Business Standard

Cartels behind onion price rise

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Tushar Pawar Nashik

A few traders bought small quantities at high rates to signal a spike in prices.

Price fixing by some traders acting together reportedly fuelled onion price rise early last week. They bought minuscule quantities at high rates, sending a message that prices had gone up sharply.

Consequently, retail prices almost doubled to Rs 70 a kg, even though the average wholesale price on the same day in Nashik district’s various wholesale centres was between Rs 3,000 and Rs 4,000 a quintal (100 kg).

On December 20, the maximum and minimum prices at Asia’s biggest onion market, Lasalgaon, were Rs 6,299 and Rs 1,200 a quintal, respectively, while the average wholesale price was Rs 3,800 a quintal. Only two or three trolleys, or 10 per cent (30 quintal) was sold at the higher rate of Rs 6,299; the rest was sold below Rs 3,800, sources at the Agricultural Produce Marketing Committee (APMC) told Business Standard.

 

Most farmers were deprived of the benefits of the high prices quoted that day. Prices were raised in the retail market on the basis of higher wholesale prices, as the APMC announces the low and high prices. This gave wrong signals to retailers and other wholesalers.

As a result, onion, trading in the wholesale market at Rs 38 a kg only two days earlier, was sold out at Rs 70 a kg in Nashik’s retail markets. “Retail rates are decided on the basis of the higher rates, particularly during lower supply of commodities in APMCs,” a trader, who did not want to be identified, told Business Standard.

Onion yields, normally 130-140 quintal per acre, had come down to 9-10 per acre in most of the Nashik district due to unseasonal rain in November, damaging crop heavily. Expenses per acre were around Rs 25,000. Most growers could not even recover expenses, according to APMC sources.

After the central government’s ban on export, prices have started declining. On Tuesday, the average wholesale price was Rs 2,351 in Lasalgaon and farmers sold around 11,000 quintal there. In Nashik’s retail market, good quality onion was sold at Rs 35 a kg, while the cheaper variety was sold at Rs 20 a kg.

“My crop was badly damaged due to heavy rain and I could get 45 quintal from five acres. Total expenses were around Rs 1 lakh. I sold these at Rs 1,800 a quintal on Tuesday and got a total of Rs 81,000. I suffered a loss of Rs 20,000, as prices came down due to the government’s export ban. Otherwise, I would have at least managed my expenses,” said Tanaji, a grower.

“Arrival of the new crop has already started in Gujarat and Karnataka markets, while regular arrival in the Nashik district is expected to begin by the last week of January. Prices will come down by February,” a senior official from the National Agricultural Co-operative Marketing Federation of India Ltd told Business Standard.

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First Published: Dec 29 2010 | 12:14 AM IST

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