 "Onion prices may rise by 10-15%: ASSOCHAM")
With retail inflation inching up, onion prices may increase further by 10-15% in the rainy season, contrary to expectations of downward movement, says a latest paper by Associated Chambers of Commerce of India (ASSOCHAM).
Calling for reduction in the gap between retail and wholesale prices, the industry body stated that onion is selling at Rs 1,800-2,500 per quintal in different wholesale mandis, whereas the retail vendors are charging upward of Rs 30-Rs 35 per kg.
"Any rise from this level will exert pressure on the consumer price index inflation. The onion, being an essential item, evokes sharp reactions from the households and even the political parties. Thus, there is a need for being watchful," said ASSOCHAM secretary general D S Rawat while releasing the paper.
ASSOCHAM has suggested timely and realistic assessment of crop and a reliable estimate of consumption requirement state-wise with proper understanding of peak demand period or month and volumes is a pre-requisite for prudent handling of the developing situation in onions.
"The government has taken a decision to buy 30,000 tonne onions through Small Farmers Agriculture Business Consortium (SFAC) and National Agricultural Cooperative Marketing Federation of India (NAFED) for creating a buffer which is welcome. However, this quantity is grossly insufficient and government should rework the buffer requirement. Given the all India production of 15 million tonnes, ideally 1 to 5% buffer (or one month's consumption need) will ensure a comfortable sailing all throughout the year," the chamber added.
The study said that on the distribution front government should create a network of outlets, preferably through NAFED, State Co-operatives, Mother Dairy and Civil Supply outlets. During periods of high prices, these outlets should start distributing onions across the country at pre-determined prices, without adding their margins.
The requirement of onion is almost constant throughout the year and availability of fresh onion is limited to 7-8 months and hence there is a need to plan stock management (including buffer).
In order to prevent sudden spike, the state level agencies should consider distribution of onions from July onwards and also ensure gradual liquidation of stocks instead of holding it till the end of the season, which could result in financial and logistics implications.
Calling for reduction in the gap between retail and wholesale prices, the industry body stated that onion is selling at Rs 1,800-2,500 per quintal in different wholesale mandis, whereas the retail vendors are charging upward of Rs 30-Rs 35 per kg.
"Any rise from this level will exert pressure on the consumer price index inflation. The onion, being an essential item, evokes sharp reactions from the households and even the political parties. Thus, there is a need for being watchful," said ASSOCHAM secretary general D S Rawat while releasing the paper.
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The monthly consumption of onions in India ranges from 800,000 tonnes to 1.2 million tonnes depending on season and prices. Assuming an average consumption of one million tonne per month, the paper has pegged annual consumption of onions on all India basis at around 12 million tonne. Considering storage and handling losses, the annual domestic requirement of onions is estimated at nearly 14 million tonne.
ASSOCHAM has suggested timely and realistic assessment of crop and a reliable estimate of consumption requirement state-wise with proper understanding of peak demand period or month and volumes is a pre-requisite for prudent handling of the developing situation in onions.
"The government has taken a decision to buy 30,000 tonne onions through Small Farmers Agriculture Business Consortium (SFAC) and National Agricultural Cooperative Marketing Federation of India (NAFED) for creating a buffer which is welcome. However, this quantity is grossly insufficient and government should rework the buffer requirement. Given the all India production of 15 million tonnes, ideally 1 to 5% buffer (or one month's consumption need) will ensure a comfortable sailing all throughout the year," the chamber added.
The study said that on the distribution front government should create a network of outlets, preferably through NAFED, State Co-operatives, Mother Dairy and Civil Supply outlets. During periods of high prices, these outlets should start distributing onions across the country at pre-determined prices, without adding their margins.
The requirement of onion is almost constant throughout the year and availability of fresh onion is limited to 7-8 months and hence there is a need to plan stock management (including buffer).
In order to prevent sudden spike, the state level agencies should consider distribution of onions from July onwards and also ensure gradual liquidation of stocks instead of holding it till the end of the season, which could result in financial and logistics implications.