Retail onion prices stay near Rs.50 a kg despite intervention from Union govt
New Delhi, Sept. 18 -- Retail onion prices are refusing to budge from the Rs.50-per-kg mark despite government intervention, with supply constraints expected to keep the market firm through September and October. Fresh kharif arrivals, delayed by the late monsoon, are expected to bring some relief from November, experts said.
The all-India average retail price of onion stood at Rs.53.84/kg on September 16, against Rs.27.71/kg a year earlier, according to data from the Department of Consumer Affairs. That means onions are now 94% more expensive than a year ago. The average wholesale price was Rs.45.65/kg on Wednesday, more than double the Rs.21.54/kg recorded a year ago.
The government has been releasing onions from its price-stabilisation buffer at Rs.35/kg through NCCF, NAFED, Kendriya Bhandar and mobile vans. According to a senior ministry official, about 9,200 tonnes of onions have been dispatched so far from the government's 120,000-tonne buffer. "Retail prices have begun showing a visible easing in several cities, including Varanasi, Shimla, Patna, Kolkata, Delhi, Ghaziabad, Amritsar and Thrissur where we distributed onions," the official said. "At the all-India level, the weighted average modal price in mandis fell 9.1% from Rs.3,721/quintal on September 2 to Rs.3,383/quintal on September 11. In Maharashtra, prices declined 4.2% from Rs.4,011/quintal to Rs.3,842/quintal over the same period," the official said.
"The recent firmness in retail onion prices is largely supply-driven," said Pushan Sharma, director of research at CRISIL.
The rabi crop accounts for about 60-70% of annual onion production and normally supplies the market until September-end. With the crop estimated to have declined 5-6% from a year earlier, primarily because lower prices during the previous season, farmers sowed less. "Average mandi prices had been around Rs.11-12/kg, reducing the incentive to expand acreage", he said.
Supply was further hit by unseasonal rainfall in Maharashtra during March-April, which damaged late-harvested rabi onions. Excess rainfall in Maharashtra and Karnataka during July also caused localised fungal infestation in stored stocks, affecting quality and reducing the quantity of onions that could be marketed, Sharma said.
The bigger concern is the gap between dwindling rabi stocks and the arrival of the next crop.
Kharif crop contributes the remaining 30-40% of annual onion production and is important for bridging the lean-season supply gap. But the late onset of the monsoon pushed back planting in key producing regions, Sharma said.
A government release on July 4 had said that onion sowing in the Nashik region was about 15 days late, while sowing in the Chitradurga and Challakere belt of Karnataka was estimated at only around 60% of normal. Market reports now point to a more prolonged delay.
This has created a supply gap in the intervening period. "With rabi stocks running down and kharif arrivals likely to be delayed, market availability is expected to remain constrained through September and October, keeping retail and wholesale prices elevated," Sharma said. A correction is expected from November onwards, as fresh kharif arrivals improve market supplies, he said....
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