Onion prices spiral on lower production

Onion is bringing tears to consumers yet again, as its prices have jumped by 40 per cent in the last ten days. The onion prices have gone up to Rs 14 a kg from Rs 10. Traders are expecting lower onion production this year and hence there may be a further spurt in prices, although government estimates suggest higher output.

"The onion arriving in mandis is small in size and this clearly indicates that the crop is low. The feedback that we are getting from traders in Gujarat, Rajasthan and Bihar also indicates a dip in output", said Rajinder Sharma, general secretary of Potato and Onion Merchants' Association, Delhi.

Traders from West Bengal, Bihar and the north-eastern states are buying onions from Delhi mandis as there is a shortage in these states, according to Sharma.

"Though the production of onion is down and arrival is low, there is a demand for exports and we are selling to the southern states, as well. Therefore, the prices are going up. The prices are likely to jump to Rs 1500 a quintal by July", said Mahendar Thakkar, an onion trader based at Pimpalgaon, Maharashtra.

"The farmers are not selling their entire produce these days. Their capacity to hold stocks is increasing and they are selling as and when they require money. There is no need to panic about the onion prices. The kharif sowing is good and we are expecting a bumper crop in August-September", said R K Gupta, director of National Horticultural Research and Development Foundation (NHRDF), a government research body.

In February, the onion prices had surged to Rs 24 a kg from Rs 10 on account of rising exports. This forced the National Agricultural Cooperative Marketing Federation (Nafed) to raise the minimum export price of onion by $25 a tonne to make exports less lucrative.