India: Increased supply causes onion prices to plummet

Last year, onions in Nagpur made headlines for their eye-watering prices, which touched Rs70 a kg, today the vegetable is selling for just Rs5 a kg at wholesale markets. At neighbourhood vegetable markets, the rates range from Rs14 to 16 a kg, less than half the price of last April.

Farmers increased onion cultivation this year in the hope of receiving high prices like last year, but instead this has led to a deluge of supply, bringing the prices down. The production has gone up in all onion growing states like Gujarat, Maharashtra and Karnataka. White onions are being sold at Rs5 to 6 in the wholesale market and Rs7 to 8 for the red variety, said a source in M/s Afzal Trading Company, a firm based at Kalamna agriculture produce market yard. In a month, the rates have gone down by Rs2 per kg, he said.

The current rates are not even enough to meet the production cost for farmers, who need to get at least Rs6 to 7 a kg to break even, sources said.

Vijay Rathore, a cultivator from Dhule district, said now farmers have begun holding on to the stock. "Even I have stored around 200 quintals in a chali (bamboo enclosure used to store onions). I will wait for the rates to go up," he said The cost of each chali comes to around Rs25,000, he said.

There is a glut in Karnataka too, which is the second major source of supply for traders in Nagpur. B Ravishankar of M/s Ravi Trading Company said the southern crop, which starts in July-August is normally exhausted by January. However, the arrivals are continuing even in April and are expected to last for one more month.

Potatoes, which are traded along with onions, are however getting slightly costlier. The rates opened at Rs600 per 50kg at the start of the season at Mainpuri in UP, a major supply centre. It was Rs400 last year when the production was relatively low.

A trader at M/s Aditya Kumar and Co in Mainpuri said this is because this year the potato growers are holding on to the crop and allowing only limited supplies into the market. So, despite higher output the rates have remained firm.

A trader at Ram Aloo Bhandar at Gokulpeth market said potatoes are costing Rs20 a kg and the rates are inching up gradually. At this time of the year, when fresh supply is available, the rates are usually in the range Rs12 to 14 a kg. However, this year the commodity is in shortage at the bulk market, he said.

(1 Indian Rupee= 0.015USD)


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