Traders from Nasik, the countrys onion hub, told FE that prices will fall after the kharif crop arrives from Andhra Pradesh and Tamil Nadu by the end of August. The produce from Karnataka is likely to enter the market by end of September or early October, which should bring down prices.
Wholesale prices in Nasik have been in the range of R2,300-R2,500 per quintal, and they are likely to remain in the same band over the next few weeks. Retail prices have jumped to R40 per kg in many metros from R25 per kg a month ago due to disruption in supplies.
Currently, domestic demand is met with the crop stored during the summer. This year, heavy summer crop ouput from non-traditional growing states, such as Madhya Pradesh and Rajasthan, has helped meet demand.
Onion prices usually go up at this point of the year as demand is met with stored onions. Thus, prices are expected to moderate during the next few weeks, CB Holkar, board member, Nafed, and a farm leader from Nasik, said.
Recently, agriculture minister Sharad Pawar had opposed a ban on export of onions, saying it would hurt the country's image in the global market. He called the rise in onion prices a temporary situation as rains in key producing states, such as Maharashtra, had affected supplies.
The country annually ships 10-15% of its total produce.
Official data say that India has exported 5.1 lakh tonne of onion, valued at R776.47 crore, in the first quarter of this fiscal against a slightly lower volume in the same period last year.
In 2012-13, annual onion production was more than 15.5 million tonne (mt). India, the second-largest onion producer in the world, had shipped 1.8 million tonne, worth R2,294 crore, during 2012-13.
The realisation from onion exports during 2011-12 was R2,141 crore. During 2010-11, India exported onion worth R2,159 crore.
The country exports onion to Sri Lanka, Bangladesh, Russia, Europe, Mauritius, China, Singapore and the Gulf countries.
The minimum export price (MEP) on onion was removed in June last year, following a sharp drop in domestic prices.