Cheaper onions in new year? Wait for 30 more days; here’s how much prices may fall

Onion production in India has been on a 12-year high in 2018-19. Nonetheless, the prices skyrocketed as irregular monsoon hit the crop.

While onion prices have been disturbing household budgets so far, in another 30 days or before, the prices are likely to fall with late kharif onion produce starting to hit the market. The same is likely to bring relief, while onion prices have breached Rs 200 kg mark at some places. “Onion prices will likely be in the range of Rs 50-60 per kg, down by 50% of their current prices,” Chaudhary Pushpendra Singh, President, Kisan Shakti Sangh, told Financial Express Online. Going forward, as rabi produce starts to come to the market, the prices will fall even more, he added.

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Onion production in India has been on a 12-year high in 2018-19. Nonetheless, the prices skyrocketed as irregular monsoon hit the crop. Flood too caused major crop damage and a dearth of cold storage facility meant that farmers were forced to sell their produce to middlemen, Sreejith Balasubramanian, an economist at IDFC AMC, had told Financial Express Online earlier. “Given lack of robust supply-chain related data, middlemen make most of the gain,” Sreejith Balasubramanian added.

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Similar thoughts were echoed by Chaudhary Pushpendra Singh who said that the government really needs to invest in better infrastructure and storage facilities. “Lack of better storage hurts both the consumers and farmers as the former pays more for the produce while the latter bears the brunt by giving produce to middle men to avoid rotting,” he told Financial Express Online. Even when the government creates a buffer stock, it is not to the tune of the daily national consumption. The government must make provisions to have a bigger buffer stock, he said.

Onion price hike explained

Onions are produced in three seasons and any disruption in these seasons affect onion prices. This year, Maharashtra crop harvest was delayed owing to prolonged monsoon season. Other states such as Madhya Pradesh, Karnataka and Andhra Pradesh also witnessed crop damage due to floods, a CARE Ratings report had said earlier. Thousands of tonnes of onion produce was wasted due to lack of proper storage. 

Meanwhile, the government has deployed measures to keep onion prices in check. Imports from Turkey and Egypt have been contracted and the government also put a ban on exports. Further, a limit on hoarding was implemented to de-incentivise hoarding.