Onion crashes again as rains spark panic sales by farmers

New Delhi: Onion prices have started falling again amid a glut in the market as distressed farmers try and dispose of thousands of tonnes of crops damaged by rain and hailstorm in key onion-growing regions.

Prices had bounced back recently from a five-year low. But rainfall and hailstorm across onion belts in Maharashtra in the past fortnight have hit the rabi crop at the harvesting stage, raising quality concerns and prompting panic selling by farmers.

Farmers are rushing to agricultural produce and livestock market committees (APMCs) to sell their produce at the earliest, which has pushed up onion stocks in the market, resulting in a drop in prices, according to industry experts.

“When quality deteriorates, storing rabi onions up to their standard period of four to six months becomes difficult, and farmers are not well equipped to cope with such circumstances,” Nana Bachav, a farmer and director at Krushi Aviskar Farmer Producer Co Ltd, explained. If farmers try to store poor-quality rabi onions for four to six months, they will lose ₹15 per kg.

“Farmers across major and secondary mandis of Nashik, Ahmednagar and Solapur in Maharashtra are bringing about 24,000 tonne of freshly harvested rabi onions each day, of which 70% is damaged. Rabi onions, harvested in March-May, account for 65-70% of India’s total onion output. They are currently trading at ₹200-300 per quintal for the damaged variety and ₹500-600 for the better-quality variety,” said Yogesh Thorat, chairman of Maha Farmers Producers’ Co.

Prices are seen to remain low for the next fortnight, after plunging from ₹900-1,000 a quintal within about two weeks, said spot market traders.

According to the IMD, Maharashtra, the largest onion-growing state, received 308% above-normal rainfall in the week ended 12 April. Since March, the state has got 17.5 mm precipitation, 79% above the usual 9.8 mm.

Estimating the damage to standing onion crops is difficult right now, but the quality is very poor, said Bachav.

“Rainfall and hailstorm in the last eight to nine days may have damaged around 18,000-acre area under rabi onion in Maharashtra, and 100-150 quintal of rabi onion was expected from each acre.

“Drying onions in the field may take up to 7-8 days if the weather is favourable,” he said.

But IMD predicts light rainfall accompanied by thunderstorm, lightning and gusty winds over some regions of Maharashtra for the next four days, and hailstorm over the central regions of the state. The erratic rainfall and hailstorm in some regions of Maharashtra has damaged about 40-50% of the standing rabi onion crops in Maharashtra, which may cause a 25-30% loss in harvest, said Suvarna Jagtap, chairperson, Lasalgaon APMC.

If the weather does not improve soon, production of rabi onion may collapse completely this year.

The potential inflation impact is not clear yet. “If the downtrend in prices continues, it will bring down inflation further,” said Madan Sabnavis, chief economist at Bank of Baroda.

“However, we need to be watchful as prices of vegetables tend to increase during summer, which has set in.”

The government estimates rabi onion production in 2022-23 (April-March) to be 23.5 million tonne (MT) against 22.9 MT last year. Rainfall and hailstorm may not weigh on (overall) onion production, but will reduce the shelf life of onions by two-three months, said a senior official from the department of consumer affairs.

Maharashtra contributes about 40% to India’s total onion production.