Onion price dips on MEP, import

Rise in arrivals eases shortage; with new crop expected in weeks at yards, govt says export ban not needed

The government on Monday said a firm ‘No’ to a ban on export of onions, as prices have started softening in the wholesale markets.

According to Union consumer affairs secretary Pankaj Agarwal, prices in the wholesale markets of Lasalgaon and Pimpalgaon in Maharashtra’s Nashik district (the state is the largest producer and these are key markets), have started falling. “In any case, there are no exports happening,” he added.

To control rising prices, the government had earlier imposed a minimum export price of $650 a tonne and had directed cooperative major Nafed to import more onions. India had exported 511,616 tonnes, amounting to Rs 776 crore, in the first quarter of 2013-14 against 517,274 tonnes in the same period a year before.

As the rains pause and arrivals improve at the markets, prices have started cooling. The price at Lasalgaon (Asia’s largest market) is Rs 3,300-3,500 a quintal as against Rs 4,700-4,900 a qtl five days earlier. “Arrivals have improved from 4,580 qtls a week before to around 9,000 qtls now. Also, owing to high prices, buying was less. So, higher availability and lower demand has brought down the prices,” said a trader at Nashik.

In most other wholesale markets, prices continue to remain above Rs 4,000-4,100 a qtl. However, sources at the Nashik market say most others take price guidance from Lasalgaon. Hence, a fall is likely at other places in a day.

In percentage terms, prices have corrected by 32 per cent from its peak levels a week before.

Earlier on Monday, consumer affairs minister K V Thomas met agriculture minister Sharad Pawar and reviewed the price situation in onions. Asked when onion prices would cool, Pawar said,” I don’t know about prices but I know about the crop condition. The crop in Nashik has been affected due to drought. As on today, the overall crop condition is good.”

Insiders maintained that fresh arrivals had started from Andhra Pradesh. But full-fledged arrivals would begin from mid-September, when Maharashtra and Karnataka’s farmers bring their crop to the market.

In Lasalgaon around 9,000 tonnes of onions arrived on Monday; in Pipalgaon, 12,000 tonnes. Arrivals are expected any time from Maharashtra, Tamil Nadu, Madhya Pradesh and Rajasthan but “these states are facing logistics problem due to rain”, Pawar told reporters on the sidelines of an event.

“This is a cyclical phenomenon of onion prices, mainly during the transition period between two seasons. This year, due to lesser carryover stock, prices had turned fiery,” said a source at the National Horticulture Research and Development Federation.

At Ahmedabad’s Chimanbhai Patel APMC, prices were Rs 3,200-3,300 a qtl in the afternoon on Monday.

Sources say the 2012-13 market year saw sowing at its lowest in three years, with the crop being five per cent less than the previous year.

“Last year’s carryover stock was sold out due to rains in Maharashtra. So, there is a shortage in the market till at least the fresh arrivals, which might start latest by the second week of next month,” said Ashok Walunj, director of the Vashi wholesale market at Navi Mumbai.

To control rising prices, the government had imposed a minimum export price (MEP) of $650 per tonne and had directed cooperative major NAFED to import onions.

India has exported 5,11,616 tonnes of onion amounting to Rs 776.47 crore in the first quarter of this fiscal against 5,17,274 tonnes in the year-ago period, as per official data.

According to the Nashik-based National Horticultural Research and Development Foundation (NHRDF), the area under onion crop is down by 10% from 10.87 lakh hectares this year.