Onion prices in wholesale markets of Maharashtra increase 30% within a week

The government, on August 20, increased the onion buffer to 5.00 lakh metric tonnes for the current year, surpassing the initial procurement target of 3.00 lakh metric tonnes.

Onion prices, which have already remained elevated, have risen about 30 percent within a week at the wholesale markets of Maharashtra, up from Rs 2500 per quintal last week to over Rs 3250 per quintal.

Maharashtra’s Pimpalgaon and Lasalgoan Agriculture Market Committee are Asia’s largest onion markets who had first seen prices begin to rise in the second week of August. Onion prices then, had jumped from Rs 1,200 per quintal on August 5 to Rs 1,900 on August 7. They stood at Rs 2,500 a quintal on August 9. Retail prices of the commodity had been hovering around Rs 30 a kilo.

While there were expectations of retail prices going up to Rs 70 per kilogram by September, the prices stabilized after government intervention when the centre levied a 40 percent export duty on August 20 till December 31. Onions are currently selling at an average of Rs 35 per kilogram throughout the country.

Wholesale onion prices are now rising on the back of a delay in the arrival of the kharif crop of red onions, which is causing a supply shortage. A delayed and erratic rainfall in Maharashtra and Karnataka’s onion belt is being cited as the cause.

Kharif produce is likely to be lower on year by around 7-8 percent, as per Pushan Sharma, Director - Research, CRISIL Market Intelligence and Analytics.

Minister of consumer affairs and food had in a press conference on August 22 assured of healthy onion production this year stating that it should not become an issue for price rise. “Our production last two years was 317 lakh mt and 318 lakh mt, respectively. Kharif sowing this year is slow but estimates show that produced area will remain the same. I assess no problems in this commodity,” he said.

Also read: Govt procuring onions at Rs 2,410/quintal, to ensure welfare of farmers: Piyush Goyal

The government has also been releasing onion from its buffer stock in targeted regions with immediate effect to ensure prices remain under check. The government had anticipated new crop arrives from October onwards, but it has not happened yet.

"Rabi stocks in the open market are expected to decline significantly by the end of August instead of September, extending the lean season by 15-20 days, which is likely to expose the market to tightened supplies and high prices," Crisil’s Sharma further added.