Onion prices to touch Rs 35/kg on low output

Onion prices are likely to soar to the 2005-level of Rs 32-35 per kg by the year-end owing to 25 per cent decline in output.

"Farmers took to sugarcane cultivation since onion had fetched prices lower by Rs 1.50-2.50 a kg last year. As sugarcane offers higher returns , there was a decline in onion acreage," said Ashok Valunj, director, Agriculture Produce Marketing Committee (APMC).

The prevailing stock price of onion at APMC ranged between Rs 8 and Rs 12 per kg today. In the retail market, the commodity was available for Rs 12-16 per kg across Mumbai.

In late 2005, onion had hit Rs 32-35 per kg owing to an increase in demand for exports at 9.44 lakh tonne. The Centre had to resort to imports in order to soften the prices.

According to Valunj, higher arrivals could be for just one day which may get normalised the next day. The onion arrival at Vashi APMC today was 1600 tonne (160 gadi) as against a normal figure of 70-80 gadi.

The surge in arrivals has been attributed to a sudden inflow of the stock after three days of halted supply owing to holidays.

At present there is adequate supply to lower the prices and this may stay for a few days. However, they would rebound in the near future itself, said Valunj. Only wet onion (new year crop) is available in the market now, as dry onion stock has exhausted. This also means that the supply would be scarce towards the year-end, Valunj said.

Yusuf Razvi of Rizvi Traders, a noted onion trader in Mumbai, said exports are not viable as the government has raised minimum export price (MEP) to curb exports.

Moreover, if the domestic market is fetching good prices, why one would go for exports, he asks.

In the last two months, price of onion has jumped sharply to Rs 10-12 per kg from Rs 6-7 per kg owing to 30-40 per cent crop losses in Gujarat and Rajasthan.

Late rains cause several diseases to onion crop that resulted into about 25 per cent loss in yield this year, Rizvi said without citing any actual figures for yield per hectare.