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Onion prices, which were being sold at Rs 50 a kg in the country’s main wholesale market of Lasalgaon in Maharasthra and Rs 80 a kg in many cities, have started showing signs of abating. However, this has more to do with the pressure exerted by the Centre on traders rather than the demand-supply situation.According to sources, top officials in the departments of consumer affairs, food, and agriculture were in constant touch with their counterparts in the states, particularly Maharashtra, to ensure onion hoaders liquidated their inventories. While the government’s decision to import 10,000 tonnes of onion and raise the export floor price to $700 a tonne also discouraged hoarding, sources say it is the intervention by the government that helped ease the situation.
Nine states including Delhi and West Bengal had placed their proposal for grant of funds from the Rs 500-crore Price Stabilisation Fund , but the application of only two - Andhra Pradesh for Rs 50 crore and Telangana for Rs 9.15 crore - were accepted. The requests of others were not in the proper format. The funds will be utilised by the states to intervene in the market to ensure cheap onions to consumers.
The average wholesale onion price was below Rs 30 a kg till August 14, compared with Rs 49 a kg on August 26 - an increase of Rs 15 a kg in a span of less than a fortnight.
Onion arrivals in mandis, which had dropped sharply in the past few weeks, went up as wholesalers and traders liquidated their inventories as the new crop arrivals would start only by September-end.
That the rising prices of onion could have an indirect impact on the coming Bihar elections also prompted the Bharatiya Janata Party (BJP)-led government to take up the matter seriously, according to sources.
Onion prices tend to move up during the June-September period as the Rabi crop gets exhausted, while the early kharif harvest has not yet arrived in the markets.
However, the scenario was slightly different this year as large tracts of rabi onions got destroyed in the unseasonal rains and hailstorm that hit most parts of the country in February and March.
Besides, the unusually dry weather in parts of Maharashtra and Karnataka delayed early kharif sowing. This not only led to a situation where the rabi supplies dried up, but also created a scenario of extended period of shortage, milked to the hilt by hoarders.
India is estimated to have produced 18.92 million tonnes of onions in 2014-15 - almost 478,000 tonnes less than in the previous year. Officials said in February-march itself, the government was aware that there might be some pressure on prices in the July-September period.
Two bodies under the department of agriculture, NAFED and Small Farmers' Agri-Business Consortium (SFAC) were provided with an interest-free advance of Rs 7.94 crore and Rs 8.75 crore to purchase onion directly from farmers and they purchased 8,368.52 tonnes of onions from farmers in April itself at Rs 19-20 a kg.
It is the same onion both the agencies are now retailing at Rs 38 a kg through Mother Diary outlets. The Delhi government is also selling it at Rs 30 a kg through its fair price shops. The price escalation between April and August are due to losses on account of transportation and storage, officials said. “The Centre still has a stock of 4,400 tonnes of onion, which will last till September end,” officials said.
In the meantime, the Centre floated a tender through NAFED for import of 10,000 tonnes of onions, but no bids were received as it was limited to domestic traders. Thereafter, the government floated another tender. This time a global one to import the same quantity of onion, which will be opened in the next few days.
