The government is likely to take some preemptive measures to prevent onion prices from simmering like last year.
A supply shortage from Nashik, the main production hub for the crop in India, has prompted the government to review the stock limits and make some declarations, an official who attended a meeting on issue told business daily Mint. Although the situation is not critical yet, the government is keen to avoid a potential shortfall and price hikes, the Mint reported.
Despite a robust harvest, fewer onion trucks are arriving at Delhi’s Azadpur mandi, the country's largest vegetable wholesale market, raising concerns about possible price spikes in the coming weeks. The Mint report, quoting an official speaking on condition of anonymity, mentioned that if the supply shortage persists, the government may ask traders to declare their stocks, followed by the imposition of stock limits if necessary. These discussions are still in their early stages, with decisions to be made based on future developments.
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Most of North India’s onions come from the Nashik, Pune and Ahmednagar regions. A prolonged supply shortage could drive up prices, an outcome the government is determined to avoid, especially with several Assembly elections approaching. High onion prices have historically influenced the voting behaviour, the report added.
As of July 3, the all-India average retail price of onions stood at Rs 43.4 per kg, a 69.5 percent increase from a year ago, according to data from the Consumer Affairs Ministry.
Queries sent to the secretary and the spokesperson for the consumer affairs department remained unanswered till press time, said Mint. Moneycontrol could not independently verify the report.
Previous government actions, such as the ban on onion exports last December due to poor crop yields and tight global supplies, were lifted in May with a minimum export price set at $550 per tonne and a 40 percent export duty. Despite a good harvest this year, onion supplies remained low, possibly due to farmers holding stocks in anticipation of higher prices in the September-October period, as reported by an onion trader at the Azadpur market.
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Daily onion arrivals in the National Capital Region range from 100-125 trucks with Delhi’s Azadpur mandi receiving 40-50 trucks, far below the usual figure of 25-30 trucks from Maharashtra. Instead, most arrivals are from Rajasthan and Madhya Pradesh, where the crop yield is 50 percent lower this year. This has led farmers in Maharashtra to prefer selling locally or to southern states where demand is higher, rather than incurring higher transportation costs to Delhi.
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Last year, steep prices in August prompted the government to sell onions at subsidised rates through retail outlets and mobile vans. This year, prices have already risen 30-50 percent from late May to early June due to reduced arrivals and increased demand ahead of Eid-al-Adha, according to an Economic Times report.
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The government is actively purchasing onions to build a buffer stock, aiming for 500,000 tonnes of rabi onions, of which 300,000 tonnes have been procured. Purchases by the National Agricultural Cooperative Marketing Federation (NAFED) and National Cooperative Consumers Federation (NCCF) have driven up prices in Nashik, where daily arrivals have dropped due to rains, although overall crop output remains stable.
Sunil Nirgude, an onion grower from Nashik, noted that current lower supplies are due to recent rains and not a significant reduction in crop yield. The government’s proactive stance aims to stabilise the market and prevent a repeat of last year’s price surge.
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