Onion prices unlikely to bring relief anytime soon
Centre issues warning, says will impose stock limits
Consumers will have to live with high onion prices for the time being. This is because of low availability in the market.
Several measures by the government have, so far, not yielded the desired results.
On Tuesday, Union Minister for Food and Consumer Affairs Ram Vilas Paswan had threatened to take action to impose stock limit on onions.
The series of measures in phases in the last 10 days by the central government follows a sharp i ncrease i n prices in the past one month from ~13 a kg in the beginning of August to ~40 now in the largest onion mandi of Lasalgaon in Maharashtra. This price has touched a three-year high. Maharashtra produces one-third of the country’s onions.
On Tuesday, Paswan had said: “There is sufficient stock of onion in Maharashtra to meet the current demand. However, supplies are seemingly being restrained to increase prices. The government is taking all measures to improve these supplies from the central buffer to mitigate any such shortfall in the availability. It will also consider imposing stock limit if prices do not moderate on account of speculative behaviour of traders.” This follows several measures to restrict exports and release buffer stock, among others.
The Centre also said on Tuesday: “The reported export below the minimum export price to Bangladesh and Sri Lanka will be immediately stopped and strict action will be initiated against those who are found to be violating this decision of the government.”
Experts, however, don’t see prices coming down any time soon despite the action. A senior government official said that, ahead of the rabi season sowing , prices of onion i n January fell to ~5 and below. This has resulted in some farmers shifting to other crops. But more importantly, this season, late rains followed by heavy showers in Maharashtra and Karnataka (which together produce half of the country’s onions) led to crop damage.
Karnataka’s crop arrives early in August and September which feeds Maharashtra till the local crop starts coming in OctoberNovember. However, heavy rain resulted in supplies getting damaged, causing prices to spiral, according to official quoted earlier.
A trader said that some farmers and traders have stored onion and are releasing it slowly in the market. This is because they had incurred losses due to sharp Modal price (~/qtl) fall in prices. The country produces close to 23 million tonnes of onion.
Owing to the high prices this season, which is ~60 per kg in the Mumbai market, consumption has been impacted with several restaurants reducing or stopping to serve onion.
Globally, “countries like China, Egypt, Turkey and Russia have enough onions and Indian traders can import and sell around ~35 per kg. However, these traders are worried that if any procedural issues hold up clearance of their imported onions in customs like in 2017, then they may end up incurring losses,” said Ajit Shah, president, Horticulture Exporters Association.