Consumers are likely to get respite from high onion prices in the next two weeks following increased supply of new season crop from major producing centres in Maharashtra and Gujarat, India's two large onion producing states.
Farmers in Maharashtra's four major onion producing districts – Nashik, Ahmednagar, Pune, and Solapur – have started harvesting the bulb in small quantity, which is set to intensify in two weeks from now. Thus, the supply is likely to get a boost in the coming weeks. So far, onion supply remained lacklustre due to lower availability of the last season crop in cold storage. The delay in sowing has proportionately delayed harvesting of the crop for the current season.
Onion consumers have been at the receiving end of high prices for the past several months. Despite several efforts made by the government, onion prices remained elevated on expectations of reduced availability of the bulb for the season 2017-18.
"Farmers are looking to increase harvesting of the matured crop in a week to 10 days. Thus, a large quantity of onion supply is set to begin in two weeks. Since the onion harvested in January contains high moisture and, hence, is sold immediately after harvesting, farmers would have no choice but to sell. Consequently, onion prices are set to fall in two weeks from now," said Ajit Shah, the president of the Horticulture Exporters' Association.
The model price of onion in the benchmark Lasalgaon Agricultural Produce Market Committee (APMC), Asia's largest spot trading mandi of this commodity, jumped again to Rs 35.40 a kg on Friday after falling to Rs 25.80 a kg late last month. When the price of onions in the wholesale market was hovering around Rs 35 a kg towards the end of November, the government levied $850 a tonne of the minimum export price (MEP) to curb its exports and boost supply for local consumers. Initially, the MEP was levied till December 31, 2017, which was later extended for three weeks to January 20, 2018. Consumers continue to pay between Rs 40-55 for a kg of onion throughout most of the country.
The government's attempt yielded a positive result for about four weeks when spot wholesale price fell by December-end. However, onion prices bounced back to Rs 35 a kg in the first week of January on estimates of a fall in production this year.
According to the latest estimate from the Union Ministry of Food, India's onion output is estimated to remain this year at 21.4 million tonnes, around 4.5 per cent lower than the production reported during the last year.
The estimated fall in onion output is attributed to the substantial decline in sowing area this year. Data compiled by the Union Ministry of Agriculture showed total sowing area under onion cultivation this year at 1.19 million hectares, 8.4 per cent lower than last year.
"Onion farmers are awaiting little warm weather for soil moisture to reduce, which would be conducive for harvesting. We expect harvesting to commence in full swing in a week," said Atul Shah, the director of APMC Pimpalgaon.
According to the National Horticulture Research and Development Foundation (NHRDF), onion supply has started increasing in mandis over the past five days. The Lasalgaon mandi, for example, has received nearly 25 per cent of the December 2017 supply in just five days of January 2018. Total onion supply during December 2017 was reported at 504,271 tonnes. However, in the first five days of January 2018, total onion supply in the Lasalgaon mandi was recorded at