Short supply fears stoke onion prices

Following short-supply fears on account of a delayed crop this year, onion prices at the retail level have touched a high of Rs 20-22 a kg in some markets, while at wholesale mandis, it is hovering around Rs 8-12 per kg.

The normal prices at this time of the year are Rs 15-16 a kg for retail, and Rs 5-6 in the wholesale market.

"Prices are likely to remain high for another week to 10 days, as farmers are not willing to sell their stock," said Kanhaiya Lal, a Jaipur-based trader adding, "However, with the Rajasthan crop expected on time-around 20 September-prices will nose dive to the earlier retail level of Rs 15-16 per kg."

Also, most traders are seemingly holding onto stocks following the short supply sentiment.

"Floods and heavy rains delayed the early crop sowing in Maharashtra. It also affected the quality of stocks at warehouses, thereby leading to short supply sentiment in the market," said Umangdas, a Nashik-based trader.

However, the current stock is estimated at 18.10 lakh tonne - enough to meet domestic demand, according to an agriculture ministry official.

The crop arrivals, he added, may be a bit lower due to the rains happening across the country, but the mandi stocks are enough to meet demand.

With onion being a politically sensitive crop and the Delhi state government, seemingly learning a lesson from the 1998 state elections, when the BJP lost the tussle following high onion prices, has ordered subsidised sale of onion at all Mother Dairy outlets for Rs 11.25 per kg.

However, "the scheme is not finding many takers as the quality is substandard," said a government official, on condition of anonymity. India has three crops of onion in a year-early kharif, late kharif and rabi.

According to the official data, total production of onions in 2004-05 is estimated around 59.42 lakh tonne, up from last year's 57 lakh tonne.

Early kharif crop from Rajasthan is expected from 20 September. The early kharif from Maharashtra will arrive by mid-October, while the late kharif crop of Maharashtra and Gujarat woud hit market from early November.

The early kharif crop has been usual this year. The arrivals began in July from Coimbatore, Tamil Nadu and in late August from Andhra Pradesh (Krunool district) and Karnataka (Chitraduga, Chilkheri and Vasadurga districts).

Onion exports between the April-August period this year also saw a dip, following delayed arrival and are estimated around 2.76 lakh tonne against 3.79 lakh tonne in the corresponding period last year, said Alok Ranjan, managing director of the National Agricultural Cooperative Marketing Federation of India (Nafed). Nafed is one of the 13 canalising agents for onion exports.