Following tomatoes, onion prices have surged, particularly in the national capital region. In August, to curb escalating prices, which rose in response to growing demand and delayed output and arrivals, the Union government offered onions at subsidized rates and imposed a 40% export duty on them. But despite these measures, onion prices are soaring once again. Let’s delve into the reasons.
Current price situation
Retailers in Delhi NCR report that onion prices have doubled, from ₹40 per kg to ₹80 a kg within just two weeks. Industry insiders expect prices to keep increasing until arrivals from the new Kharif crop, which is delayed by almost two months, becomes available in December. In Maharashtra’s Lasalgaon, the hub of onion wholesale trade, prices have surged by 58% in a fortnight, standing at ₹38 per kg as of Tuesday. On average, onion prices in primary production districts of Maharashtra are hovering at ₹45-48 a kg.
Reasons for the price surge
Several factors have contributed to the spike.
Market arrivals of stored onions have dropped by around 40% over the last two weeks, with the late arrival of the Kharif harvest from major producing states like Maharashtra and Madhya Pradesh a factor.
Sowing of kharif onion suffered in southern states like Karnataka and Andhra Pradesh due to consistent losses faced by farmers over the past couple of years. Coupled with erratic and weak monsoon rainfall this season, onion production in these states took a hit. The upcoming kharif onion supply is now largely dependent on Alwar, Rajasthan, where the forecasted yield is less than 40% of the usual.
Price outlook
Industry experts forecast that prices might rise further, potentially reaching up to ₹150 a kg in Delhi-NCR. The prime reason being inadequate monsoon showers in Maharashtra’s prominent onion-producing regions, resulting in a sub-optimal Kharif crop yield. The situation is unlikely to improve soon since the new red onion arrivals from the Kharif season are expected to be delayed by approximately two months.