Onion prices fall on warning to hoarders

Last Updated: Sat, Sep 21, 2013 04:58 hrs

Onion prices, the primary factor behind India's headline inflation touching a six-week high a few days ago, softened, led by a 20 per cent fall in major mandis in Maharashtra. The price fall followed the Maharashtra government's stern warning that it would initiate raids' on hoarding. The Centre's decision to raise the minimum export price (MEP) 38 per cent and arrival of the new crop aided the fall.

It is expected prices in retail markets would react to the price fall soon. Onion prices fell 17.3 per cent in Lasalgaon, Asia's largest spot selling onion mandi. At Pimpalgaon, prices plunged 22.7 per cent.

On Thursday, the Maharashtra government had convened a meeting of Agricultural Produce Marketing Committee secretaries in Nashik and warned the government would carry out raids on hoarders to unearth hidden stocks. "The price decline after the government's threat shows traders were hoarding the commodity to create artificial shortage and keep prices high," said a Nashik-based exporter.

R P Gupta, director, National Horticulture Research & Development Foundation (NHRDF), said, "The actual impact on other markets would be seen in a day or two."

Harvesting of the kharif onion crop started in Maharashtra and the first lot of 1,000 tonnes arrived in the markets in Ahmednagar and adjoining areas. The new crop was quoted at Rs 24-25 a kg, about 35 per cent lower than the prices of the previous crop. Pune markets received about 200 tonnes of the new crop, quoted at Rs 35 a kg. NHRDF data show arrivals in Pune stood at 1,037 tonnes on Friday, against 477 tonnes on Thursday. As the new crop from Karnataka has also started arriving in major mandis, the supply pressure on Maharashtra has eased. Therefore, prices would be lower from here, Gupta said.

On Thursday, the Centre had raised the MEP for onion to $900 a tonne from $650 a tonne to discourage exports. Onion exports fell 81 per cent year-on-year to 29,247 tonnes in August, after the government imposed curbs on exports. India, the second-largest producer of onions in the world after China, is estimated to have harvested 16.6 million tonnes of the commodity last year. In 2012, the total realisation from exports of 0.18 million tonnes of onions stood at Rs 2,294 crore.

To meet the high demand during the festive season, Food Minister K V Thomas had decided its import onions from Egypt, Pakistan, China, etc.

On a free fall (Rs /qtl)
Markets Sep-19 Sep-20 Change (%)
Bangalore 4,000 3,800 (-)5.00
Bhuvaneshwar 4,700 4,600 (-)2.13
Delhi 5,575 5,300 (-)4.93
Hyderabad 3,300 3,000 (-)9.09
Jaipur 5,500 5,050 (-)8.18
Jalgaon 4,200 3,500 (-)16.67
Kolkata 5,000 4,500 (-)10.00
Lasalgaon 5,200 4,300 (-)17.31
Malegaon 5,050 4,300 (-)14.85
Mumbai 5,600 5,400 (-)3.57
Pimpalgaon 5,500 4,250 (-)22.73

More from Sify: