Onion, tomato, potato prices may not spike in near term
Even as several experts are of the view that inflationary pressure, including that in food items, may again build up from October as economic activity gathers steam, one thing which could give some solace is the price movement in three key items — tomatoes, onions and potatoes — in the next few months.
Traders and market watchers said price movements in all the three items will remain within a band without any unusual spikes because of multiple reasons. A key reason for this is adequate stocks with private traders and government warehouses in case of onions and potatoes and also new crop arrivals in the coming few months.
Onion
Onion is highly volatile among the three commodities and any spike or sharp drop in its prices triggers massive reactions everywhere. Being the key staple food of millions, onion price movements have a direct bearing on the household budgets of many in the country. Onion prices in the retail markets of Delhi are around ~32-33 per kilogram, according to data sourced from the department of consumer affairs.
Trade and market experts said that in the Lasalgaon wholesale markets, onion prices are expected to be around ~16-24 pe kg till October, while in the retail markets, it is expected to be around ~20-40 per kg for the next few weeks.
According to the second advance estimate of horticulture production, onion output in 2020-21 (July to June) is expected to be 26.92 million tonnes, which is 3.18 per cent more than last year.
Traders said prices are down this year as compared to the same period last year because, unlike 2021, farmers and traders haven’t liquidated their main rabi crop in a hurry.
Surinder Budhiraja, a trader in Delhi’s Azadpur mandi, said almost 70 per cent of onions are stocked with private traders that is estimated to be around 1.4-1.5 million tonnes. Staterun Nafed has also built an onion stock of around 0.2 million tonnes. “That apart, a little over two months is left for the next new onion crop (kharif) to hit the markets. This will further pull down the prices,” Budhiraja added.
Potatoes
Just like onions, potato prices are also expected to be stable in the coming months due to excess stocks in warehouses.
“Just around 20-25 per cent of the potato crop has been sold so far while the rest is stored in warehouses. This will be sufficient to manage the next 2-3 months,” said another trader. The new potato crop will start arriving from Punjab around October 15. Up to this time, current stocks will meet the demand.
Already, fresh arrivals have started from Hasan district in Karnataka in many markets but incessant rains and floods have hampered release of some stored potatoes from warehouses, trade sources said. India’s potato output in 2020-21 is projected at 53.69 million tonnes which is 10.56 per cent more than last year.
“The retail price of potatoes in most parts of the country is expected to be in the range of ~20-40 per kg in the coming weeks,” the trader said.
Tomatoes
Tomato is the third crop, the price movement of which is keenly watched and that has a direct bearing on household budgets. In the last few weeks, till early August, tomato prices in several markets across India had risen due to drop in arrivals. The current months are usually considered lean season for tomato production in India.
According to the second advance estimate, tomato production in India is estimated at 21 million tonnes in 2020-21, which is 2.18 per cent higher than last year.