Onion prices, which in recent weeks had shot up beyond the reach of most Indians, have begun to fall, thanks to rising arrivals in wholesale markets and export control by the government, officials said.
Wholesale prices in India’s largest onion-trading hub, Lasalgaon in western Maharashtra, have eased to Rs880 a quintal, from Rs1,500 a quintal just a fortnight ago, they said. Retail prices have fallen from a peak of Rs25 a kilo to about Rs15 a kilo in the Mumbai market.
“Arrivals in the Maharashtra markets have increased. Arrivals in other markets across India will rise in the first week of March,” C.B. Holkar, vice-chairman, National Agricultural Cooperative Marketing Federation of India (Nafed), said on Thursday. “Prices will come down further,” he said, predicting wholesale prices could fall to Rs650 a quintal by March.
Easing onion prices should come as a relief not just to India’s poor and the middle class, but also to politicians trying to control rising inflation in a country where onions have often impacted election results.
Farmers cashed in on an output shortfall in major onion-producing countries, especially China and Pakistan, and exported a record 9.5 lakh tonnes between April 2006 and January 2007. This, coupled with a fall in local cultivation, crimped supply and boosted prices. In response, the government sought to curb the flight of the vegetable by raising the minimum prices at which onion could be exported.
It raised the minimum export price (MEP) in stages to $345 a tonne, compared with $265 in the first week of January, he said. “Export orders decreased immediately after the government increased MEP.”
While the current softening in prices were largely confined to western India, those in northern India would fall once arrivals increased in the first week of March, Holkar said.
Farmers felt firm prices in the past several weeks had enabled them to recoup the last year’s losses when a bumper crop had pushed down prices to abysmal levels, Satish Bhende, additional director, National Horticulture Research and Development Foundation, said.
This prompted many to move over to cash crops and led to a fall in onion acreage. India’s onion production is expected to fall to 5.5 million tonnes in the year to March 2007, from 6.2 million last year.
“With the bumper crop last year, prices had tumbled to one rupee per kilo. Then, nobody helped us,” said Namdev Karale, a 78-year-old farmer.
“With good prices now, we are recovering last year’s losses.”