Onion prices soften on fresh arrivals from Maharashtra

There is something to cheer for consumers. After remaining high for the last three months, onion prices have started cooling off in the local markets because of new crop arrival.

Onion prices moved up in the last few months because arrivals from Nashik region in Maharashtra, which produces about 40% of the country’s onion production, was delayed due to late sowing of the crop on account of deficient rainfall.

But, off late, onion prices at the Nashik wholesale market have plummeted from Rs 1,100 per quintal in February 2009 to around Rs 500 per quintal at present, a steep decline of more than 50%.

Accordingly, the wholesale price of onion in Delhi has also gone down from Rs 1,500 per quintal in February to around Rs 700 per quintal at present. In the retail markets of Delhi, onion is selling at Rs 10-14 per kg.

?Prices are likely to fall further in the next few months because of good crop in Maharashtra this year,? C B Holkar, vice-chairman, National Agricultural Cooperative Marketing Federation (Nafed) told FE from Nasik. Onion, during the rabi season, is usually cultivated in Maharashtra, Gujarat and Tamil Nadu, which accounts for around 80% of the total onion production.

The rabi onion harvest is expected to be around 8 million tonne this year, of which Maharashtra is expected to produce a record 3.2-3.5 million tonne.

According to the National Horticulture Research and Development Foundation, a Nafed promoted body, onion prices showed a declining trend a month back due of heavy arrivals in Maharashtra.

?Arrivals are expected to increase further after the full rabi crop is harvested during April-May,? NHRDF said in a report. Due to higher supplies, the government has also decided to cut the minimum export price of onion by $25 a tonne for April recently to an average of $195-200.

With this, the MEP of onion has been slashed by a huge $125 a tonne since March 13 after domestic availability of the commodity increased.

Nafed is the nodal agency for onion export, which decides the MEP every month in consultation with 12 other agencies, taking into account domestic supplies and prices.

The Gulf countries are the main importers of the onion. Pakistan and China are India’s main competitors in the global market.

The country’s onion exports have increased from 8.29 lakh tonne during 2003-04 to 1.1 million tonne during 2007-08. During 2007-08, India exported onions worth of Rs 1,285.82 crore.