Onion acreage may shrink owing to weak prices

A steady fall in onion prices might divert farmers to other crops, leading to a decrease in area under the vegetable in the next sowing season. Traders and exporters say onion prices have dropped by 43 per cent since January, owing to heavy arrival coupled with huge production.

“Current price trends have demotivated farmers and it may impact sowing next season. Since we are still in the harvesting period, we cannot estimate how much area may fall under onion,” said Sanjay Singh, assistant director (horticulture), National Horticultural Research and Development Foundation (NHRDF).

According to NHRDF data, model prices of onion were ~615 a quintal in January, which have plunged to ~350 a quintal. In May 2016, the prices were ~770 a quintal. Daily arrival of onion at this time has reached to over 2,000 tonnes in Lasalgaon mandi in Maharashtra, India’s biggest onion trading market.

“Onion prices are below farmers’ expectations, and this may divert farmers to other crops. It is possible that sowing of onion in the next season may decline. However, it is too early to predict how much area will decrease. Picture will clear after the first rain and the price trend at that time,” says Ajit Shah, president of Horticulture Exporters Association. Traders say the prices may gain after mid-June as the arrival of fresh onion may decrease and demand for stocks improve. Currently, export as well as local demand is normal but, as arrival of onion is higher, prices are going down.

According to the first advance estimate for horticulture crops, onion production might fall to 19.71 million tonnes (mt) in 2016-17 as against 20.93 mt in 2015-16. Traders, however, do not agree with the government’s estimate and predict a higher output of about 21 mt.

India exported 2.72 mt onion in 2016-17, higher by 144 per cent from 1.14 mt in 2015-16.