Onion prices fall 10-33% on better release, MEP threat

The government’s statement that it might restore the minimum export price (MEP) of onions and excessive release by hoarders and large stockists led to a sharp fall in onion prices over the past five days.

This month, the commodity plunged about 19 per cent in the Vashi APMC (Agricultural Produce Marketing Committee) market on increased arrivals from major producers, including Pune and Gujarat. In Vashi, onion prices fell to Rs 1,700 a quintal today, against Rs 2,100 a quintal on February 1.

In the last five days, supply rose 17.57 per cent to 14,050 quintals. “Arrivals have significantly increased from all major producing centres. Delayed monsoon rainfall this season extended early sowing by 15-20 days, resulting in a similar delay in harvesting. Also, the chilling cold hampered supplies, as trucks weren’t plying towards the end of January. Consequently, supply was affected badly, with a temporary support to rising prices,” said Ashok Walunj, director, Vashi APMC market.

Due to adverse weather conditions, this year, the yield has fallen 10-15 per cent, resulting in lower income for farmers. The current prices of Rs 16-18 a kg for stockists and Rs 22-24 a kg for consumers were fair and sustainable, and this would encourage farmers to plant the crop next season as well, said Walunj. But, stockists procure onion at Rs 4-6 a kg from farmers and keep the floor price for tenders in Nashik 2.5-3 times higher. So, despite a higher payout for consumers, farmers couldn’t benefit from the price rise, said a Nashik-based trader.

In the benchmark Lasalgaon mandi in Maharashtra, Asia’s largest spot onion market, the commodity today fell 15 per cent to trade at Rs 1,575 a quintal, against Rs 1,850 a quintal on February 1. Anticipating a further decline in prices, traders even sold the commodity at Rs 1,400-1,425 a quintal.

“Many trader groups are in a hurry to get rid of the high inventory they built through the last few weeks, especially from Gujarat, the only supplier state in western India ahead of Maharashtra,” said the trader. On January 31, a panel said onion MEP would be restored if prices continued to rise. MEP was withdrawn in June 2012 to shield exporters from falling prices in the home market.