What keeps onion prices rising despite government efforts?

NationalWhat keeps onion prices rising despite government efforts?


Onions have reached the Rs 80/kg barrier in the majority of metropolises, and more increases are expected in the future. A study of the reasons behind the government’s repeated attempts to lower the price of essential kitchen items

How far has the government gone?

The central government has often intervened to regulate the price of onions during the last few months. A 40 percent export levy was applied in August to make it more accessible on the home market. Nevertheless, onions continued to report price increases in the wholesale and retail markets, even if the action restricted the export pipeline. Consequently, the government launched yet another attack on October 28 by enforcing a minimum export price (MEP) of $800 per ton. This corresponds to a base export price of Rs 67/kg. In essence, Bangladesh’s little export revenue stream likewise came to a complete stop.

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 Why do prices keep going up?

The wholesale market in Lasalgaon reacted to these measures, though not as much as the government was expecting. Consequently, the bulb’s average trading price on October 28 was Rs 4,800/quintal, and on November 3, it dropped to Rs 3,650. Onion prices at retail are still high; most cities estimate that the bulb costs between Rs. 70 and Rs. 80 per kg. The biggest onion market in the nation, Lasalgaon, is situated in the Niphad taluka of the Nashik district and sets prices for the bulb.

The reason behind the higher-than-normal costs of onions in the market is the delayed arrival of the monsoon and significant damage to the harvested crop earlier in the year. Maharashtrian farmers seed their rabi onions in December or January and then harvest them in March. Due to its low moisture content, this onion may be stored; producers store their onions in covered structures known as kanda chawls to keep out heat and moisture. However, this year’s unseasonal rainfall and March storms severely destroyed the crop. According to trade estimates, almost 60% of the onions that were supposed to be stored were damaged and were offloaded by the farmers in April and May at extremely low rates. The current price increase is the result of this serious supply chain mismatch. Although the government claims to have buffer stocks, there are significantly fewer of these than are needed.

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When will the price of onions start to stabilize?

The markets are not giving any reason for optimism regarding a speedy end to the price increase. The kharif onion, also known as red or lal kanda in Marathi, has begun to arrive at Lasalgaon’s market, although its quantity is insufficient to leave an impression. Therefore, the old stock still makes up the majority, while the new onion arrivals range from 10 to 50 quintals on average. Farmers and traders have discounted any impending shift in the trend.

The majority of farmers are currently selling off their older stock. It is not yet time to harvest the new crop. Only at the end of the month, when arrivals improve, will the situation improve, according to a market dealer. Up until that point, the government and the public would both find the price of onions to be exorbitant.

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