Onion prices will stay depressed till mid-March: Experts

Mumbai: Onion prices will stay depressed till the arrival of the long shelf life rabi or winter crop in the markets in mid-March, experts said on Tuesday.

There is a supply glut in the market which has led to events like farmers getting a pittance of their input costs for the produce and also angry farmers halting trading at Asia’s biggest market place Lasalgaon in Maharashtra, on Monday, they said.

Independent farm sector analyst Deepak Chavan told PTI that there are a variety of reasons for the current spate of troubles which has led to panic selling by farmers as the shelf life of the late kharif harvest is too small, and called for government intervention.

Chavan said more farmers sowed the ‘late kharif’ variety rather than the kharif variety this year leading to an increase in acreage and estimated that productivity has gone up by up to 20 per cent leading to the current situation.

Prolonged rains delayed sowing and many farmers opted for the ‘late kharif’ variety. They also saw a glimmer of hope in elevated onion prices in February over the last three years and timed their crop accordingly, he said.

Shivaji Awate, a grower from Manchar in Pune district, said late kharif harvest ideally needs to be sold by the farmer within eight days of harvesting as against the ‘rabi’ harvest which has a shelf life of more than six months.

This year, the rise in temperatures in February has meant that the same period for ‘late kharif’ has dropped to three days as well and there is wastage of produce, leading to the panic selling at rates lower than Rs 500 per quintal which is not even covering half of the input costs, he said.

Chavan said the prices will stay depressed till mid-March till the rabi arrivals begin, and it will be only with the long shelf life arrivals that traders will hold on to higher prices for the commodity.

He advocated for utilisation of the specially-created price stability fund and also direct cash transfers to the two lakh-odd farmers who he estimates have been impacted by the depressed prices.

The intervention from the government, which can also include an early entry in the spot markets by agencies like Nafed to pick up over a lakh tonne of onion, can help assuage frayed nerves, Chavan said.

Awate made it clear that if the government does not help it will have political ramifications as well, reminding that the general elections in 2024 is not far off.

Changdev Holkar, a grower from Nashik district’s Lasalgaon, said the government should also consider a 50 per cent subsidy in the transport costs and look at ways to encourage exports, pointing out that onion prices in countries like the Philippines are high at present.

Ajit Shah, an onion exporter who also serves as the president of the Horticulture Produce Exporters’ Association, said it is very difficult to convince the South East Asian country, which buys the crop from China, to switch to Indian onions.

He said Bangladesh was one of the biggest markets for Indian onions but the export ban over the last two years led growers in the neighbouring country to start farming their own onions, which has upped the local supply and put pressure on prices.

Shah also opined that the prices will be depressed for another 15-20 days till the arrival of the rabi harvest, and said only government intervention can be of help.

It can be noted that the farmers have been pressing for a grant of Rs 1,500 per quintal for onion, and have threatened to disrupt trading if the demand is not met.

Maharashtra is one of the biggest producers of onion accounting for almost 40 per cent of the overall onion produced in the country and the late kharif acreage in the last sowing season stood at 2.69 lakh hectares nationally.