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Informist, Monday, Sep 16, 2024

By Pallavi Singhal

MUMBAI – Prices of onion are likely to fall with fresh supplies of the kharif crop hitting the market along with the sale of the vegetable at subsidised prices by the government, traders and market experts said. The recently announced withdrawal of minimum export prices and cut in export duty are not seen causing any price rise, they said.

“Prices of onions will fall after staying flat for about two weeks, once the fresh supply of the kharif crop begins to arrive in the markets in October,” agricultural expert Deepak Chavan said. According to him, arrivals of kharif onions are estimated to be higher by at least 50% this year compared to the previous year.

“Farmers have sown onions in a very large area, almost double last year’s, as the crop fetched handsome prices last season,” he said. So far, as of Sep 2, onion has been sown across 290,000 ha of land, sharply up from 190,000 ha last year, according to data released by the government’s crop weather watch group. The government has set a sowing target area of 382,000 ha for this kharif season, up from 285,000 ha last year. But the target is not likely to be met.

However, the fall in prices will be subject to the weather. “Prices will only remain stable in the next two weeks if rains do not lash the crucial onion-growing regions during this period,” said Chavan. Karnataka, the top kharif onion-producing state, has not seen any spell of heavy rain in the past 10 days, which has kept the crop secure, he said.

The onion crop is harvested in three seasons--rabi in March-May; kharif in September-November, and late kharif in January-February. While the rabi crop accounts for roughly 70% of the country's total production, kharif and late kharif together constitute 30%. With the new arrivals expected to begin in October, prices are unlikely to rise.

Moreover, the government’s sale of subsidised onions has affected wholesale markets and brought prices down, Bharat Dighole, president, Maharashtra State Onion Growers’ Association, said. The government began retail sale of onions at 35 rupees per kg in Delhi and Mumbai on Sep 5. Data from the consumer affairs ministry shows onions selling at 4,140.48 rupees per 100 kg on Sunday, down from 4,229.15 rupees per 100 kg five days ago.

Though the government has reduced export restrictions, which could have triggered a rise in prices, the step has come too late, says Dighole. “New crop is never exported but is used domestically as it has high moisture content and cannot stay fresh for long. Given the current problem regarding availability of shipping containers, the removal of export restrictions will not matter much,” he said.

The government has an onion buffer stock of 470,000 tn, higher than the stock of 305,000 tn procured last year to use to stabilise prices, according to the consumer affairs ministry. The government also removed the minimum export price of $550 per tn on onions and cut the export duty to 20% from 40% on Friday.  End

Edited by Rajeev Pai

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