Panic among traders triggers drop in onion prices

The onion prices in Lasalgaon and elsewhere in mandis of Nashik district – the onion bowl of India – crashed on Thursday.

Onion, a basic ingredient in Indian kitchens, was sold at around Rs 11 per kg — a fall of nearly 35% — in the wholesale market, resulting in a panic situation.

The reasons for the price drop are many and the impact was cascading. Firstly, the traders panicked due to Income Tax raids on some big players.

There was also panic among the stockists and farmers due to reports of imports particularly from Egypt.

The prices also fell since the new crop is expected to be good. Reports from the district stated that six wholesale markets of the 16 mandis were shut because of the emerging situation.

While the average price stood at Rs 20 per kg for the last few days, it suddenly dropped to Rs 11 per kg. A few weeks ago, it was Rs 24 to  25 per kg in the wholesale market.

“Farmers have refused to sell onions at a low price,” Jaydutta Holkar, chairman of Lasalgaon APMC said.

“What we are seeing now is a panic situation. It’s going to stay for eight to 15 days,” Deepak Chavan, Pune-based agricultural commodity expert told DH.

He expressed confidence that the situation would ease out soon. Chavan pointed out that the daily requirement of onion is 50,000 tonnes and import of 200 to 500 tonnes does not make an impact thought it creates some short time panic.

“We are not taking any chances. Let the crisis settle down,” said a farmer from Nashik district. In the Third Advance Estimates of Area and Production of Horticulture Crops for 2016-17, released a fortnight ago, the department of agriculture, cooperation and farmers welfare stated that with 21.7 million tonnes estimated onion production in the country, there is an increase of 3.8% over the previous year.

Maharashtra, Karnataka, Madhya Pradesh, Bihar and Gujarat are the major onion producing states. The department of consumer affairs said that recently it held a meeting with traders/importers in coordination with department of commerce and discussed about the current onion price and reviewed the availability situation.

“It transpired that import of around 2,400 MT of onion has arrived while another 9,000 MT is expected shortly. Recent production does indicate that as per the fundamentals, there is no rational for prices of onion to rise any further,” it said.