Retail onion prices are expected increase from early next month and hit Rs 60-70/kg, Crisil said on Friday, citing adverse impact of higher temperature and unseasonal rains in the key growing states on the quality and shelf life of rabi crop.
The current modal retail prices of onion in the country is hovering around Rs 25/kg.
Maharashtra, Madhya Pradesh and Rajasthan witnessed unseasonal rains in February-March.However the prices of the staple vegetable in the festive months of October- December are expected to stabilise, compared with higher prices in September because of arrival of kharif harvests thus ruling out any major supply crunch, Crisil stated in a report.
Inflation in onion, which had been in the negative zone since September, 2021, came in at 1.65% in June 2023. It stated that the monsoon rains during August and September would determine transplantation and bulb development of the onion crop, according to the report.It said that to temper prices of kitchen bulbs, the agencies including farmers’ cooperative Nafed and National Cooperative Consumers’ Federation of India (NCCF) are expected to release 0.3 – 0.4 million tonne (MT) of storied onion in the market.
In February, high temperatures in major onion producing states such as Maharashtra, Madhya Pradesh and Rajasthan lead to the early maturity of the rabi crop. “Unseasonal rainfall in the key growing regions during March affected the quality of onions and reduced the shelf life of rabi onion from six months to 4-5 months, raising storage concerns and induced panic selling among farmers,” Crisil stated.
The rabi crop, which is conventionally scheduled to be brought in the market from March, was harvested early and started trading in February, coinciding with late kharif supplies, leading to a supply glut in the market.
The benchmark prices at Lasalgaon, Maharashtra, the hub of the country’s onion trade on Thursday was Rs 1,300/quintal, which was Rs 1,250/quintal just a forth-night back.
Two months back the prices were ruling around Rs 950/quintal.Rabi onion harvested during April – June accounts for around 65% of the country’s onion production and meets the consumer’s demand till the kharif crop is harvested from October-November.
Kharif harvested onions are not stored because of higher moisture content thus entering the market directly.The estimated production of onion during the 2022-23 crop year (July-June) declined marginally 31.01 MT against 31.7 MT reported in the previous year. The output of kitchen bulbs was 26.64 MT in 2020-21.
Since the beginning of 2021, the government has not imposed a ban on onion exports, which was the norm a few years back. India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal.
India is the biggest producer of onion and Maharashtra, Madhya Pradesh, Karnataka and Gujarat have more than 70% share in the country’s production.