Onion prices continue to crash due to excess supply  

February 2, 2012

In just two months, the prices of onion tumbled by 52% due to excess supply and low off take

Alekh Angre

The prices of onion have crashed by more 52% in the past two months due to excess supply across the country. Experts say that though the prices are in the favour of consumers, the government interventions in required as farmers are unable to recover their cost of production.
 
In the key onion market of Laslangaon in Maharashtra prices have been falling since early December. The wholesale price for onion is Rs350-Rs400 per quintal compared with Rs850-Rs900 per quintal two months ago.
 
According to RP Gupta, director, National Horticultural Research and Development Foundation (NHRDF), “This is something we had predicted. The prices were bound to fall from January as there was excess supply. The government gave a production estimate of about 80,000-90,000 metric tonnes for onions. However, the total production during this season is much higher.”
 
The official data released on last week stated that onion prices fell steeply by 79.1% from same period last year. According to Horticulture division of Agricultural Ministry, the total production of onion for 2011-12 for all three season- rabi, kharif and later kharif – stood at 1.51 lakh metric tonne.
 
According to a Lasalgoan-based trader, there are simply no takers for the produce. “The government policy for onion has always been wrong. Now at least it should intervene and give some subsidy to exporters. Otherwise the situation will continue to remain same.”

Last month, following the protest from traders, the government slashed the minimum export price (MEP) for onions from $250 to $150 per tonne. Maharashtra state government also issued no objection certificate for the export of 3,000 tonne.

In the Mumbai market similar trend is followed. In APMC, Vashi the wholesale prices are as low Rs4-Rs5 per Kg.  Similarly, the prices are also falling in Andhra Pradesh. In Vijaywada, due to lower demand and extra supply from the other southern states, the prices of onion have crashed as low as to Rs2-Rs3 per Kg.

Mr Gupta says that, “There is an urgent need of government intervention. Onion growers cannot even recover the cost of the production and are compelled to sell at low price, incurring losses.”