Slump in exports, glut to push onion prices further down

A glut-like situation triggered by reduced dependence on the bulb by importing countries is hampering onion prices even as the fresh arrivals continue to hit the markets.

Experts see onion prices going further down as new crop is likely to start arriving from growing regions of North India by May-end.

Onion prices have plunged to a minimum of ₹100-200 a quintal in wholesale market at Solapur in Maharashtra.

The modal price of ₹450 is lower by 40 per cent from ₹850 seen last year. The prices ruled lower even as arrivals were less at 12,000 quintals compared to 14,000 quintals last year.

Trade sources blamed inconsistent government policies on onion exports for the plight of the farmers.

India exports less than 10 per cent of its total onion production of 18.9 million tonnes, yet the domestic price fluctuations are largely dependent on export activities.

In August last year, the government hiked minimum export price (MEP) to $700 per tonne from $425. Later, in December same year, it reduced the MEP to $400.

Fluctuations in government policy on MEP affected the international buyers, who faced uncertainty about costs and logistics of onions imported form India.

Experts see production to be higher than last year’s 18.9 million tonnes.

“Already onion prices have plunged to as low as ₹100/quintal in wholesale markets. It cost farmers ₹6 for every kg grown on their field. They can’t even recover their costs with such low prices.

We suspect a complete collapse of onion prices by end of May and the government has to be prepared for worse,” Ashok Walunj, Director, APMC-Vashi in Mumbai told BusinessLine.

Data available with Agricultural and Processed Food Products Export Development Authority (Apeda) revealed that exports of the bulb has been consistently going down from 1.5 million tonnes in 2013-14 with a per unit value of ₹21,380 to around 0.8 million tonnes during 2015-16 so far till January with per unit value of ₹25,746.

“India’s onion exports completely depend on importing country’s requirements.

Even if there is a bumper crop in India, the importers will not stock onion at their end.

In such a scenario, countries such as Pakistan, Iran, China play a competition to Indian onion,” said RP Gupta, Director, National Horticultural Research & Development Foundation.