Onion set to remain dear

Supply disrupted due to transportation problems; prices double in last 1 month.

Onion prices will remain high for some more time on inadequate supply in major mandis across the country, following unseasonal rainfall.

Early crops, harvested in major centres of Karnataka and Nasik and stored in open plinths, were severely damaged following tow days of unseasonal rains. Subsequently, high moisture content in the new crop went up further resulting into massive spoilage.

“New crop stored and sold today in mandis cannot be transported to far off places due to high moisture content. Apparently, markets do not absorb large quantities in one or two days. Therefore, the quantity of onion available today in mandis is bound to spoil after two days,” said Nitin Parakh, proprietor of Vashi-based Hari Om Traders.

Since, supply has also been disrupted due to problems in transporting from major producing centres, a vacuum is likely to be created in the market in the next couple of days resulting into further price spike, he added.

Prices of both the old and new crop have doubled in the last one month, despite the government’s intervention through a rise in the minimum export price (MEP) recently. With only 5-8 per cent stock available, the old stock is quoted between Rs 33-38 a kg. This would translate into consumers paying up to Rs 44-45 to procure a kg of onion.

The commodity that brought down the Bharatiya Janta Party-led National Democratic Alliance government earlier this decade, is currently trading between Rs 10-25 a kg for the new crop depending on the quality. The new crop with high moisture content is selling at Rs 10 per kg, while onion with low water content is priced at Rs 25 a kg in the Vashi wholesale market.

Four days of continuous rainfall damaged the crop in Karnataka and Nasik, the two major producing centres of early variety onion. About 60 per cent of the harvested quantity was damaged, especially in Kurnool and neighbouring districts of Karnataka.

The next crop is expected from Gujarat. If the sun shines bright, then the movement of onion will ease out. But, consumers are not going to get relief from high prices until the last week of December, said a Mumbai-based onion trader.

Export demand is still bullish especially from Colombo and the Middle East, as Pakistan has lost the markets due to unavailability of crop. The onion crop in Pakistan was washed away this season following devastating floods. As a result, global buyers are rushing towards Indian markets. But the demand is very low at the current price between $900-950 a tonne for Colombo and $1,000 a tonne for the Middle East.

About a week ago, the government had raised the minimum export price of onion by $150 a tonne to $525 a tonne from $375 a tonne earlier. However, the move failed to make any significant shift in price sentiment in the market.