Virendra Pandit
New Delhi: It happens almost every year when the gap between two crops shoots the prices up. As five state assemblies go to the polls in the coming weeks, the onion prices have gone through the roof across India in the last 10 days. This price rise has pulled down the bulb’s demand, despite its relatively short supply.
According to the media reports, onion prices in Maharashtra and Gujarat almost doubled in a fortnight, despite a relatively lower demand and supply, prompting the buyers to urge the government to to bring the prices down. In Mumbai and Ahmedabad, the onion prices hovered around Rs. 80 per kg on Tuesday, and may soar further in the coming days.
The government recently imposed a Minimum Export Price (MEP) for onions and directed procurement of an additional 2 lakh tons of onion for buffer stocks.
Reports from Uttar Pradesh said the prices soared because of short supplies which, in turn, pulled down demand. “We are getting onions for Rs 60 to 65 from mandi. But customers are not buying the onions much due to rising prices. There is a shortage of supply too,” a vegetable vendor in Agra said.
Prices soared because of short supplies as many a state reported reduced production due to inclement weather during the monsoon season that ended mid-October. Many onion-producing areas reported a wipe-out of the crop.
Last Saturday, the Union Government notified the MEP of USD 800 (INR 66,600) per metric ton (MT) on a FOB basis for the export of onions, between October 29 and December 31, 2023. This price meant that onion prices would be about Rs. 67 per kg.
The free-on-board (FOB) price is the price of goods at the frontier of the exporting country or the price of a service provided to a non-resident. It includes the values of the goods or services at the basic price, the transport and distribution services up to the frontier, and the taxes minus the subsidies.
The measure was taken to maintain sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored rabi 2023 onion is declining.
Besides, the government also announced the procurement of an additional 2 lakh mt of onion for the buffer, over and above the 5 lakh tons already procured.
Onion from the previous buffer stock was consumed since mid-August in major consumption centers across the country and also supplied to retail consumers at Rs 25 per kg through mobile vans operated by NCCF and NAFED. To date, about 1.74 lakh mt of onion was supplied from the buffer stock to moderate the prices for consumers and ensure remunerative prices for the farmers.
Earlier, the government procured over 5.07 lakh mt of onion and is all set to procure another 3 lakh mt soon to keep the price under control, the reports said.
The Centre on Monday said the onion prices in Maharashtra fell by 5-9 percent from last week following its decision to fix the MEP.
The Department of Consumer Affairs is monitoring exports and prices on a daily basis to ensure stable domestic prices and availability to consumers, the statement said.
With the demand rising in November, the department has started releasing onion buffer stock into the market both through mandi sales and discounted sales to retail consumers at centers of high prices.
This includes retail sales through 685 mobile retail outlets covering over 170 cities. NAFED and NCCF also started procuring an additional 2 lakh tons of onion of kharif harvest to be distributed in high-price centers to keep the prices under control.
The all-India average price of onion was around Rs 50.35 per kg while the maximum rate was Rs 83 per kg and the modal price was Rs 60 per kg, according to data compiled by the Department of Consumer Affairs.