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Onion hits 8-month high on supply disruptions, low arrivals

Traders say prices will remain elevated due to increased demand, lower availability

Dilip Kumar Jha  |  Mumbai 


prices saw a remarkable jump, hitting an eight-month high on account of a sharp increase in by stockists in both, domestic and overseas markets amid reports of low arrivals in the country’s major mandis.

Data compiled by the National Horticultural Research & Development Foundation (NHRDF) showed that the model price of in Maharashtra’s mandi almost doubled to Rs 8.70 per kg, from its earlier low of Rs 4.50 per kg.

Prices of agricultural commodities usually increase around this time on account of disruptions due to rain and a sudden spurt in from stockists, ahead of a including Diwali and Dussehra celebrations. 

Two years ago, prices had hit the record high of Rs 80 a kg in the wholesale market, while rates had gone up to Rs 100 a kg in retail markets. The spike in prices prompted the government to allocate Rs 500 crore for the creation a buffer stock. Consequently, government agencies like the Small Farmers' Agribusiness Consortium (SFAC) and the National Agricultural Cooperative Marketing Federation of (Nafed) accumulatively procured nearly 30,000 tonnes of during the last season.

"The buffer stock of is generally created during the April-May period every year. However, the central government refrained from creating a buffer stock for this season due to a bumper production. Even private traders did not stock up as much as they do every year since expectations were of low prices. Due to an existing lack of a buffer stock, the government is unable to intervene and stabilise market prices, even as has started to decline in major markets across the nation," said Rajiv Tevtiya, Managing Director, RML AgTech, a city based farm advisory company.

Onion hits 8-month high on supply disruptions, low arrivals

"Last year's stock in Madhya Pradesh has been exhausted. So, there is a pressure on Maharashtra from all across the country including West Bengal, Assam, Bihar and Uttar Pradesh, among others. Regular from Delhi and other regions continue with the spurring further," said Atul Shah, Director, Pimpalgaon Agricultural Produce Market Committee (APMC).

In terms of supply, arrivals in the benchmark mandi declined to 1,200 tonnes on Monday, after hitting a record high of 2,917 tonnes in early June, this year. On Tuesday, arrivals stood at 14,000 tonnes.

Lower storage by large stockists across the country contributed to the decline in supplies further. stocks witnessed a decline on account of a lower output of 19.71 million tonnes in 2016-17, marking a decline of 6 per cent over last year’s output of 20.93 million tonnes.

"Sowing scenario for the current year appears to be grim. are unwilling to sow and re-plant pods in the field due to lower realisation throughout this year. During the early harvesting period in the rabi season, released the entire quantity of their produce, thereby reducing prices by Rs 1-2 a kg. Around half of quantity stored in cold storages got spoiled due to a weak infrastructure,” said Sanjay Swarup, who is the owner of Shivkrupa- an wholesaler in Nashik.  

He added that suffered a major loss this year as prices remained below the estimated cost of production of Rs 5 a kg. As a result of this, sowing area under was less this year. Swarup also rued the fact that the government was not willing to pay adequately to domestic farmers, while it was ready to encourage and pay higher to overseas

First Published: Wed, July 26 2017. 01:22 IST