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Onion prices skyrocket; traders blame disruption of trade due to stock limit

Partha Sarathi Biswas
After soaring for three weeks continuously, onion prices in the wholesale markets across Nashik — the onion belt of Maharashtra — had corrected by around Rs 1,000 per quintal.

Onion prices in most urban areas are on the rise, with the bulb touching Rs 100 per kg in Delhi. This price rise in retail centres comes at a time when wholesale prices of the bulb are seen dipping. Trade sources say this is mainly because of the disruption of trade brought about by stock limits imposed on traders earlier this year.

After soaring for three weeks continuously, onion prices in the wholesale markets across Nashik — the onion belt of Maharashtra — had corrected by around Rs 1,000 per quintal. On Wednesday, the average traded price of onion at Lasalgaon’s wholesale market located in the Niphad taluka of Nashik was Rs 4,300 per quintal — an almost Rs 1,000 correction from the high of Rs 5,501 per quintal it traded on Monday. Similarly, at the wholesale market of Pimpalgaon in the same taluka, prices had dipped to Rs 3,840 per quintal from Rs 5,611 per quintal the market reported on Monday.

However, the trend was reversed in retail markets, where prices were at the Rs 80-100 per kg mark. Data from the Price Monitoring Cell (PMC) of the ministry of consumer affairs note that on Wednesday, the bulb was sold at Rs 80 per kg in New Delhi, Rs 67 per kg in Mumbai and other cities. Prices in the northeast were over Rs 80 as markets complained of a supply-demand mismatch.

Jaydutt Holkar, chairman of the wholesale market of Lasalgaon, said this reversal of the normal trend — wherein price hikes are uniform in retail and wholesale markets — could be because of trade impositions placed by the central government earlier this year. Alarmed by the continuous price rise, the central government had in September not only banned the export of onions but also prescribed a limit to the stock that wholesale and retail traders can hold. Wholesale traders could hold 500 quintals of the bulb while retail traders were allowed to hold just 100 quintals.

Holkar pointed out that such stringent limits on stocks had disrupted the markets.

“Mostly, wholesale traders stock up in anticipation of demand but the stock limit has put a lid on it. Thus, although traders knew of a possible disruption of supplies due to heavy rains, they were not able to send enough onions to retail markets,’ he said.

Diliprao Bankar, chairman of the Pimpalgaon market also alleged that the Centre’s measures were to blame for the disruption in the market.

The heavy rains which had lashed Maharashtra damaged the upcoming crop. At present, the majority of onions feeding the market from the stock of April. New arrivals were hit as heavy rains prevented harvesting. In some cases, the harvested onions have been damaged.

India’s efforts to import onion has not met with much success, as the Egyptian onion has failed to click with consumers. Trade sources say about 50-60 containers of onions have arrived or are in transit. Meanwhile, a high-powered central committee is expected to visit the state to gauge the situation.