Onion prices across the country, particularly in primary agricultural markets near the growing regions, have crashed between 30 per cent and 40 per cent over the last 10 days as the late kharif crop has begun to flood the markets.
Officials, traders and exporters fear further fall in the bulb’s prices as the rabi crop is all set to hit the markets anytime after March 15.
“Onion prices had topped ₹ 4,000 a quintal in Nashik in the third week of February, but they have now dropped to levels of ₹2,500 as late Kharif crop arrivals have increased since the last 4-5 days,” said Suvarna Jagtap, Lasalgaon Agricultural Produce Marketing Committee (APMC) Chairperson. Lasalgaon is one of the biggest markets for onion in Maharashtra’s Nashik district, the hub of the commodity’s trade.
According to the Ministry of Agriculture and Farmers Welfare, the modal price or the rate at which most trades took place on Tuesday was ₹2,660 a quintal for the Red variety compared with ₹4,000 on February 20.
Unseasonal rains effect
After dropping from the highs seen during September-October last year, onion prices surged last month after unseasonal rains lashed the growing parts of Maharashtra, raising fears over the crop prospects.
Prices in other growing States such as Gujarat and Maharashtra also increased in tandem since the latter is the top producer in the country. Maharashtra accounted for nearly 41 per cent of onion produced during 2019-20.
Modal prices in other States such as Madhya Pradesh, the second-largest grower, and Gujarat, the fifth-largest producer, dropped in line with the Maharashtra trend. In Madhya Pradesh, the modal price dropped to ₹ 2,000 a quintal from ₹ 3,000 on February 25.
In Gujarat, the modal prices dropped to ₹ 2,400 on Tuesday from ₹ 3,000 during February 22-25 at Kapadvanj APMC in Kheda district.
Prices during the same time last year ruled below ₹ 1,500 a quintal at Lasalgaon.
“The late Kharif onion has begun arriving after some delay,” said PK Gupta, Acting Director at Nashik-based National Horticultural Research and Development Foundation (NHRDF).
Arrivals in Maharashtra increased during February 25-March 2 by 27 per cent to 88,643 tonnes compared with 69,625 tonnes during February 18-23. At the same time, arrivals in Gujarat dropped to 58,347.55 tonnes from 76,824 tonnes during the same period, while in Madhya Pradesh it was a tad higher at 6,819.25 tonnes versus 6,761.07 tonnes.
During February 25-March 2 last year, arrivals in Maharashtra were much higher at 1.73 lakh tonnes, Ministry of Agriculture data showed.
“Prices have crashed as arrivals are flooding the market not only in Maharashtra but also in other growing States such as Gujarat,” said Jagtap.
No boost to exports
However, the drop in prices are not helping in boosting exports. “We are slowly getting orders but they are not at previous levels,” said Chennai-based Rajathi Group Director Madan Prakash.
“Pakistan is very competitive in the export market offering onion at $400 a tonne. Today, our price is $550 a tonne compared with $700 a few weeks ago,” said Prakash, whose company exports onion to South-East Asia.
The problem with onion exports is that India has not been able to recover after the ban imposed on shipments in September last year to curb the sharp rise in prices. Besides banning exports, the Centre also allowed duty-free imports of onion as retail prices topped ₹ 100 a kg then.
The measures helped control the rise in prices by October-end and the ban on exports was lifted from the New Year.
However, first, importing countries had stocks of onion from other sources such as Egypt, Turkey and Holland and then, the Indian produce could not match the prices at which Pakistan and China offered to global buyers.
Interestingly, before the Centre can ban onion exports, its shipments during April 1 till September-end at 13.07 lakh tonnes had exceeded last fiscal total exports of 11.49 lakh tonnes.
Higher output in 2019-20
The exports happened on the heels of the Ministry of Agriculture, in its third advance estimate of horticultural crops, pegging onion production higher during the 2019-20 season (July-June) at 26.48 million tonnes against 22.82 million tonnes the previous year.
“We are getting packaged cargo at Mumbai for exports at around Rs 30,000 a tonne,” said Prakash.
This translated to $411 a tonne but shippers are having to pay a premium to shipping firms for immediate shipments or spend on storage until actual shipments take place.
“Arrivals have increased, and prices could be under pressure going forward,” Prakash said.
Little relief seen
“We don’t see growers getting relief from low prices as the Rabi crop will begin arriving in two weeks’ time,” said Jagtap.
“Prices could drop to as low as ₹ 1,500 over the next few weeks as arrivals are increasing,” said Sohanlal Bhandari, Nashik District Onion Traders Chairman.
Concurring with the traders’ views, NHRDF’s Gupta said the Rabi onion was expected to arrive as early as March 15. “The arrivals might be higher as this year the area under cultivation increased. But the yield per hectare might be low,” he said.
Quality seeds issue
Growers did not sow quality onion seeds, which could affect productivity, the NHRDF official said.
Availability of quality seeds has been an issue since growers have been selling their produce when prices are high than saving a part of it for resowing.
“The sharp drop in prices is now forcing farmers to hold back. This has resulted in arrivals slowing,” said Nashik-based trader Jayachandra Muthalya.
According to Ministry of Agriculture data, provisional arrivals in Maharashtra on March 2 were 12,097 tonnes compared with 18,052 tonnes on March 1. For a major part of last week, arrivals were above 15,000 tonnes in the State.
“Prices have dropped further by ₹ 100 today,” said Rajathi Group’s Prakash, pointing to the pressure on the market.
Jagtap said farmers cannot be holding the late Kharif onion for long since they did not have a longer shelf life like Rabi onion. “They will have to ensure that the produce is sold off quickly,” she said.
At one point of time last week, prices dropped below ₹2,500 a quintal before climbing back this week.