The price of onions have skyrocketed over the last week across India as rain-induced delay in the ongoing summer harvests has impacted supply. The heavy rain and flood in parts of Telangana and Andhra Pradesh, a major producer of red onions, have destroyed the crops and has triggered the sudden spike in prices.
Onions are retailing at around Rs 8,000 per quintal in Lasalgaon, Asia's biggest onion market in Maharashtra. This is having a cascading effect on other markets across the nation.
The prices have soared as high as Rs 100 per kg in Chennai and Kerala from last week’s prices of Rs 40 to Rs 50. The prices in cities such as Pune, Guwahati and Patna rose to Rs 70, Rs 65 and Rs 60 per kg, while in Andhra cities, the vegetable is being sold at Rs 75-80.
The prices have soared as rains have affected the kharif onion in Karnataka and Nashik, Ahmednagar, and Solapur in Maharashtra. Around 40 per cent of the onions procured after cultivation in February-March have been lost.
The arrival of new kharif onions has been delayed and it is now expected to arrive in the market only by mid-November. As per APMCs in Nashik district, farmers still have a small stock of summer onions left. These may last till the time the new crop arrives. Therefore, the supply will be comparatively low.
According to traders, reopening of hotels and restaurants has added to the demand for onions. Traders say that retail prices would climb fast if a shortage of onion continues in the wholesale market.
The arrival of new crops from Rajasthan has started, but the volumes can’t meet the requirements of the domestic market. The arrival of new crops from Madhya Pradesh is expected to begin only in December.
Hence, onion traders expect the demand to increase further after Navratri.
The reasons for the current spell of high prices are not very different from those during earlier inflationary periods. While existing stocks from this year’s winter crop have been nearly exhausted—as they usually are, at this time of the year— fresh harvests have been disrupted.
Non-availability of labour owing to Covid regulations had forced farmers to reduce onion cultivation this season. As a result, prices are likely to rise till the next harvest season in the middle of December.
Imports
Meanwhile, authorities have initiated imports to deal with the sudden inflationary pressure and cool off the prices. Fifty containers with around 1,500 tonne of onions, imported from Iran and Turkey, have reached JNPT Mumbai and will soon be available in the market. The landing cost of the imported onions at JNPT is in the range of Rs 45 and Rs 50 per kg. Traders have imported these 50 containers via Dubai.
Another 28 tonnes of Egyptian onions have made its way to Tamil Nadu in a bid to bring down the price. According to traders, the onion will be sold from Wednesday and is likely to be priced between Rs 55-Rs 65 per kg.
On September 15, the government banned exports of all varieties as a precautionary step since domestic supplies showed signs of depleting due to a bad winter crop and brisk exports.