Onion prices down 40% from season's peak on govt action but supplies worsen

Cheer for consumers, grief for farmers and traders. Huge losses for stockists who booked at higher levels on hopes of further price rise

In some big respite for consumers, wholesale onion prices have declined by 40 per cent the past two weeks, due to continuous measures by the government to control hoarding and stem the unusual surge in prices ahead of festive season demand.

In the benchmark Lasalgaon Agriculture Produce Market Committee (APMC), onions prices on Friday remained unchanged from Thursday's level at Rs 27 a kg. But at that level they were by as much as 40 per cent from this season’s peak price of Rs 45 a kg scaled on September 19, though they are still much higher than Rs 13-14 a kg seen in early August.

The price decline may have brought some cheer for consumers, but farmers and some traders are at the receiving end. Stockists who have booked the vegetable at higher levels expecting prices to price further, have been hit with significant losses.

“The sharp fall in onion prices can be attributed to frequent government action, which started with the levy of the minimum export price (MEP) and was followed by the ban of exports and introduction of stock limits. Farmers are worried about these measures,” said Narendra Savaliram Wadhavane, Secretary, Lasalgaon APMC.

Surprisingly, despite the imposition of stock limits, onion arrivals fell sharply to a mere 210 tonnes on Friday, from 1,800 tonnes on September 19.

“There is very little quantity of onion left with traders, farmers and stockists from the last season,” said Wadhavane.

Onion prices have fallen by 10 per cent since the stock limit and ban on export were imposed on Sunday. They had hit Rs 45 a kg two weeks ago in the benchmark Lasalgaon mandi, which in turn led to the price rising to Rs 80 a kg in the retail market. To curb further price rise, the government imposed a minimum export price (MEP) of $850 a tonne on September 13, in order to lower exports. But, the MEP levy was insufficient to check price rise on low supplies and high demand. So, the Centre on Sunday imposed a holding limit of 100 quintals on retailers and 500 quintals on wholesale onion traders across the country.

In retail markets too, onion prices have slumped to below Rs 60 a kg, down 25 per cent.

“The price decline has benefited consumers but, hampered farmers and stockists. The sharp decline in onion prices has certainly disappointed farmers with fear of lower sowing area under onion next season,” said Sanjay Sanap, an onion wholesaler in Nashik.

Traders, meanwhile, allege that the government’s action was unwarranted as farmers need to earn some extra money from onion, an opportunity they get once in 4-5 years.

Meanwhile, the Centre has also directed states to take stringent action against illegal hoarding of the vegetable. It has also urged all states to utilise the 57,000 tonnes of onion it has stored as buffer stock. So far, the governments of Delhi, Haryana and Andhra have done so, to cool prices. The Delhi government has already started providing onion at Rs 23.9 a kg to buyers in the capital, with 5 kg limit per family.

Uttam More, a Lasalgaon based wholesaler, said, “The next season crop is estimated to hit mandis by early November. Hence, there is very little room for onion price to decline from the current level for one month. Consumers will have to bear with high onion prices for one month.”