Fourteen years after the Bharatiya Janata Party (BJP) government lost the reign in Delhi in 1998 due to its inability to control onion prices, the fear of its repeat looms large with the Congress-led United Progressive Alliance (UPA) government at the Centre. After consumers started crying due to high onion prices, it is now turn of the government to shed tears as nothing much can be done this time except taking actions against speculators and hoarding..
Without substantiating fundamentals, the price of politically sensitive commodity shot up to Rs 45-50 a kg despite normal supply in 1998, and this time too the commodity trebled in December 2013 representing five-fold increase in the last one year. Onion was trading at around Rs 2,225 a quintal in Asia’s largest onion spot market Lasalgaon (Maharashtra) on Thursday, onion prices have recorded 526.76% increase in the last one year. The commodity has witnessed a staggering 517.65% increase in Pimpalgaon (Maharashtra) and 490% in Mahuva (Gujarat).
“Deficiency in rainfalls in kharif sowing season has resulted into lower acreage this year. But, consumer demand has surmounted from all across the country ahead of the upcoming wedding season resulting into fuelling of prices,” said Atul Shah, director of Agricultural Produce Marketing Committee (APMC), Pimpalgaon.
A recent study by the Small Farmers' Agri-Business Consortium (SFAC) supported by the Union Ministry of Agriculture forecasts, onion crop in India’s two leading producers - Maharashtra and Karnataka – could decline by 35% and 25% respectively compared to the previous year due to water shortage and delay in the monsoon rainfalls early 2012.
The National Council of Applied Economic Research (NCEAR) has estimated a 20% drop in onion output for 2012-13 from the level of 16.34 million tonnes reported in the previous year. NCEAR estimated demand for Indian onions to remain strong.
Apparently, after a staggering 17% jump to 12.95 lakh tonnes between April – December 2012, onion exports from India have nosedived. According to R P Gupta, Director, National Horticulture Research & Development Foundation (NHRDF), onion exports have declined in December by 40-50% due to higher quotes from Indian traders.
A Mumbai-based onion exporter said, “Indian traders are quoting $450 a tonne of good quality onion against $290-300 a tonne of their Pakistani counterparts. Hence, onion import from Pakistan works out to cheap resulting into India’s neighbouring country grabbing maximum export orders.”
While Indian exporters have lost most of markets in the Middle East to Pakistan, only a few consignments have been reported being executed to Sri Lanka. New orders have dried up, he added.
Meanwhile, the Union Agriculture Minister Sharad Pawar has hinted that the burgeoning onion price would cool down soon. But, traders expect the commodity to remain traded between Rs 22-30 a kg in retail market until late kharif crop supply from Nasik (Maharashtra), Gujarat and Madhya Pradesh begins towards the end of the February. Hence, consumers are unlikely to get respite from higher onion prices throughout this year.
Attributing the spurt to speculative activity and hoarding by a certain group of traders, Virendra Singh, National Co-operative Consumers’ Federation of India Ltd (NCCF), said that the price would moderate within a week.
