Despite a decline in exports, onion prices in India continue to hover between Rs 35-45 per kg in retail markets. A significant factor behind this trend is the reduced rabi onion acreage from the previous year. Rabi onions, planted between December and January and harvested after March, constitute over 72-75% of India's onion consumption. The central government's estimation of rabi onion production was around 191,000 tons, deemed sufficient for domestic needs, according to a Press Information Bureau statement. However, the sowing area for rabi onions has decreased to 756,000 hectares from 1.23 million hectares in 2023.
Kharif onion sowing also reported a decline, with the area sown being 154,000 hectares compared to 285,000 hectares last year, as per the Ministry of Agriculture. Nonetheless, an increase in sowing area is anticipated due to favourable rainfall in Nashik and other regions. Market analysts observe that many farmers have withheld their rabi onion produce, contributing to the current price surge. This is attributed to reduced market arrivals and concerns over the kharif crop's performance. Prices are expected to normalize with the arrival of new crops later in the year, according to a trader from the Lasalgaon wholesale market in Nashik, India's largest onion market.
The Indian government has applied a cautious approach to onion exports, imposing a 40% export duty and a Minimum Export Price (MEP) of $550/ton, significantly limiting exports. Current export figures stand at 91,316 tons, a reduction from the usual 2.4-2.5 million tons. Further government interventions in the form of increased MEP or export duties, or importing onions, are considered unlikely due to potential political repercussions.
Source: indianexpress.com