December 5, 2020

4 reasons why onion prices surged sharply across India

4 reasons why onion prices surged sharply across India

BY Administrator_ India

Capital Sands

For the second consecutive year, onion prices have begun to surge at retail outlets across the country. In cities such as Mumbai and Pune, retail prices have zoomed to Rs 100 a kg.

According to the Ministry of Consumer Affairs, the average retail price of onion in the country was Rs 55.60 a kg. In Delhi, prices are ruling at Rs 50 a kg. This means that prices in other parts of the country are not ruling as high as Mumbai and Pune.

On October 22, modal prices or rates at which most trades take place for onion were Rs 6,200 a quintal against Rs 5,800 a quintal a day before. This can easily translate to over Rs 75 a kg and higher at retail outlets in most parts of the country.

A Press Information Bureau (PIB) statement said the prices increased 12.61 percent from a year ago (as on October 20). A surge in onion prices makes headlines across the country since it is one of the most used vegetables in the country.

“Rains affected crops in onion growing regions of states such as Maharashtra, Gujarat, Andhra Pradesh, Karnataka, and Madhya Pradesh. The rains have hit the kharif and late kharif onion crops,” he said.

The onion crop was affected by Anthronose and Twister bacteria, whose growth were aided by rain, humidity and temperature, he said. “The problem has been compounded as 70 percent of the kharif onion crop has been affected by heavy rains. Even the late kharif crop in Maharashtra and Gujarat have been affected by rains,” Dr Gupta said, adding that 35 percent of the rabi onion that was stored had rotted.

Data show that arrivals are higher this year compared with last year, but since most onions are of poor quality, prices have surged. Muthyala said current arrivals of onions in the Nashik market, which sets the price trend for the rest of the country, were about 60 tractors a day against the usual 600.

Muthalya said some farmers had formed a group on social media and were deciding on when to take their produce to the markets. “This is also affecting arrivals,” he said.

The Union government has created onion buffer stocks, but Prakash wonders what a meagre quantity of less than one lakh tonne can do. “Tamil Nadu alone requires 2,000 tonne of onions a day. So, you can imagine all-India demand. But I must admit the Centre has been prudently releasing buffer stocks,” he said.

The fourth aspect for the surge in prices, according to an MCX study, is ‘volatility premium’ due to the anticipated shortage of the commodity. This is one reason why prices almost double at the retail end from the Agricultural Produce Marketing Committee (APMC) markets.

Prices and premium surge alarmingly when there is a lack of substitute for these products. Onion is witnessing such a phenomenon, according to agricultural economists. But Gupta expressed hope that the surge will be reined in quickly since the Centre is taking various steps, especially allowing imports from countries such as Egypt.