Robust harvests, early kharif crop may keep lid on onion prices

Written by Sandip Das | New Delhi | Updated: Jun 19 2013, 06:44am hrs
Strong summer harvests in non-traditional onion producers, such as Madhya Pradesh and Rajasthan, are likely to keep prices stable over the next two months even as farmers in Maharashtra, the biggest producer of the key vegetable, start preparing for crop transplantation following recent rains.

With monsoon rains covering the country ahead of schedule, even supplies from early kharif from the southern states Tamil Nadu, Kerala and Andhra Pradesh are expected to enter the market by next month, which would keep prices in check.

Traders from Nasik, the hub of country's onion trade, told FE that wholesale onion prices have been in the range of R1,500-1,600 per quintal for the last two months. While production in Maharashtra declined last year because of deficient monsoon rains, the demand was met by supplies from Madhya Pradesh and Rajasthan this year.

There is enough stock to meet demand for the next two months, after which kharif crop is set to enter the market (by September), CB Holkar, board member, National Agricultural Cooperative Marketing Federation of India (Nafed) and a farm leader from Nasik said. The kharif crop accounts for close to 40% of the country's annual onion production, estimated at 15-17 million tonne (mt).

Retail onion prices in Delhi are in the range of R16 to R20 a kg at present. Traders from the Azadpur mandi also say that onion prices are expected to be stable during the next few months.

Holkar said that farmers in the key growing areas of Satara, Nasik and Jalgaon in Maharashtra have been preparing nurseries before transplantation is done next month.

Earlier this year, following a temporary rise in prices because of lower production from Maharashtra, commerce minister Anand Sharma had told the Rajya Sabha that the spurt in domestic prices was temporary and it was caused by unseasonable rains and mandi closures in Delhi. "We have adequate stocks (of onion). We have no shortage and the position is as such comfortable," Sharma had said.

He had stated that only surplus production, after taking into account all of domestic consumption, is allowed to be exported. Domestic production of onion, estimated at 17 mt this year, is likely to exceed the demand of about 15 mt. Production during 2012-13 (July-June) is estimated at 15 mt.

India, the second-largest onion producer in the world, had shipped 1.5 million tonne of the key vegetable during 2012-13. The realisation from exports in 2011-12 was R1,714 crore. During 2010-11, India exported onion worth R2,159 crore. India 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.