Storage could check onion prices: Ramesh Chand

NITI Aayog member and agricultural economist Ramesh Chand has suggested using mechanisms like enhanced storage and promotion of cultivation to check volatility in onion prices.

Chand said the primary trigger for an abnormal rise in prices was the production shock generally caused by weather events. He said studies showed that this was worsened by stocking and market manipulation.

He suggested promoting onion cultivation in states like Uttar Pradesh and popularising production in the kharif season as well.

Retail prices of onions had shot up to Rs 80 per kilogramme (kg) in August, due to supply crunch. The rates have declined to Rs 40 to 50 a kg, after government measures, including a curb on exports. "Price spikes are seen almost every third year despite impressive growth in production," he said.

The country experienced an annual growth rate of above 13 per cent in onion production during the last 13 years since 2000-01, which has not been matched by any other food crop in recent times.

However, domestic and overseas demand for onion seems to be outpacing growth in supply. Per capita availability of onion has risen to more than 13 kg in recent years from 4 kg in 2002-03, an increase of 12 per cent every year.

"It looks strange that increased availability is associated with increase in price volatility rather than providing flexibility to absorb small shocks in supply," he added.

Meanwhile, in a related development, state-owned MMTC today invited bids from local players for sale of 1,000 tonnes of imported onions in the domestic market.

According to the tender, MMTC is offering 500 tonnes each of imported onions of Chinese and Egyptian origin for sale in the domestic market. Bids should be submitted by October 21 and remain valid up to October 26.