Agri Economics Commodity

Onion prices in the commodity’s hub, have risen by ₹750 per quintal

"Onion prices in the commodity's hub, have risen by ₹750 per quintal"

Onion prices in Maharashtra’s Nashik district, the commodity’s hub, have risen by ₹750 per quintal in the last ten days, but prices are expected to fall once early Kharif onion arrives next month.

‘Traders have raised their prices, citing stock damage in storage. However, they have raised the prices to entice growers to bring the new crop to market as soon as possible after harvest,’ said Vikas Chaudhary, a Nashik-based exporter.

Also Read: Amit Shah promised to direct banks to adopt a flexible lending policy

Rainstorms cause havoc

As per the Ministry of Agriculture and Farmers’ Welfare data, the modal price (rates at which most trades take place) of onion is currently ₹ 2,150 per quintal at Asia’s largest yard, Lasalgaon agriculture produce market committee (APMC), up from ₹ 1,400 on September 13. Recent rains in the region had harmed the stocks, which were down 20-30%, according to Chaudhary.

‘Traders have raised onion prices, citing 25-30% damage to Inventory,’ told M M Prakash, the President of the Agri Commodities Exporters Association (ACEA).

He stated that packed onion cargo delivered in Mumbai two weeks ago at ₹ 1,600-1,700 per quintal is now quoted at ₹ 2,100-2,200.

Ajit Shah, President of the Horticulture Produce Exporters Association (HPEA), wondered where stock damage was reported. ‘As far as I know, no damage to onion stocks has been reported,’ he said.

‘Rainfall has been higher in the Nashik region this year. As a result, stocks may have been harmed,’ explained RP Gupta of the National Horticultural Research and Development Foundation (NHRDF).

Problems with exports

‘However, onion prices will be lower this year and will not rise to levels seen at this time last year,’ he said. Last year at this time, the modal price of onion was ₹ 3,000 in Lasalgaon APMC before peaking at ₹ 5,400 on October 31.

Onion prices in retail outlets soared to ₹ 100 per kg, forcing the Centre to ban exports and allow duty-free imports. Both have been relaxed since January of this year.

Despite lower prices, onion exports have been delayed this year. ‘After November, they are expected to pick up. High freight rates, particularly to the Far East, have hampered exports. Container availability has also been an issue, according to Shah of Horticulture Produce Exporters Association (HPEA).

Pakistan is a competitor

‘Exports are taking place, but on a more subdued note. Pakistan’s new crop has arrived on the market, and arrivals are up this year,’ said ACEA’s Prakash. As a result, shipments from the neighboring country have a competitive advantage.

Also Read: Pakistan chooses more expensive import options ignoring India’s massive stocks

‘Pakistan’s stocks are new crop, whereas our offerings are old crop. Naturally, buyers prefer new stocks,’ Shah explained.

Recently, Indian exporters reduced their offer rates by $15 (₹ 1,105) per tonne in the hope of attracting some demand. ‘There is no denying that Indian onion commands a premium in the global market. The only issue is that buyers abroad, who were impacted by India’s ban on onion exports last year and this year, always seem to have other options,’ Prakash explained.

‘Pakistan’s rates have also started to rise. Some buyers are gravitating toward us as a result,’ Shah explained.

Pakistan is currently quoting its onion at $300 (₹ 22,150) per tonne free-on-board, versus India’s $400 (₹ 29,500).

‘Our exports have been harmed primarily because our prices are higher than those of competing countries.’ Traders are not getting good margins,’ said Gupta of the National Horticultural Research and Development Foundation (NHRDF).

Some traders, according to Shah, were holding stocks at ₹ 18,000-19,000 per tonne, plus another ₹ 4,000-5,000 for storage. ‘Traders must recover their funds,’ he stated.

Early Kharif harvest

According to exporter Chaudhary, the upcoming early Kharif onion quality is good and will begin arriving next month.

‘At first, we heard there was some crop damage, but it has recovered. The quality is said to be good,’ Prakash said.

‘The early Kharif onion crop is good across the country, not just in Maharashtra. Farmers in many states, particularly in the South, have planted onion this year,’ said Gupta, implying that onion production may be higher this year. Shah stated that a correct crop image would be available only after October 15.

Onion has three crops: the early Kharif crop arrives around mid-October, while the late Kharif crop arrives around the New Year. After April, the rabi onion crop arrives.

Sudden and unexpected rains in states such as Karnataka, Madhya Pradesh, and Maharashtra harmed the Onion crop in 2019 and 2020. In both years, retail prices soared to ₹ 100 per kg during October-November, forcing the Centre to intervene to keep the price rise under control.

Also Read: Boycott on onion auction at Lasalgaon to end on October 30

According to the Ministry of Agriculture and Farmers’ Welfare’s second advance estimate, Onion production last season (July 2020-June 2021) was projected at 29.92 million tonnes (mt), up from 26.28 mt in 2019-20 and 26.10 mt in 2018-19.

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