Plan to import onion may keep prices under check

PUNE: Fear of government action has helped keep onion prices stable in July and traders expect them to rule steady even during most of August.

Though traders still believe that a shortage of the bulb is bound to happen in September-October, the government's move to begin imports is likely to put a cap on the extent of price rise during this period, they believe.

As against an increase of 80% in the wholesale prices in June, onion prices have remained stable, declining slightly in the second half of July. Most of the traders and sources at major mandis in the country attribute the stability in prices to government action and decline in exports due to international trade factors.

An elected head of one of the major mandi for onion traders said, "Traders are not in mood to do hoarding as government has included onion in the Essential Commodities Act." A major exporter of onion said, "There was no speculative price rise in July."

Another big onion trader in the national capital said, "The measures taken by the current government have been responsible for taming the increasing trend of onion prices. The previous government has allowed exports to happen till August and had taken action only after the onion prices reached Rs 45/kg in wholesale.

"Decline in exports by more than 50% in July as compared to August has also contributed to keeping the prices stable. Though the Union government has imposed a minimum export price ( MEP) of $ 500/tonne onions to discourage their exports, trade sources attribute the decline in exports in July to international factors. Onion is available in plenty in most of the onion growing countries like Pakistan, Egypt China and their quality is better than Indian onion reducing demand for Indian onions.With the onset of the holy month of Shravana and Chaturmasa, domestic demand is likely to remain less in August. Wholesale onion prices may remain between Rs 15/kg and Rs 25/kg in August," said Sohan Bhandari, president, Nashik district onion traders association.

Two main factors had made the onion traders believe that prices could be like previous year, touching Rs 100/kg in retail during September/October.

The growers as well as exporters/traders are not sure about the quality of the stored stock, which was damaged by rains and hailstorm in March and April this year. "Absence of rainfall for about 1.5 months helped keep the stored onions in good condition. With the revival of monsoon, if rains persist for longer period, the increase in humidity leads to fast deterioration of the stored onions," said Surinder Babu Budhdhiraja, Delhibased onion trader.

Secondly, the delay in sowing of kharif crops also leads to shortages during Septmber/October. "The new crop from Nashik region will be late by at least two months now," said Nanasaheb Patil, chairman, Lasalgaon APMC.

As farmers are waiting for appreciation in prices, they are holding a huge stock, say traders. "Rajasthan onion, which is currently taking care of onion requirement of north India, will come to market for another one-and-a-half months. There is still huge quantity of onion with farmers in Madhya Pradesh, Maharashtra and some other places," said Budhdhiraja.

Despite the confidence of traders about a shortfall of bulb towards the end of the rainy season, government's move to import onions is expect to put cap on the extent of price rise.

Source : economictimes.indiatimes.com