Government Takes All the Necessary Steps to Control the Prices of Onion - Strategic Measures to Mitigate the Onion Predicament in Maharashtra India

Onion Prices Rise Amid Fears of Rain Damaging Rabi Crop Rates may firm up with Nafed procurement for buffer stocks round the corner

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Onion prices have topped $0,12 a kg across various agricultural produce marketing committee (APMC) yards in Maharashtra on fears that recent rains in the growing areas may have affected the rabi crop.

“Unseasonal rains have lashed the growing regions and it has pushed up prices. The market trend will be clear after a week once reports of any damage to the crop comes in,” said Yogesh Thorat, Chairman, Maha Farmers Producers’ Company.

“We hear that rains have affected the crop and harvest could be only 70-80 percent of what we saw last year,” said Suvarna Jagtap, Chairperson, Lasalgaon APMC, Asia’s biggest onion market.

Output in other States

But a section of traders and exporters say onion production could be higher this year too with States such as Haryana, West Bengal, Madhya Pradesh and Karnataka increasing the production of the bulb.

“Other States have begun to increase onion production by encouraging growers,” said Jagtap.

As onion prices surged to $1,22 a kg in retail outlets a couple of years ago, the Centre came out with a policy to make onion production sustainable by encouraging “non-traditional” States to grow the horticulture crop more. The efforts have begun to yield results now.

Currently, the modal price (rates at which most trades take place) is $0,10 a kg, though quality onions are priced above $0,12. “Prices for onions are above $0,12 now, particularly for the new rabi arrivals,” said Jagtap.

Hope for growers

“Onion prices were lifted from a five-year low early this year after the Maharashtra government subsidized to the extent of ₹350 a quintal. It was only till March 31 and it resulted in farmers flooding the markets,” said Thorat.

Onions that arrived before March 31 were produced during the kharif season and they have a lower shelf-life. Rabi onions, which have begun arriving now, have a higher shelf-life and hence, they command a better price.

“Domestic prices are ruling better now at $0,08-0,12 a kg. But demand has been slack and it is reining in prices,” said Ajit Shah, President, Horticulture Produce Exporters Association

But there is hope for farmers as the National Agricultural Cooperative Marketing Federation (Nafed) will begin procuring onions for buffer stocks soon.

Exports competitive

“Nafed is likely to buy three lakh tonnes for buffer stocks in a week or two,” said Shah. Throat said the cooperative could begin procuring onions by the month-end.

“Onion production is good but there is not much demand for exports. We are the most competitive in the global market, though,” said M Madan Prakash, President, Agriculture Commodities Exporters’ Association (ACEA).

“Export demand is slack due to economic slowdown across the world,” said Shah.

“Exports to key regions in Europe have not been taking place since the Ukraine war broke out. It is preventing access to those regions,” said Jagtap.

“Shipments to Bangladesh and Sri Lanka too have been affected due to domestic problems there,” she said.

Prakash said Indian medium size onion is quoted at $200-295 a tonne cost and freight to Malaysia. Onions of bigger diameter are commanding $240.

Higher Indonesian quota

He said one heartening feature on the export front is that Indonesia has begun to buy more onions from India. “This year, Indonesia has allocated a higher quota for Indian onion imports. The only issue is only shippers having good agricultural practices (GAP) certificates can get access,” he said.

However, many exporters are now shipping the horticulture commodity to Jakarta. “It has now become profitable to export to Indonesia. It is one reason that is encouraging exporters,” said Shah.

According to reports, Indonesia has cut the quota for imports of Chinese onion in favour of India.

Data from Agricultural and Processed Food Products Export Development Authority of India show that onion exports during April-January period of the 2022-23 fiscal were 19.8 million tonnes (mt), valued at $456.78 million, compared with 15.37 mt, valued at $460.52 million, during the entire 2021-22 fiscal.

Source: The Hindu Business Line

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