Onion prices remain stable in season of spike

Written by Sandip Das | New Delhi | Updated: Oct 22 2014, 10:40am hrs
The government's decision to import onion for augmenting domestic supplies and putting the key commodity under the Essential Commodities Act has prevented the huge spike in retail prices usually witnessed during September- October in the last few years.

Due to supply constraints, retail onion prices have risen to as high as R80 per kg in many cities during September-October. But this year, the retail prices have been ruling around R30-35 a kg across key cities.

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Wholesale price at Nashik, the hub of onion trade, has been around R1,300-1,400 per quintal, which is far lower than R2,400 per quintal reported a year back.

Traders said that as the kharif crop from Maharashtra is expected to arrive in the market in the next couple of weeks, retail onions prices are expected to fall sharply in a month.

In July, anticipating a spike in onion prices, the Cabinet Committee on Economic Affairs (CCEA) approved the inclusion of onion in stockholding limits under the Essential Commodities Act 1955. The inclusion is in force for a year.

The cabinet took the decision to bring onion under the purview of the Act after a decade, following requests from states such as Delhi, Chhattisgarh, Madhya Pradesh, Mizoram, Tripura and West Bengal. Subsequently the government has imported around 3 lakh tonne of onion from Egypt and Aghanisatan in the last few weeks.

The government's step to put onion under the Essential Commodities Act for curbing hoarding and timely imports resulted in improvement in supplies, thus stabling prices, an official with the consumer affairs ministry told FE.

With the prices stable, the cabinet recently decided to slash the minimum export price (MEP) to $350 per tonne from $500 per tonne imposed in July.

The government had decided to import a small quantity of onion because due to delay in monsoon arrival in key growing areas of Maharashtra, Rajasthan and Madhya Pradesh this year, kharif arrivals have been delayed by at least a month, thus pushing up prices in the later part of October.

The official said the period between July and September is sensitive, in which prices rise as demand is met through stored crops from summer output. The country exported 1.3 million tonne of onion in 2013-14 from the total output of 19.7 million tonne. Domestic onion demand during the lean period from June to November is met through stored rabi (winter) and fresh kharif (summer) produce. Maharashtra, Rajasthan, Madhya Pradesh, Karnataka and Andhra Pradesh are the biggest producers of onions.