Onion prices may soar again if procurement lags

The retail price of the kitchen essential has risen by around 20% and wholesale price by 15% in the past one month.
Image of Onions used for representational purpose only.
Image of Onions used for representational purpose only. (Photo| Arun Kumar, EPS)

NEW DELHI: Onion prices are likely to soar if government does not intervene and accelerate procurement, say experts and traders’ associations.

Lesser production of onion due to drought-like conditions in Maharashtra and slower rate of procurement by the government agencies to maintain a buffer have fuelled onion prices in the last one month.

The retail price of the kitchen essential has risen by around 20% and wholesale price by 15% in the past one month. Last year this time, the retail price was around Rs 21/kg and wholesale price at Rs 1,581.97/quintal.

Currently, the retail price in Delhi and other metro cities is ranges from Rs 35-40, which was around Rs 20-25 a month ago. Market experts say the onion price will further rise beyond Rs 50-60 as new kharif crops are expected to arrive in September and October.

Unlike last few years, the procurement of onion by the government agencies was quite less, which created positive sentiment among traders. “Lesser government procurement of onion prompted traders and farmers to stock more and sell it later when prices go up,” said Prakash Jurel, a Uttar Pradesh-based onion trader.

Moreover, the procurement price fixed by the government was around Rs 21/kg whereas wholesale market price is ranging around Rs 25-30. This made farmers to stockpile onion for longer rather than bring it to the market for a better price.

“It would be better if the government increases the procurement price to motivate farmers to bring their onions to procurement centres. This will help in controlling retail price as well as adding to the government’s buffer stock,” said Yogesh Thorat, chairman of Maha FPC, a Maharashtra-based consortium of farmer producer companies.

Maharashtra is the largest producer, producing over 42% of the country’s onion. Other major producers of onion are Madhya Pradesh, Karnataka, Gujarat and Rajasthan.

Additionally, this year the production of onion has reduced by 15-20% due to drought-like conditions in the onion-producing region of Maharashtra. Data shows that 27 districts of Maharashtra experienced deficient rainfall ranging from -20% to -45%.

Maharashtra experienced severe heatwave conditions which prevailed for a long time. Temperatures soared in May and June ranging from 44-48 °C over Central India, which constitutes the onion-growing region.

Longer spell of heatwave conditions has also impacted the quality of onions. “Extreme heatwaves have spoiled the onion kept in stock either in farmers’ homes or godowns in Aurangabad, Solapur and Ahmad Nagar,” said Eknath Sanap, an Aurangabd-based onion farmer.

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