Onion prices to cool down in two weeks

Farmers await warm weather for harvesting, supply to increase by third week of Jan

Consumers are likely to get some respite from high onion prices in the next two weeks following increased supply of the new season crop from major producing centres in Maharashtra and Gujarat, India’s two large onion producing states.

Farmers in Maharashtra’s four major onion producing districts, Nashik, Ahmednagar, Pune and Solapur, have started harvesting the bulb in small quantities and this is set to intensify in two weeks from now. Thus, supply is likely to receive a boost in the coming weeks. Onion supply has remained muted due to lower availability of the last season’s crop in cold storages. The delay in sowing has proportionately delayed harvesting of the crop for the current season. Onion consumers have been at the receiving end for several months due to high prices. Despite several efforts made by the government, onion prices remained elevated on expectations of reduced availability of the bulb in the 2017-18 season.

“Farmers are looking at increasing harvesting of the matured crop in a week to 10 days. Thus, copious onion supplies are set to begin in two weeks. Since the onion harvested in January contains high moisture and is sold immediately after harvesting, farmers will have no choice but to sell. Consequently onion prices are set to fall in two weeks from now,” said Ajit Shah, president, Horticulture Exporters’ Association.

The modal price of onion in the benchmark Lasalgaon Agricultural Produce Market Committee (APMC), Asia’s largest spot trading mandifor this commodity, jumped to ~35.40 a kg on Friday after falling to ~25.80 a kg late last month. On Monday, however, the modal price of onion was recorded at ~33 a kg.

When onion price in the wholesale market was hovering around ~35 a kg towards the end of November, the government levied an $850 a tonne minimum export price (MEP) to curb onion exports and boost supply for local consumers. Initially, the MEP was levied till December 31, 2017, which was later extended till January 20, 2018. Consumers continue to pay ~40-55 for a kg of onion almost throughout India. The government’s attempt yielded positive results for about four weeks when spot onion wholesale price fell by December-end. But, prices bounced back again to ~35 a kg in the first week of January on estimates of a fall in production this year.

According to the latest estimate from the Union ministry of food, India’s onion output is estimated to remain at 21.4 million tonnes this year, around 4.5 per cent lower than production reported last year.

The estimated fall in onion output is attributed to the substantial decline in sowing area this year. Data compiled by the Union ministry of agriculture showed the total area under onion this year at 1.19 million hectares, 8.4 per cent lower than last year. “Onion farmers are awaiting warm weather for soil moisture to reduce. We expect harvesting to commence in full swing in a week,” said Atul Shah, director, APMC, Pimpalgaon. According to the National Horticulture Research and Development Foundation (NHRDF), onion supply has started increasing in mandis over the last five days. The Lasalgaon mandi, for example, has received nearly 25 per cent of the December supply in just five days of January. Onion supply during December was reported at 504,271 tonnes.