Bad days over, onion survives kharif crisis

Prices are dipping after a weeklong spin. With late kharif harvests set to come in, the crisis will end soon

The worst is over: as mandi arrivals across Maharashtra increase, onion prices in most parts of the country are steadily going down. After a weeklong furore over “spiraling prices”, in Delhi, arrivals have gone up from 7000 quintals on February 5 to 11,210 quintals on February 14. Average wholesale prices have dropped from Rs 1200 per quintal to Rs 400 per quintal. Prices are going down below Rs 20 per kg.

Supplies fell earlier in the month but the retailers continued to maintain their margins, pushing up prices. “We have to earn at least Rs 1-2 per kilogram if we have to survive,” says Delhi vendor Manohar Pundit. “Customers choose the best onions when they buy a couple of kilograms but we get it in bulk so we have a lot of wastage. Apart from that, we also have to pay for the transportation and labour involved in getting them till the market.”

“We have started bringing the stock by train to reduce cost. And in the next few days, when the produce from Rajasthan starts coming in, the prices will go down sharply,” says trader Hansraj Ashok Kumar. Just outside the mandi, the average rate at the Chaudhary Hiralal Fruits and Vegetables Market in Azadpur is Rs 13 per kg.

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All through the new year, onion prices have been rising despite arrivals in Maharashtra and Gujarat. A combination of factors brought the spotlight back on the onion, promptly renewing demands for a ban on exports and fair price shops.

The seeds were sown in the monsoon of 2006. As heavy rains flooded the fields of Maharashtra, onion bulbs in nurseries were extensively damaged. “The late kharif or rangda bulbs took a battering in the rains and it has resulted in much less production this season,” explains Prakash Daima, director of the Agriculture Produce Marketing Committee in Lasalgaon, the largest onion mandi in the country. “Supply has also been affected because many more farmers chose to export their onions this time round.”

With over 50 per cent of the crop in Pakistan being washed away, Indian exports have been higher this season. As compared to about 7.8 lakh metric tonnes exported in 2005-06, this time 9.4 tonnes have been shipped out of the country. While the NHRDF report does indicate that “the reason for higher prices is good demand for exports, particularly from neighbouring countries”, director Dr RP Gupta adds: “It still doesn’t add up to much. Most of our produce is sold in the domestic market.”

The third factor to the fluctuating price drama is that the kharif crop in most states is over and supplies are at present coming out of Maharashtra and Gujarat. Stocks from other states are scheduled to kick in by early March.

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Traders have also played their part in ensuring a week of “unrealistic” prices, pressuring the markets to maintain higher prices for domestic supplies as well. “There is no reason why onions should have sold at more than Rs 15 per kilogram in the capital at any given point of time,” argues Gupta. “Despite marginally less arrivals and exports, the prices should still not touch Rs 25.”

According to NHRDF’s latest crop prospect report for onions, the harvest of the late kharif crop is on across Maharashtra, Madhya Pradesh and Gujarat. In Karnataka, Rajasthan, Haryana and Punjab, the harvest is nearly complete while harvesting is due to start in Orissa and West Bengal this month. Prices are expected to stablise as farmers across the country start harvesting their Rabi crop March onwards and arrivals at the mandis continue into May.