Even as onion prices near seven-month high, a section of the trade is blaming speculation for the edible bulb turning costlier by 75 per cent in the last one month.

On Tuesday, the modal price or the rate at which most trades took place at Lasalgaon Agricultural Produce Marketing Committee (APMC) yard, Asia’s biggest for onion, was ₹1,850 a quintal for fair average quality. For quality produce, the rates were as high as ₹2,300. On June 2, the modal price was ₹1,050.

Higher arrivals “There is no problem with supply. We see ample onions coming to markets in Maharashtra. Speculation that the current dry spell will affect onion planting and its arrivals later this year is driving up prices,” said a source, who did not want to be identified, from Nashik in Maharashtra.

Data on onion arrivals in some of the primary markets such as Lasalgaon, Pimpalgaon, Pune and Solapur APMC yards in Maharashtra show that arrivals have been higher in June this year compared with last year.

For example, at Lasalgaon, daily arrivals since the second fortnight of June have been in excess of 1,500 tonnes against less than 1,000 tonnes last year.

According to the Agriculture Ministry, onion production this year is a record 19.2 million tonnes (mt), up from last year’s 16.81 mt.

Cartel seen “There seems to be no genuine reason for the current surge since we don’t have any problem with supplies. It is likely that some sort of cartel is operating,” said a trading source in Chennai.

A probe ordered by the Competition Commission of India two years ago concluded that some influential traders in the Nashik region were in collusion with a few in select cities.

Crop fears

“Prices are rising on fears of the kharif crop being affected due to lack of rains,” said RP Gupta, Director of National Horticultural Research and Development Foundation in Nashik.

Till now, kharif onion growing States such as Maharashtra, Karnataka, Andhra Pradesh, Gujarat and Madhya Pradesh have not received any rain under the influence of the South-West monsoon.

As on June 30, the monsoon has been 31 per cent deficient across the country. However, the deficiency is above 70 per cent in these States, barring Karnataka.

CB Holkar, member of National Agricultural Cooperative Marketing Federation and a grower, denies there is any speculation or cartel behind the surge.

Waiting for showers “There was unseasonal rain during March in Maharashtra. At least 50 per cent of the rabi crop was affected by it. But for the damage, you should be able to get onion at ₹500 a quintal now,” he said.

“Only average quality onions are arriving these days here. Therefore, prices are rising,” said another trader from Lasalgaon.

“We see prices rising more since the dry spell is a cause for concern,” said Holkar.

“Kharif planting has already been delayed by 15 days. There could be further delay since growers will begin sowing only after getting some showers. As a result, arrivals in September-October could be delayed by at least 15 days,” said Gupta of NHRDF. “There is a small area that is covered by early kharif onion. It has already taken a hit,” he said.

Delayed inflow “Delay in arrivals means pressure on the supplies that will come to market from August onwards. We are not sure how much of the rabi onion is left with growers and traders,” Holkar said. Onion is grown in both kharif and rabi seasons.

While kharif onion has a lower shelf life, the rabi produce can last up to six months. This helps the supply pipeline going until kharif onion arrivals begin with the Andhra Pradesh crop in late August or early September.

The Centre is taking various steps to rein in the price surge, which is resulting in food inflation.It has raised the minimum export price to $300 a tonne and asked States to crack down on hoarders.

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