Onion continues burning pockets at Rs 150 per kg, imported supplies arrive

Retail onion prices on Friday remained higher at up to Rs 150 per kg even as the imported supplies have started arriving to boost the domestic availability and check prices.

In metros, retail price of onion was ruling at Rs 120 /kg Kolkata, at Rs 102/kg in Delhi and Mumbai and at Rs 80/kg in Chennai, as per the data maintained by the consumer affairs ministry.

In most cities, onion prices were ruling at Rs 100/kg. In Itanagar, the bulb crop was at Rs 150/kg.

"Imported onions have started arriving. About 1,160 tonne has reached India. Additional 10,560 tonne of shipments are expected to arrive in the next 3-4 days," a senior ministry official told PTI.

Both red and yellow onions have been imported from Turkey, Egypt and Afghanistan. The shipments are landing at Mumbai port, the official said.

State-owned MMTC, which is importing the key kitchen staple on behalf of the government, has contracted 49,500 tonne of onion so far. Some shipments will arrive next month.

Onion prices have shot up sharply due to estimated 25 per cent fall in kharif production of 2019-20 crop year (July-June) compared to the previous year because of late monsoon and eventual excess rains in the major producing states.

The prices have failed to cool down despite several government measures in the last few weeks. The government has already banned export of onion, imposed stock limits on traders and is also supplying buffer stock at a cheaper rate.

Traders and experts are of the view that onion prices will continue to remain firm till January when late kharif crop will start hitting the market.

The country had last imported 1,987 tonne of onion in 2015-16 when prices had shot up significantly.

Not only onions, other veggies selling at 50% higher rates than last winter

Not just onion, retail prices of potato and other vegetables have also shot up in the national capital on Monday as recent winter rainfall has damaged some of the crops, according to traders.

At the Azadpur wholesale mandi here, prices of main vegetables, especially onion, are ruling high in the range of Rs 70-90/kg, potato at Rs 22/kg, tomato at Rs 18/kg.

For instance, wholesale rate of cabbage was quoting Rs 7-10/kg on Monday at Azadpur mandi, as against Rs 1.40-3/kg a year ago, cauliflower at Rs 8-22.50/kg as against Rs 5-10/kg in the previous year, while carrot at Rs 4-23/kg as against Rs 2-12/kg, and capsicum at Rs 12-22/kg as against Rs 6-12/kg in the said period, according to data from central government portal Agmarknet.

However in retail markets, the rates are much higher depending on the quality and locality. Onion is available at above Rs 100/kg, potato at Rs 35-40/kg and tomato at Rs 60/kg in retail markets of the national capital region. Prices of other vegetables like gobi, cabbage and spinach double the rates quoted in the wholesale mandis.

"The supply of most of the vegetables, including potato and tomato, has been affected because of recent rains. This has resulted in increase in prices," Potato and Onion Merchants Association at Azadpur mandi General Secretary Rajendra Sharma told PTI.

Some of the vegetable crops have been damaged and in some places, harvesting of onion and other crops has delayed due to water-logging in the farm fields, he said.

Currently, Delhi is getting the potato supply from neighbouring Punjab and Haryana, where the crop is damaged because of last week's heavy rainfall. Similarly, harvesting of onion has been affected due to wet fields, he added.

An onion trader at Azadpur said the arrival of fresh onion crop has not improved much even as private traders have started importing some small quantity.

"We are not able to buy onions at such high rates, now potato and other vegetables are also becoming out of reach for poor people like us," e-rickshaw driver Akbar in Bhogal market said about rising food inflation.

Milk and butter prices have also gone up. Even cooking oil prices, especially of mustard oil, has increased by Rs 15/kg litre, he said adding that it is becoming hard to feed family members.

Onion prices have risen by 81 per cent in the last one month and are ruling above the Rs 100 per kg mark for the third week in a row in most cities, as government efforts to cool the rates seem to be taking more time than expected.

Onion prices have skyrocketed as domestic production in Kharif and late-kharif seasons (summer-sown) is estimated to have declined by 22 per cent.

The government has been maintaining that it has taken all possible steps to rein in prices such as allowing imports, imposing a ban on exports and putting restrictions on quantities of onions to be stocked by retailers and wholesalers.

UP mulls stepping up onion imports from other states to cool runaway prices

With retail onion prices rising hitting Rs 80-100/kg range, the Yogi Adityanath government has decided to clampdown upon hoarders to control the prices of the commodity.

The government also intends to step up onion imports from other states viz. Maharashtra, Rajasthan and Madhya Pradesh to cater the market demand in UP.

UP chief secretary R K Tiwari, last evening, reviewed the onion supply situation and stressed it was the responsibility of concerned officials to ensure adequate availability of onion at affordable prices.

He directed the department officials and law enforcement agencies in UP to take strict action against hoarders, since they create artificial scarcity of onion in the market, which further fuels the commodity’s price index.

The onion stock with traders would be physically verified to ensure there was no hoarding, although the government has yet not fixed onion stock ceiling. The officials have been asked to apprise the chief secretary’s office of the steps being taken on a daily basis.

On Wednesday, union food and public distribution minister Ram Vilas Paswan had said crop loss owing to floods in key onion growing areas had created a demand and supply gap, resulting in price rise.

“The main reason behind rising onion prices is the demand and supply gap. The crop got destroyed due to rains and floods. People will get relief by November end,” he had told a news agency. Paswan had also chaired a meeting with union consumer affairs secretary AK Srivastava and food secretary Ravi Kant to discuss the onion situation, including possible import to curb price rise.

Earlier, the Department of Consumer Affairs (DoCA) had advised the Centre to act as facilitator for onion imports for ensuring a speedy arrival of the commodity from other countries.

