Heavy crop damage in hilly states lifts onion, potato prices

Stockists hold on to onion expecting further price rise as new crop will hit the market only in October

Onion and potato prices shot up sharply across the country, except north India, on supportive fundamentals. While the damage of potato crop in the hilly areas, especially in Uttarakhand and Himachal Pradesh, lifted traders’ sentiments, stockists held onion in anticipation of further price rise until the new season crop hits the market in October.

Data compiled by the Nashik-based National Horticulture Research & Development Foundation (NHRDF) showed that onion prices rose by up to 41 per cent in the last two weeks on reduced supply from stockists. Guwahati was the worst hit in price rise with 41 per cent, followed by Mumbai at 31.48 per cent.

Potato followed suit with prices swelling by up to 42 per cent in Hubli (Karnataka). In Kanpur, one of India’s largest producing centres, potato prices jumped a marginal 7.14 per cent in the last fortnight.

“Stockists have started releasing stocks intermittently in anticipation of lower quantity of goods in warehouses. Since stocks at 2.7 million tonnes are 5-10 per cent lower across the country, compared to the last year, stockists are making profits to the maximum extent possible,” said R P Gupta, director, NHRDF.

According to Tariq Anwar, minister of state for agriculture, onion production is estimated to remain lower by 4 per cent at 16.82 million tonnes during FY13.

This year, however, early monsoon rainfall has benefited onion sowing. Thus, overall area during the kharif sowing season is estimated to remain 15-20 per cent higher from the level of around 200,000 hectare (ha) in the previous year. Early and late kharif seasons constitute around 20 per cent each, while the remaining 60 per cent of around 1 million ha acreage is covered in rabi season.

Apparently, onion arrivals have declined steadily during the past two weeks. Plying of truck was hampered due to heavy rainfalls across the country. For potato, however, June-July is a harvesting season when crop matures in hilly areas. Because of the recent flood in Uttarakhand and Himachal Pradesh, a major portion of crop has been damaged.

“While the assessment of crop damage is yet to be done, we believe a major portion of around 20,000 ha of sowing area in Uttarakhand has been washed away due to the devastating flood,” said a senior official with a potato research firm.

Meanwhile, exports to Bangladesh have opened through the land rout. Additionally, excessive demand from north India is keeping pressure on existing stocks. Since the new crop is set to hit the market only in October, the prices of these sensitive commodities are set to remain firm.

A Mumbai-based trader does not rule out onion and potato price to hit Rs 30 a kg and Rs 20 a kg in nearby APMC mandi.