Onion prices fall on low demand

Govt's decision to bring onions under Essential Commodities Act forced stockists to release additional quantities into market

Onion prices fell in the benchmark Lasalgaon mandi in Maharashtra, owing to low export and local demand ahead of the festive season. Also, the government’s decision to bring onions under the Essential Commodities Act forced stockists to release additional quantities into the market in a staggered manner, resulting in oversupply at major mandis.

So far this month, onion prices have fallen 11 per cent; now, the commodity is being traded at Rs 14 a kg in the Lasalgaon spot market, Asia’s largest mandi for onions. In June, prices stood at Rs 14 a kg, before rising to Rs 21 a kg in August.

The rise in arrivals at the Bangalore mandi led to pressure on traders to sell at prices quoted by purchasers.

Consequently, prices at that mandi fell about 36 per cent in the first nine days of September to below Rs 14 a kg. At other trade centres, prices fell five-seven per cent, depending upon the proximity to producing centres.

“Though planting of the kharif crop, which accounts for about 20 per cent of India’s annual onion production, started about a month late this season due to delay in the monsoon, production is estimated at normal levels. Additionally, there has been less demand from local markets, as all consumer states built some inventory amid expectations of an abnormal price rise like last year (in 2013, the retail price shot up to Rs 100 a kg),” said R P Gupta, director, National Horticultural Research and Development Foundation.

To keep prices in check, the government had allowed import of onions. To discourage exports, it had levied a minimum export price of $300 a tonne in June. In July, this was raised to $500 a tonne; the rise was rolled back after a month.

“There is no export demand  due to frequent changes in the government’s policy. We have lost the foreign market completely. Developing an export market in case of surplus supplies will be a Herculean task for us,” said Ajit Shah, president, Horticulture Exporters’ Association.

Gupta says despite delay in the monsoon, both kharif and late-kharif sowing have been normal this year.

With adequate soil moisture due to late rains, rabi sowing is also expected to remain normal. Onion production in the country, it is expected, will stand at last year’s  of 19 million tonnes.