Agri Business

Now, growers flock to store their onion to cash in during lean arrivals season

Subramani Ra Mancombu Chennai | Updated on April 06, 2021

Prices drop below ₹900/quintal; export demand yet to pick up

Onion growers in Maharashtra have booked warehouses and storages well in advance this year to store the bulb even as its prices have slipped further to below ₹900 a quintal.

“Onion prices have dropped sharply from the highs seen in February. Rabi onions are expected to arrive from April 15 onwards. By now itself, onion farmers have booked spaces in warehouses to store the bulb,” said Agri Commodities Exporters Association (ACEA) President M Madan Prakash.

Onion prices, which had zoomed to ₹4,000 a quintal in the third week of February this year, have nosedived to below ₹900. According to Ministry of Agriculture and Farmers’ Welfare data, modal price of red onion, usually harvested during early and late Kharif season, is currently ₹850/quintal at Lasalgaon, Asia’s largest market for the bulb.

Higher shelf life

During this time of the year, arrivals of late Kharif onion continue but traders say that Rabi onions have begun to arrive. Since the Rabi crop can last for over six months, their prices are ruling at around ₹900.

Last year, prices at the same time were at least ₹100 higher despite the Centre imposing lockdown to tackle the spread of novel Coronavirus (Covid-19) pandemic.

On Monday, 1,400 tractor loads of onions arrived in Lasalgaon against arrivals of 2,200 during the peak harvest period. Over 2,000 tonnes of onion changed hands against over 2,500 tonnes during the normal period.

“Markets were closed for March-end and Holi. We have opened from April 1 and farmers are coming in slowly,” said Lasalgaon Agricultural Produce Marketing Committee Secretary Narendra Savaliram Wadhavane.

In retail outlets, onions are priced at ₹25 a kg in Mumbai and Delhi, according to the Consumer Affairs Ministry data. “Usually, rabi onion is being stored over the last few years by growers, traders, exporters and, even, government. Rabi onion can be stored for 6-7 months,” said Ajith Seth, President, Horticulture Produce Exporters Association (HPEA). “Normally, the crop that arrives during April-May is kept in the warehouses. During that time, a good quantity arrives in the market facilitating storage. Currently, Rabi onions have begun arriving but their quality is not good,” said Vikas Chaudhary, a Nashik-based exporter. Explaining the difference in the situation this year compared to the previous one, Prakash said earlier storage spaces would be available even in late April or early May during peak arrivals.

“Even those who have an average type of storage space have reported that the spaces have been booked beforehand this year. Growers began to look for warehouses a little early this year,” the ACEA president said.

Farmers are opting to store their produce this year, expecting to get better prices during the non-peak or lean arrival season starting June. Prices tend to stay firm at least until September when early Kharif onion crop begins arriving in the market.

“Many warehouses have come up in the last few years to help farmers by storing onion,” Prakash said. This is similar to what potato farmers do – store the produce and wait for prices to increase.

The rent for these warehouses, called Chaali, differs from one place to another and also depends on the facilities that are made available. Seth said the average cost could work out to ₹50,000 for 50 tonnes and it is a one-time contract that could extend up to the time the grower or trader takes out the produce.

Cold storages are also available, though they are a pricey affair. Similarly, large warehouses are available at cheaper rates.

“Storage capacity of these warehouses differ. Farmers even book spaces according to their needs. Within one warehouse, spaces can be rented out differently,” said Nashik-based trader Sushant Musale.

The best option for growers will be to opt for a chaali that can ensure airflow from all sides, including from the bottom as it will provide onions with a larger shelf life.

Slack export demand

Though prices have dropped, exports demand has not picked up as expected.

“Export demand has not picked up in destinations such as Malaysia due to restrictions imposed by Kuala Lumpur to contain Covid-19. Traders are not sure of demand picking up,” said ACEA’s Prakash.

“Export demand is slow because our buyers are still receiving their old orders from countries such as Pakistan. We can expect demand after a couple of weeks,” said HPEA’s Seth.

Till February-end last fiscal, onion exports totalled 13.94 lakh tonnes (lt) against 11.49 lt the whole of 2019-20 fiscal. This is despite onion exports being banned from September third week to December 31 as the Centre resorted to various measures to rein in surging onion prices.

Onion prices surged to over ₹100 a kg in retail outlets before the Union Government’s measures, including allowing duty-free imports and imposing a cap on stock holdings, paid dividends.

Last year’s high prices have also aided higher production of onion during the current crop year (July 2020-June 2021). According to the Ministry of Agriculture, onion production this year is projected to be 26.29 million tonnes (mt) from 26.09 mt the previous year with the area under the bulb rising to nearly 1.6 million hectares (mh) from 1.43 mh a year ago.

Published on April 05, 2021

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