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Onion prices remain high due to supply shortages, Shravan month ending, reduced acreage
Onion prices remain above ₹45/kg amid supply shortages as onion traders hold stock, anticipating further price rises due to heavy October and November rains
Onion prices are on the rise, Business Standard wrote, citing data from the Price Monitoring Cell of the Department Of Consumer Affairs, which showed that onions are currently priced at ₹45.69 per kg on average, which is significantly higher than ₹31.4 per kg during the same time last year.
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How much were onions priced in key markets?
Onion prices in major metro cities including Delhi, rose more than 25% over July, going over ₹50 per kg.
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In Maharashtra where India's largest onion trading hub, the Lasalgaon wholesale market is located, onion prices surged 30% compared to the last month, reaching ₹35 per kg as of Wednesday.
What are the reasons for the rise in onion prices?
The onion price rise is attributed to the end of the Shravan month. Many Hindus in North India abstain from onions along with other dietary restrictions, which causes a surge in demand after the period ends, according to an Economic Times report.
Onion traders are also holding onto stock, anticipating further price rises due to an expectation of heavy rainfall in October and November, which could possibly disrupt supply.
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Another reason is the reduced rabi acreage compared to the previous year, which saw only 756,000 hectares sown compared to 1.23 million hectares in 2023. Rabi onions constitute over 72-75% of India's total onion consumption.
The same was true for Kharif onions with only 154,000 hectares sown, compared to 285,000 hectares last year.
To remedy this, the central government discouraged exports with a 40% export duty and a $550 per tonne minimum export price. This led to India, a major onion exporter, shipping only 91,316.31 tonnes during this year, compared to the usual 2.4-2.5 million tonnes, according to the report.
