Wholesale onion prices surge to 8-month high of Rs 21.5 per kg at Lasalgaon

Drought in Maharashtra might reduce state's output by half

Wholesale onion prices have doubled in the past week to Rs 21.5 a kg, the highest in eight months, at the benchmark Lasalgaon mandi in the Nashik district of Maharashtra.

This is due to estimates of lower production this year, following drought in the state's major producing centres. Maharashtra contributes nearly 30 per cent of India’s overall output and Nashik district alone has around 80 per cent of the state’s production. Hence, drought in Nashik hampers the all-India trade.

On most occasions between March and October, prices moved between Rs 6 and 12 a kg. However, these suddenly shot up to Rs 18.5 a kg at Lasalgaon on Monday, after reports on drought in Maharashtra. It steadied on Tuesday, before shooting up again on Wednesday.

 

Also, arrivals had during the past three days, to a mere 500 tonnes on Wednesday at Lasalgaon. Experts say output in Maharashtra is expected to decline by half this year. Deficiency of monsoon rainfall has led to drought in 17 districts, covering 20,000 villages of the major producing pockets.

“Deficiency of monsoon rainfall has also led to reduced soil moisture, resulting in delayed crop arrival and 30-40 per cent reduction in onion size,” said Sanjay Sanap, proprietor of Shivkrupa Traders, a wholesaler at Lasalgaon.

The state faced a similar drought situation in 2016. Its impact was seen in 2017, when prices shot up to Rs 35 a kg at Lasalgaon. For retail consumers, prices had crossed Rs 60 a kg.

“Prices might touch Rs 40-45 a kg in mandis by Diwali, on low availability of last year’s stock and expected delay in harvest of the new-season crop. But, unlike past years when traders and arhatiyas (middlemen) were benefiting from the price hike, farmers will reap benefit this time with whatever quantity they are currently holding on to,” said Santosh Chavan, another onion wholesaler in Nashik.

Traders expect farmers to start harvesting premature crop, to take advantage of the current price hike. The onion harvest in India normally begins by the end of October.

“The sharp increase in prices has pushed India out of export markets. Onion from Pakistan works out cheaper by $100 a tonne in the Middle East, Sri Lanka and other destinations. Export demand has collapsed; exporters are currently executing old orders,” said Ajay Shah, president, Horticulture Exporters’ Association.

The chief minister has asked ministers to visit tehsils to assess the crop situation. According to an estimate, nearly 20,000 villages got less than 75 per cent of the expected rain this season.

India’s onion export was about 2.1 million tonnes, worth Rs 43.8 billion, in 2017-18. The previous year, it was nearly 3.5 mt, worth Rs 46.5 bn.