to arrive only in November”.
“At present, the onion arrivals in the market are not of top quality which is further increasing the prices to attract quality onion supply. Earlier, at least 250-300 tonnes of A-grade onion use to arrive daily in the mandi but it has declined to just 50-70 tonnes per day since late August,” added Singh.
The rise in prices is also being attributed to a disruption in the supply chain caused by the heavy August rain in wholesale markets of the major onion producing regions.
“Heavy rain in mid-August in Satara, Pune and Nashik has led to moisture damage in stored onions and as a result, their quality has deteriorated. Farmers are complaining around 35-50 per cent damage to their stored onions across Maharashtra,” said Nana Saheb Patil, director of the National Agricultural Cooperative Marketing Federation of India (NAFED) in Maharashtra.
“The early-kharif onion crop which should have arrived in markets by now has been damaged and its arrival in the market has been delayed. Presently, only farmers who have holding capacity and traders who have stocked onions are releasing them to market in a staggered manner due to which onion prices are also rising steadily,” added Patil.
NAFED has only managed to procure 45,000 metric tonnes (MT) of onions for the buffer stock against the target of 1,00,000 MT this year, as was reported in July.
The buffer stock serves the dual purpose of stabilising prices in case of an onion produce shortage as its procurement provides farmers with better prices in the event of crashing market prices due to lack of demand.
Suraj Kale, an onion commission agent in Lasalgaon wholesale market, said, “The wholesale prices have already touched Rs 30/kg and will further increase to Rs 60-70/kg in the upcoming festival season as the new crop will only arrive in market by mid-November.”
He added, “As the retail prices are usually double of the wholesale, the retail onion prices may go beyond Rs 100-110/kg in major consumption states like Delhi, Punjab,West Bengal except major production regions like Maharadshtra, Gujarat, Madhya Pradesh, Karnataka and Andhra Pradesh.”
Also read: Modi govt wants farmers to pay for groundwater but puts onus on states to get them to do it