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Exclusive: Onion prices to fully stabilise only by Lohri, say experts

The rise in onion prices could have been controlled if the export ban on the vegetable had been implemented earlier. The state elections in Maharashtra and the stance of opposition parties in criticising the ban only made the situation worse.

Edited by: Dhairya Maheshwari New Delhi Published on: December 12, 2019 19:04 IST
 A woman arranging onions near a road in Chennai

 A woman arranging onions near a road in Chennai (representative image)

Even as the prices of onion at retail outlets have started to come down across the country, experts believe that the rates of the popular vegetable will be back to normal only around Lohri next month.

The wholesale prices of onion will stabilise only by January around Lohri, when the kharif crop starts coming into the markets,” said Rajinder Sharma, former Chairman of the Agricultural Produce Marketing Committee (APMC) at Azadpur Mandi, Asia’s biggest wholesale market for fruits and vegetables.

Sharma currently heads Delhi’s Potato and Onion Merchants’ Association. He explained that even though Centre’s decision to import onions from Egypt and Turkey as well supplies from Rajasthan and Gujarat are helping ease pressure on household budgets, the real difference to the prices will be affected once the bumper kharif crop starts coming in.

“Onion was trading between Rs 40 and 75 a kilogram on Delhi’s wholesale market when the crop was in short supply,” said Sharma, trying to explain the steep hike in onion prices.

“Onions here sell between Rs 10 and 15 when the supplies are normal,” he adds. The wholesale price of onion at Azadpur was between Rs 25 and 30 on Thursday. On shelves, that translates into customers dishing out between Rs 96 and 100 for a kilogram of onion in Delhi.

In Maharashtra’s Lasalgaon onion market, where the benchmark prices are set, the vegetable was trading at Rs 41 on Tuesday, compared to Rs 71 a week earlier. The wholesale prices at Asia’s biggest spot-selling markets for onions was between Rs 8 and 10 a kilogram last year, as per official data.

Underlying reasons for high prices

The hike in onion prices has been blamed on the damaging of the crop by rain after it had been harvested. “The problem with the onion crop is that it gets damaged very easily during the rains. So, it must be sent to the market for sales once it is harvested,” said Sharma.

"It is a highly perishable crop that needs to hit the market shelves soon after being harvested. There is no point in holding onion back," said Sharma.

He further blames domestic politics in Maharashtra, India’s largest onion growing state, for the hike in the vegetable’s prices. “The export ban could have been brought in around October when the prices were starting to rise. But, with the state election around the corner back then and opposition parties pandering to their local constituency of large-scale onion growers in the Nashik belt, the government was unable to take the decision,” said Sharma.

In the opposition camp, NCP president Sharad Pawar has been scathingly critical of the export ban and even campaigned on the issue in the recently concluded state elections in Maharashtra, even as the rest of the country bore the brunt of high onion prices.

In fact, while experts have been of the view is onion is a highly perishable crop and should not be stored lest it gets damaged by unseasonal rains, Pawar had in October called for stocking up onions to increase its shelf life, as he hit out at Centre for banning onion storage, a decision taken to stem the rising prices.

"How is this government banning any onion holding?" the NCP chief had said at an election rally.

Asif Shaikh, an onion trader in Nashik, rejected the argument. "Had the farmers not stocked the onions once they had been harvested, there wouldn't have been such shortage of onions," he said. 

Another problem facing the onion growers in the country is that of middlemen. Avinash Godani, a farmer based in Madhya Pradesh’s Hoshangabad district, opined that removing middlemen from the supply chain posed a major challenge in stabilising prices. “At times, the middlemen stock the onion after procuring it from the farmer and sell them only at the time of crisis like now,” he alleged.  

Both Shaikh and Godani, like Sharma, believe that onion prices will normalise only in January, though both agree that the government's measures to bring down the prices are starting to bear fruit.

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