Onion prices in India increase on January rains, exports hit as well

Delay in arrivals of the late kharif crop and rain In Maharashtra have pushed up onion prices by about Rs 1,000 a quintal since February 1, which has also made exports unviable.

February 05, 2021 / 06:10 PM IST

Onion prices in India have increased by about Rs 1,000 a quintal since the beginning of February on delay in arrivals of the late kharif crop, which has also hit exports as they have been outpriced in the global market.

The prices softened on February 5, though.

“There is a delay in the arrival of crops in Maharashtra as the growing regions experienced rains last month. We expect arrivals to rise after mid-February,” said Chennai-based Rajathi Group Director Madan Prakash.

Several parts of Maharashtra received moderate rainfall in the first week of January, which is unusual for that time of the year. Onion-growing areas such as Nashik received over 8 mm of rainfall.

“Last month rains have impacted the late kharif onions on the field,” said National Horticultural and Research Foundation (NHRDF) Acting Director Dr PK Gupta.

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Modal prices—rates at which most trading is done—for onion increased from Rs 2,700 a quintal on January 30 to Rs 3,500 on February 2 at Lasalgaon agricultural produce marketing committee (APMC) yard in Maharashtra’s Nashik district before slipping to Rs 3,260 on February 4.

Prices ruled between Rs 3,050 and Rs 3,200 at various APMC yards in Nashik district.

“We exporters get packed cargo of onion at Rs 40-41 a kg,” said Prakash, whose firm exports agricultural products.

Onion was quoting at Rs 44 a kg in Delhi and Rs 50 in Mumbai at retail outlets on February 4, according to the Ministry of Consumer Affairs. Prices were Rs 39 and Rs 43, respectively, on January 30 in both these cities.

“The difference in our offer price and other competitors in the global market was coming down but the recent increase has widened the margin again,” said Nashik trader Sushant Musale.

Exports unviable

Indian onions are being offered at $600 a tonne (Rs 43,700), while the bulb from China and Pakistan was quoting at $400-425 (Rs 29,125-31,000), said the Rajathi Group director.

“Exports are not viable at current prices,” he said.

Musale said export demand was also responsible for onion price’s increase. “Export demand is not at expected levels currently,” said Nashik district onion traders chairman Sohanlal Bhandari . It was one of the reasons why prices began to cool after rising early this month.

Onion exports have been in fits and starts ever since the government lifted the ban on shipments from the country on January 1, 2021.

It banned exports on September 14, 2020 after retail prices began to surge. Prices topped Rs 100 a kg in some centres in the second week of October before a slew of government measures checked the spike.

Onion prices could come under pressure further when arrivals increase later this month, Prakash said.

Musalae said late kharif crop harvest was expected to gather momentum towards the end of the month and could put pressure on prices.

Onion arrivals are a tad lower at markets such as Nashik APMC yard. “Usually, at least 500 tractor trolly loads of onions arrive but currently, the arrival is 475,” Musale said.

According to the Ministry of Agriculture, onion arrivals during February 1-5, 2021, were 70,073 tonnes against 1.23 lakh tonnes during January 25-30.

Bhandari said arrivals were still considered good and the new crop would begin arriving in a month's time.

The problem of seed availability and quality has been dogging growers since 2019 as they have been more keen on selling their produce than save some quantity for resowing.

The ministry's third advance estimate of horticultural crops has pegged onion production during the 2019-20 season (July-June) at 26.48 million tonnes against 22.82 million tonnes the previous one.

Production during the current crop year would need to be watched out.

NHRDF’s Gupta said though the area under late Kharif onion cultivation was higher, productivity could be lower this year.“Quality seeds were not available for sowing this time. It will affect productivity,” he said.

(Subramani Ra Mancombu is a journalist based in Chennai who writes on commodities and agriculture)
Subramani Mancombu is a journalist based in Chennai who writes on commodities and agriculture
first published: Feb 5, 2021 06:10 pm

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