Average prices of onions unlikely to improve soon

THE REASON FOR THE CURRENT LOW PRICES IN MAHARASHTRA IS THE ARRIVAL OF FRESH HARVESTS AND SIMULTANEOUS RELEASE OF OLD STOCKS

NEW DELHI: Average prices of onions are unlikely to improve in the near-term, going by plentiful overall output in 2017-18 and decent acreage for the crop in 2018-19, an official responsible for watching onion production said, requesting anonymity.

Things can change if there’s an uptick in export prices or if weather shocks cut supplies, the official added.

This may be good news for urban consumers, but not for farmers. Growers are restive in Maharashtra and Madhya Pradesh, two major producers, where prices have slumped.

The reason for the current low prices in Maharashtra is the arrival of fresh harvests and simultaneous release of old stocks farmers were holding on to in anticipation of higher rates. The average price of onion in Maharashtra on December 4 stood at ~783 per quintal. In contrast, the average onion price in Lasalgaon, Asia’s largest wholesale onion market, near Nashik, was nearly ~1,800 on October 17. This is a drop of nearly 56%.

A larger crop in Pakistan and China, which also export onion, are weighing on Indian exports, the official cited above said.

According to the Association of Onion Exporters president Ajit Shah, Pakistani onions are going for about $170 per quintal, while Indian exporters expect at least $240 for superior quality Indian varieties. Last week, the finance ministry cleared a ~500-crore food-processing project called Operations Greens to stabilize supplies and prices of tomatoes, onions and potatoes. These items are prone to alternating seasonal spells of high inflation and low prices at least twice a year, angering consumers (when prices rise) and farmers (when the rates crash).

In November 2017, the govern- ment curbed exports when onion prices shot up. In February 2018, the government lifted these restrictions when prices began falling. The government has also extended benefits of the “Merchandise Export from India Scheme” to onion exporters to make India more competitive.

Onions, generally available round the year, are grown in three cycles. The summer or kharif crop (sown in April-june) begins hitting markets from midOctober. The late kharif crop (sown in September) fills the markets from January till March. The main winter or rabi crop (grown between October and November) reaches markets during March and April. July-october is usually a lean period, when prices rise.

Prices should stabilize within a few weeks, but this latest hiccup only aggravates a politically challenging spell of poor returns to farmers. “It is possible that traders were hoarding stocks from April on behalf of farmers, which is a common practice,” the official said. Maharashtra is the country’s largest onion grower, while India is the world’s second-largest producer.