Commodities

Onion growers in tears as prices crash

Vishwanath Kulkarni Ahmedabad/Bengaluru | Updated on November 22, 2018

Huge stockpiles, poor offtake pull down rates

The crash in onion prices is making growers cry in Karnataka and Maharashtra even as the harvest has just begun in other major producing States such as Gujarat, Rajasthan and Madhya Pradesh.

A clutch of factors, including huge carry-forward stocks, the slowdown in movement to consuming States such as Tamil Nadu and Kerala on account of Cyclone Gaja, and poor demand from exporters is weighing on prices of the bulb. In some markets, including Yeola in Maharashtra, the modal prices fell as low as ₹325 per quintal on Thursday.

Trade sources said that stock from the previous season is still stored with farmers, traders and stockists. This is creating supply pressure on the market as they are looking to dispose the previous crop ahead of the full-fledged arrival of the new crop. It is expected that prices may come under further pressure as arrivals are set to increase in December and January in the central and northern States.

Quality concerns

“There is still a huge quantity lying with farmers. We have no clue exactly how much is stored with them. But with the new crop starting to arrive, demand for the old crop has declined sharply. This is reflected in the overall reduced prices,” said Jaidatta Holkar, Chairman, Lasalgaon APMC.

 

 

Trade sources said that the stored onion is of inferior quality, which is hurting price sentiments.

Due to the rain defiicit n many parts of the country, farmers and traders anticipated better prices for the crop. But the expectations fell flat as prices, instead of going up, started tumbling due to poor quality and higher arrivals.

“Farmers are bringing the old stock, which is quoting around ₹450 a quintal. There are huge quantities stored with farmers. The new crop is ruling around ₹1,500 a quintal in the markets. But the weak price sentiment is influencing the new crop prices, too, “ said Holkar.

Impact on new crop

“If arrivals of the old crop continue beyond December, there is a possibility that the new crop’s prices will suffer. And we may see prices slipping below what is being quoted now,” Holkar added.

Anticipating better prices, farmers and stockists had stored large quantities. “They had anticipated higher prices after Diwali. But their calculations failed because early-sown onion has already started hitting markets, putting pressure on prices,” said Ashok Walunj, a leading onion trader in Mumbai.

Notably, the prices quoted in November are the lowest in several years for the comparable period. Traders attribute this to the increased supplies of old and new crops.

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Published on November 22, 2018

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