Onions turning bitter

Eye watering price may touch 100/kg

Hyderabad: The price of onions, a staple that has sparked protests in the past and toppled governments, has jumped to its highest in nearly two years and could fuel food inflation as scant rainfall delays sowing. The onion prices in both the Telugu speaking States are on the rise and presently cost Rs 35 per kg in Hyderabad and elsewhere in Telangana and Andhra Pradesh.

This price is, in fact, an increase of Rs 5 during the past week in various super markets and vegetable outlets. With a high possibility of the crop failing this year due to weak monsoon, market sources fear that the prices of onions may touch Rs 100 a kg.

Wholesale onion price at Lasalgoan in Maharashtra, Asia's biggest market for this kitchen staple, has shot up by 70 per cent in just about a month -- hitting its highest level for the month of July in the past two decades.

Persistently high food prices in the country, mainly for onions used in everything from bhajis to biryanis, are politically sensitive as more than a quarter of India’s 1.25 billion population lives on a maximum of Rs 50 a day. High food costs lifted country’s June consumer inflation to an eight-month high, and a further rise could stop the Central bank from cutting lending rates that are key to boosting growth. Against this background, the rise in the onion prices may cast a doom for the governments.

Prices could jump further as a mismatch between demand and supply is expected to worsen due to weak monsoon, said Changdev Holkar, former director of the National Agricultural Cooperative Marketing Federation. Unseasonable weather, hoarding and price manipulation have in the past led to dramatic rise of onion prices and the administration of Prime Minister Narendra Modi is keen to avoid the fallout that had hit the State governments of Delhi and Rajasthan.

According to Heritage Fresh supermarket sources, there has been a shortfall in arrival of onions and even the quality was not as good as it used to be till couple of weeks ago. Ratnadeep supermarket sources said that there had been a hike in prices by about Rs 7 per kg in the last one week.

According to agriculture experts like Sarampally Malla Reddy, leader of the All-India Kisan Sabha, onions are normally cultivated in Telangana during the Rabi season mostly in districts of Karimnagar, Nizamabad, Warangal and Adilabad. In Andhra Pradesh, Chittoor and Kurnool happen to be the two major districts where onion is cultivated during the Kharif.

Quoting official figures, Malla Reddy said till July 22 onions have been sown only in 8000 acres this Kharif out of a total area of one lakh acres in Andhra Pradesh. Similarly, in Telangana sowing took place only in 4000 acres as against normal sowing in 10,000 acres during the Kharif season. During Rabi, onion is grown in about 50,000 acres in Telangana, he said.

However, the continued dry spell has marred the prospects of good onion crop in both the States. Farmers did not opt for sowing onion in more than 10 per cent of the normally sown area this year and if the dry spell continues, 90 per cent of the crop would be lost.

What is worrying the AP and Telangana governments is that they cannot even think of importing large quantities of onion from the neighbouring states like Karanataka and Maharashtra as these two States are also witnessing a prolonged dry spell and there has also been sharp decline in the crop output there.

Traders who would have by now offloaded stocks anticipating fresh crop will resort to hoarding and hence the price may even go up to Rs 100 per kg. At Lasalgaon the average price has leaped 54 per cent in two weeks to Rs 2,550 per 100 kg, highest since November 2013.

Rain in Maharashtra, India's top onion producer State, has been over a third less than normal so far in the June-September monsoon season. Karnataka, another major onion producer, has had a quarter less rain and the official forecast is that this year India could suffer its first drought since 2009 due to the El Nino weather pattern.

The Union government has already decided to create a small buffer stock of onions to check any price spike but more needs to be done, industry body ASSOCHAM has said. Annually, nearly 15 million tonnes of onions are consumed in the country using them as a base for most of their dishes.

The country harvested 18.9 million tonnes in 2014/15, but a significant amount was damaged due to untimely rains and hailstorms during February to April. "Sensing a shortage, farmers are slowly releasing old crop," said R P Gupta, director at the National Horticultural Research and Development Foundation.

A Lasalgaon trader said usually new-season supplies rise from end-September but this year that could happen only from November. "Until then prices will remain firm at the current level or could rise further."