In October 2019, the Adityanath government had opened onion outlets for selling the commodity at controlled rates, when its prices were ruling high owing to short supply. The chief secretary had directed the district magistrates to open such outlets at important spots, including Mandi Parishad premises.

The state had decided to swoop down on onion hoarders, while setting the stock limit of 50 and 10 tonnes for wholesale and retail traders respectively.

The great onion crisis in India is back to Modi govt's dismay

Onions in India are once more at the epicenter of a major controversy, pitting government officials who want lower prices against farmers that need extra income.

Prices of the vegetable, as ubiquitous as spices in Indian cooking, surged more than 200% in September from previous months after flooding from heavy monsoon rains damaged crops and reduced supplies. That’s prompted the government to ban exports and crack down on hoarding to lower prices, angering farmers who took to the streets on Monday in protest.

The onion, whose soaring prices have been blamed for bringing down past governments, puts Prime Minister Narendra Modi in a tight spot. During his reelection campaign this year, the premier promised to raise incomes for farmers, a key voting constituency that makes up more than half of the electorate. Yet Modi also needs to ensure inflation remains stable, and food prices are already spiking higher.

“The government could be caught in a dilemma, as while it seeks to keep food inflation contained, it also has a promise to raise farm incomes,” said Jason Yek, Asia Country Risk Analyst at Fitch Solutions. “Any measure to artificially depress the price of onions could spur a backlash from the onion farmers.”

Onions of Yore

This isn’t the first time onions have taken center stage in Indian politics. In 1998, high onion prices were cited for the Bharatiya Janata Party losing the vote in New Delhi. In 2013, onions were blamed for soaring inflation. Last year, Modi, in his campaign to gain reelection, said farmers are his ‘top’ priority, with ‘TOP’ meaning “Tomato, Onion and Potato.”

Onion prices in India climbed to as high as Rs 80 a kilogram in September, compared with Rs 20 to 25 in July through August. The gains are due to flooding, as well as because farmers reduced onion crops after prices fell to as little as Rs 2 per kilogram in Maharashtra in December, said Siraj Hussain, former farm secretary and a visiting senior fellow at the Indian Council for Research on International Economic Relations in New Delhi.

The government last month released onions from state stockpiles to Safal, the country’s largest organized retail network of fruit and vegetables, which will also cap prices. Authorities will monitor prices, and consider strict action against hoarding and profiteering activities. Exports of all varieties of onions are now prohibited, the government said on Sunday.

‘Penalized Farmers’

The efforts have started working and wholesale prices in some markets are starting to decline, with the arrival of new crop produce from the southern region also helping to ease tight supplies, according to a government official on Wednesday.

Devinder Sharma, a food and trade policy analyst in Punjab with 30 years of experience in food policies, says the government is panicking over surging onion prices. Farmers in some regions are getting paid 75% less for their onions after the export ban was introduced, he said.

“It is the farmers who suffer in the process,” Sharma said. “Farmers are being penalized to keep consumers happy. Inflation has to be kept low, but what happens to the millions of people that produce that food?”

Centre bans onion export, imposes stock holding limit to check price rise

To control onion prices ahead of the festive season, the central government banned its export with immediate effect. And, perhaps for the first time, directly imposed a stock holding limit on retailers and wholesalers across the country, bypassing state governments.

Earlier, it had authorised states to impose stock limits for certain items under the Essential Commodities Act. However, in an unusual move on Sunday, directly imposed a holding limit of 100 quintals on retailers and 500 quintals on wholesale onion traders across the country.

The price has over the past month soared to almost Rs 80 a kg in some retail markets, including in the capital, Delhi. The effect of the latest moves remain to be seen, as prices have risen due to depleted supply after months of rain in the major producing states of Madhya Pradesh, Maharashtra and Karnataka.

Chart“The sharp increase in prices is because of lower supply. Only around 15 per cent of last year's output is left with famers and stockists. Imposing stock limits or a ban on export will not help much,” Sanjay Snap, an onion wholesaler in Nashik, told Business Standard.

Some said the move could have a cascading impact on growers. “Onion prices rise once in four-five years, the only time farmers get the opportunity to earn some money. The government should allow farmers to earn. Stock limits and export restrictions would help correct prices temporarily but discourage farmers from sowing (more in the future).

Unfortunately, the government also takes no action when the onion price goes down,” said Jaydutta Holkar, chairman of the huge wholesale centre at Lasalgaon in Maharashtra’s Nashik district.

Central government data showed the retail price last week was around Rs 60 a kg in Delhi, Mumbai and Lucknow (and Rs 42 in Chennai). In Kanpur, it was Rs 70; in Port Blair, Rs 80 a kg. On September 13, the Centre had imposed a Minimum Export Price of $850 a tonne (Rs 60 a kg). Even so, some export continued to neighbouring Bangladesh and Sri Lanka. Sunday’s announcement is meant to stop all such shipment. Bangladesh, Sri Lanka and UAE are the top three destinations for Indian onion. The country exported fresh and chilled onion worth $496.8 million in 2018-19. In the first four months of 2019-20, around $154.5 mn.

The Centre had also directed states to take stringent action against illegal hoarding of onion. And, urged all states to utilise the 57,000 tonnes of onion it has as buffer stock. So far, the governments of Delhi, Haryana and Andhra have done so, to cool prices. On Friday, Delhi chief minister Arvind Kejriwal said his government would provide it at Rs 23.9 a kg to buyers.

India produced 23.48 million tonnes in 2018-19 (third advance estimate), up from 23.26 mt in 2017-18.