Onion prices: New approach needed to address seasonal hike in prices

A new approach is needed to address seasonal spike in onion prices as farmers have started storing the winter grown crop and marketing it later in the lean period of August-October for better returns, Consumer Affairs Secretary Pankaj Agrawal.

“Firstly, everyone has to understand that rabi (winter) onion is a commodity that is being marketed. Stored onion is a good product to be released slowly in the market during the lean period of August-October,” he said, adding that a new approach needs to be adopted to address the seasonal spike.

Since much of onions are stored in Maharashtra, this state sets the price trend for others including Delhi, he said. Even Madhya Pradesh traders, who also supply onions to the national capital, take price cues from Lasalgoan in Maharashtra, he added.

Agrawal said retail prices of onions in the southern region are softening due to arrival of early summer crop from Karnataka and Andhra Pradesh.

Prices, however, remain high at Rs 66-75 per kg in Delhi and other parts of north India as the south crop is costlier in terms of transportation and demand is being met through stored crop, he added.

“There is about 4 per cent fall in onion production. But supplies in the country were down by 34 per cent in August and 39 per cent so far in September. The percentage fall in output does not match with the percentage of shortages. Do they correspond? It means someone is hoarding,” Agrawal said.

“Farmers, especially in Maharashtra, are holding back onions as the government is encouraging them to create storage capacity for the crop. Farmers are getting good price this year, he said, adding that dehoarding onions from their godowns is not the solution to address the price rise issue.

If farmers store, you cannot dehoard. If we dehoard, it will be for the first time that Indian farmers will be arrested for hoarding, he said.

“Would you like to do that? Do you want to impose Inspector Raj on farmers? That is not the way we want to work. There are certain challenges,” Agrawal said.

Of 27 lakh tonnes of onions stored across the country, Maharashtra – the largest onion producing state – has stored 15 lakh tonnes. It has sold most of the stored onions and currently has about 2 lakh tonnes, Agrawal said.

Agrawal said the government has the option of declaring onion as an essential item and take action on hoarding.

“Before taking such a step one needs to understand that 17-18 million tonnes of onions are not produced in one season and then hoarded.”

About 60 per cent of produce arrive in April-May, the rest 20 per cent each in September and November, he added.

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