Onion prices slump to 4-yr low

The price of onions has hit its lowest point in four years at the benchmark wholesale market at Lasalgaon in Nashik, reportedly the largest in Asia.

Bulbs of below-average quality, with high moisture content, are quoted at Rs 2 a kg and the best quality at Rs 6.70 a kg. The average is Rs 4.20 a kg, earlier seen at Lasalgaon on June 7, 2012.

In comparison, the average cost of production is Rs 5 a kg and onion of average quality was quoted at Rs 40-50 a kg across the country early this calendar year.

"We do not have any option. Lured by the price of Rs 10-12 a kg during sowing time in June, we borrowed money from a local moneylender to purchase seed and fertiliser, assuming the price would remain elevated as in past years around this time. But, the price has slumped to a level which doesn't cover the cost. Where would we arrange money to repay the loan?" said a worried Dilip Tambe at Lasalgaon.

Normally, during the festival period of September and October, the price remains elevated as harvesting of the new crop begins around Dussehra. This year, however, farmers have already started harvesting the new crop. Also, the demand in past years from Madhya Pradesh, Uttar Pradesh and Bihar isn't there, due to a bumper crop in those regions.

Maharashtra has announced a subsidy Rs 1 a kg to onion farmers but this is criticised as insufficient for even the transportation cost from the farm.

"Farmers are in deep trouble, as excessive supply will keep prices under pressure. There is no recovery in sight for them," said Atul Shah, Director of the Agricultural Produce Market Committee (APMC) at Pimpalgaon in Nashik district.

The major reason for the fall in prices is the output forecast. The third advance estimates of the Union agriculture ministry suggests 21 million tonnes, which would be a record, 11 per cent more than last year.

Traders and stockists are also hit, as they'd bought at Rs 6-7 a kg.