Prices of onions soar across country, cross Rs 60 in Delhi

The retail price of onion, a key ingredient in Indian kitchens, touched ~63 per kg in Delhi on Tuesday on tight supplies and lower arrivals in wholesale markets, according to data from the consumer affairs ministry. The current price is more than double the ~27 per kg at which onions sold in early August.

It isn’t just Delhi. On Tuesday retail prices were around ~55 per kg in major eastern Indian cities like Kolkata and Ranchi. In Mumbai, the capital of Maharashtra which is also a major producing state, the bulb retailed at ~50 per kg, a three-fold rise in price compared to early July.

The spike in retail prices comes despite export restrictions announced by the Centre last week when a minimum export price of US$ 850 was imposed.

Onion prices are higher this year due to a sharp drop in planting of the summer crop (Kharif 2017-18) which fell 29% year on year.

The lower planting has also led to lower arrivals in wholesale markets. Data from the National Horticulture Board shows that onion arrivals during October were 17% lower year on year.

“Arrivals have nearly halved compared to normal due to lower production following heavy rains in parts of Maharashtra,” said Metha Ram Kriplani, president of the fruits and vegetable seller’s association in Delhi’s Azadpur mandi.

Kriplani adds that the current wholesale prices of ~40-45 per kg is likely to soften by end December when the late Kharif crop hits the market.

The Kharif crop which is planted between July and August is harvested between October and December in Karnataka, Maharashtra, Andhra Pradesh, Madhya Pradesh and Rajasthan. The summer harvest contributes about 15% to India’s annual production of onions, with the late Kharif and Rabi crop contributing 20% and 65%, respectively.

“This year we have seen onion prices crashing to as low as Rs 2 per kg in wholesale markets and then spike within a few months,” said Siraj Hussain former agriculture secretary and currently a fellow at the Delhi based Indian Council for Research in International Economic Relations. “The solution is to invest in scientific storage of onions so that the sizeable winter (Rabi) harvest can be stored, coupled with a stable trade policy to encourage private investments in storage,” he adds.

Domestic supplies are also tight as India exported about 8,00,000 tonnes of onions between April and August this year, according to data from the Agricultural and Processed Food Products Export Development Authority.

In 2016-17, India exported 2.4 million tonnes of fresh onions, about a tenth of its estimated production of 21.7 million tonnes during the year.

Kriplani adds that the current wholesale prices of ~40-45 per kg is likely to soften by end December when the late Kharif crop hits the market.

The Kharif crop which is planted between July and August is harvested between October and December in Karnataka, Maharashtra, Andhra Pradesh, Madhya Pradesh and Rajasthan. The summer harvest contributes about 15% to India’s annual production of onions, with the late Kharif and Rabi crop contributing 20% and 65%, respectively.

“This year we have seen onion prices crashing to as low as Rs 2 per kg in wholesale markets and then spike within a few months,” said Siraj Hussain former agriculture secretary and currently a fellow at the Delhi based Indian Council for Research in International Economic Relations. “The solution is to invest in scientific storage of onions so that the sizeable winter (Rabi) harvest can be stored, coupled with a stable trade policy to encourage private investments in storage,” he adds.

Domestic supplies are also tight as India exported about 8,00,000 tonnes of onions between April and August this year, according to data from the Agricultural and Processed Food Products Export Development Authority.

In 2016-17, India exported 2.4 million tonnes of fresh onions, about a tenth of its estimated production of 21.7 million tonnes during the year.