New Delhi(India), 10/08/23: Onion prices have surged substantially, perhaps more than doubling in some places, including Maharashtra’s Pimpalgaon and Lasalgoan Agriculture Market Committee, Asia’s largest onion market.
Prices for onions increased from ₹1,200 per quintal on August 5 to ₹1,900 on August 7. On August 9, they were worth ₹2,500 per quintal.
Onion retail prices are currently hovering around ₹30 per kilo. They are projected to rise over the next few weeks, reaching ₹60-70 per kg by early September.
According to experts, prices have risen due to speculative buying following lower onion acreage this monsoon, as well as depleted carry-forward rabi stockpiles.
According to agriculture ministry data, the sown kharif area for onions as of July 31 was 13% lower than last year at 68,000 hectare.
A farm sector analyst quoted by MoneyControl stated, “Last year’s number was already low year-on-year (YoY). The lack of rainfall in most areas of Maharashtra has been a drag on sowing this year. Seed sales of onions have also fallen by about 30 percent this year.”
Meanwhile, rabi season stockpiles, harvested between December and January, are likely to be lower due to a drop in production early this year.
Pushan Sharma, Director at CRISIL wrote in a report, “Rabi stocks in the open market are expected to decline significantly by the end of August instead of September, extending the lean season by 15-20 days, which is likely to expose the market to tightened supplies and high prices.”
High temperatures in February caused the rabi crop to mature early in the important agricultural states of Maharashtra (49 percent of total India output), Madhya Pradesh (22 percent), and Rajasthan (6 percent). Furthermore, unseasonal rains in these locations in March damaged onion quality, reducing their shelf life from six months to four to five months.
According to CRISIL, the demand-supply imbalance in the lean patch towards the end of August will be reflected in even higher onion prices due to the decreased shelf life of rabi onions and panic selling in February-March.
Another factor for the increase in onion prices is hoarding.
The head of a Maharashtra APMC mandi, quoted by MoneyControl stated, “Traders in the industry have started hoarding onions, storing them in large quantities as they expect a shortage to soon take over the market.”
