Peeling away the layers: Onion price at 2-year high

A steady decline in last year’s inventory has propelled onion prices to a two-year high in wholesale mandis in major producing regions in Maharashtra. 

The price increase has spilled over from Maharashtra to other states and has led to reduced consumption.

Data compiled by the Nashik-based National Horticulture Research and Development Foundation (NHRDF) showed the price of onion at Rs 28.64 a kg in Asia’s largest onion mandi in Lasalgaon on Monday, a decline from Rs 29.54 a kg on November 2. Prices here have increased by Rs 8.44 a kg, or 42 per cent, over the last month. Two months ago, onion prices were around Rs16.45 a kg, nearly half the current price, in Lasalgaon. 

The price surge was similar in major mandis in Gujarat, Delhi, and Rajasthan. This price level for onions has not been seen since October 2015.

Onion consumption has declined with retail prices of Rs 60 a kg in Mumbai and Rs 50-55 a kg in Delhi. The sharp rise in onion prices is attributed to a harvest delay in Karnataka due to unseasonal rainfall in October.

“Normally, the early Karnataka crop starts arriving in mandis in the second fortnight of October. This year, the early harvest is delayed by late sowing. Supply is not expected before early December,” said Sanjay Sanap, a wholesale onion trader in Lasalgaon.

Traders estimate only 40 per cent of the usual area was sown in Karnataka this year due to unseasonal rain, which also reduces onion productivity due to high soil moisture. Karnataka contributes nearly 15 per cent of the early onion crop. The crop in Maharashtra is delayed as well.

In Lasalgaon, onion arrivals slumped to 800 tonnes on Monday from 2,148 tonnes a month ago. In Pimpalgaon, arrivals declined to 1,500 tonnes on Monday, from 2,400 tonnes a month ago. Stockists are diverting consignments to Mumbai, where arrivals rose to 2,142 tonnes on Monday, from 1,316 tonnes a month ago.

“Onion traders are bringing their trucks to Mumbai to take advantage of the high price. Even at this price, exporters are finding parity with prices in competing countries like Pakistan. Since Kuwait has banned onion imports from Egypt, orders from the Middle East are switching to India,” said an onion exporter.

India’s onion exports during April-July jumped by 56 per cent to 1.23 million tonnes worth Rs 1,443 crore, from 788,257 tonnes valued at Rs 977.84 crore in the corresponding period a year ago.

Know your onions

• Onion consumption has declined with retail prices of Rs 60 a kg in Mumbai and Rs 50-55 a kg in Delhi
• The sharp rise in onion prices is attributed to a harvest delay in Karnataka due to unseasonal rainfall in October