Onion prices pick up after a slump
Onion prices have started to increase after a slump of 18 months after the Madhya Pradesh government procured 2 lakh tonne of onions, removing excess supplies from the market.
Rise in prices is witnessed also due to damages inflicted by July rains in Gujarat and Rajasthan that has set bullish trend in onion prices. At the benchmark Lasalgaon APMC in Maharashtra, average wholesale onion prices have doubled during the past 10 days to Rs 13/kg. As onion prices have begun to increase, it will help avoid shortages of the commodity by encouraging farmers to plant more, say trade veterans.
Traders were afraid of onion farmers, especially from the non-traditional onion growing regions to shift away from the crop, leading to shortages post-Diwali due to the prolonged slump in onion prices.
However, the huge procurement by the Madhya Pradesh government and its subsequent dumping of the commodity at Rs 2/kg to Rs 3/kg in other states has reduced supplies from Madhya Pradesh, creating more demand for the available stock.
“Reduced onion supplies from Madhya Pradesh coupled with damages caused by excessive rainfall in Gujarat has led to more demand for onions from Maharashtra,” said CB Holkar, former director of National Agricultural Co-operative Marketing Federation (Nafed).
The average wholesale price of onion at Lasalgaon has increased from Rs 6.35/kg on July 18 to Rs 13/kg on July 28. Prices had been ruling below Rs 7/kg during 2016 except in January, while they were ruling below Rs 5/kg from February to June in 2017.
Onion farmers, who hope to recover losses borne for past several months, have warned against government trying to restrict the rise in prices, while traders think the present rise in prices will help in augmenting the supplies in future.
“Farmers were disenchanted with onion, not wanting to sow it. Now, good prices may help to attract them again to plant the kharif crop, thus avoiding any shortages in the future,” said Holkar.
Onion prices are expected to stay at the current levels or rise slightly more till mid-September, after which, fresh kharif harvest of onions will begin from Karnataka and Andhra Pradesh followed by Maharashtra.