MSTC to try reverse auction of Nashik onions to shore up prices

Onion farmers in Nashik district of Maharashtra, who have been selling their produce at less than ₹2 a kg due to glut, may soon get some relief. State-run MSTC is planning to sell the onion through its reverse e-auction platform which is likely to fetch around ₹ 6-7 a kg.

According to BB Singh, Chairman and Managing Director, MSTC, Mother Dairy has agreed to buy nearly 20 tonnes of onions a day through the reverse e-auction process, which is likely to commence in the next five-six days. MSTC is also in talks with other organised retail chains such as Spencer’s Retail and Reliance Fresh to purchase the Nashik onions on the platform.

Unlike the regular auction where buyers compete by offering higher prices, in reverse auction sellers compete to get business which usually leads to a drop in prices.

“We have tied up with 28 FPCs (Farmer Producer Companies) to participate in the reverse e-auction process. We are planning to have a floor price of ₹6-7 a kg below which nobody would be allowed to sell. This will help provide better price realisation to farmers who have been offloading their produce for as low as ₹1.5-2 a kg,” Singh told BusinessLine on the sidelines of an MSME conclave organised by CII here on Wednesday.

Mother Dairy will sell the onions procured through the e-auction platform through its 150-odd outlets in the Delhi-NCR region.

Model to be scaled up

As per statistics available on the National Horticultural Research and Development Foundation (NHRDF), the modal prices of the bulb in Nashik (MS) in December 2018 was trading at ₹528 a quintal, as against ₹3,008 in the same period last year, a drop of over 80 per cent. However, the price of onions in majority of the retail markets is hovering around ₹20-27 a kg.

The drop in prices is primarily on account of a huge carry over stock following excess production. This has created a glut, forcing farmers to dispose off their stock before the present years’ crop starts to arrive in the market. Nashik accounts for nearly 50 per cent of the country’s total onion production.

MSTC plans to replicate the model, once it is successful, for facilitating sale of other agri produce which are subject to price fluctuations.

According to Singh, while prices crash due to overproduction in a certain region; it witnesses a spike in some other regions due to poor availability. MSTC hopes to bridge the gap thereby eliminating middlemen and helping farmers realise better prices.

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