Onion wholesale prices at season's highest as farmers delay harvest

After moderating on pick-up in the arrivals of the pre-matured variety, onion’s wholesale price bounced back and hit the highest for this season — Rs 86 a kg —  on Monday over controlled supply from farmers.

After reaching Rs 75 a kg (model price at the benchmark Lasalgaon Agricultural Produce Market Committee or APMC) on December 3, the price of onion slumped to trade at Rs 47 a kg on December 9 because of increased supply of the pre-matured crop. The price of onion, however, jumped again to reach Rs 73 a kg on December 13 and it further rose to Rs 86 a kg on Monday. The mandi remained closed on Saturday and Sunday.

In retail, onion is selling at Rs 120-140 a kg across the country. The wholesale price jump will reflect in the retail price in a week.

Changing their strategy, farmers have slowed harvesting of red onion in order to fetch higher prices for a longer duration. Since the government has imposed stock limits for stockists and retailers, farmers reduced supply to stretch the harvesting season until the late kharif season crop hits mandis.

“There has been a sharp decline in onion arrivals at the Lasalgaon mandi. On the other hand, demand pressure has come from across the country, pushing the onion price to a record high,” said, Narendra Wadhwane, secretary, APMC, Lasalgaon.

Total onion arrivals in Lasalgaon mandi were reported at a mere 450 tonnes on Monday, compared to 1,215 tonnes on Friday. On December 3, onion arrivals in the Lasalgaon APMC were reported at 460 tonnes.

“Farmers are aware of around 30 per cent crop damage across Maharashtra, the key onion producing state in India. Hence, they have slowed harvesting of red onion. Since, the harvested onion spoils in two days because of high moisture content, it cannot be stored for a longer period (onions are usually dried first before being sent to the market). Besides the imposition of stock limits by the government has forced farmers and stockists to sell their produce immediately. Hence, farmers have slowed onion harvesting to control supply,” said Ashish Dabhale, a Niphad (Lasalgaon)-based trader.

The government, in November, levied stock limits of 50 tonnes and 10 tonnes for wholesalers and retailers, respectively, which were further reduced to 25 tonnes and 5 tonnes. The Union Ministry of Consumer Affairs on December 10 reduced the stock limit for retailers further to 2 tonnes. The ministry has asked the state government and the district administration to carry out anti-hoarding operations immediately.

“The government can place stock limits for farmers, stockists, and retailers, but certainly not for the underground crop. Since farmers need to sell their inventory immediately, the government should withdraw stock limit,” said Raghunath Sawant, a farmer.

The early variety of red onion needs to dry in the sun for at least two-three days to reduce moisture content. Since the stock limit is very low, the trader either needs to stop trading in mandis which may lead to distress sell from farmers, or sell their inventory immediately, which would result in high spoilage.