The Rise and Fall of Onion Prices: A Comprehensive Analysis

The price of onions, a staple ingredient in Indian cuisine, has been a subject of concern for many months. The recent surge in prices has led to a series of measures by the Indian government to stabilize the market and ensure availability during the festive season. In this article, we delve into the reasons behind the price hike, the government's interventions, and the impact on consumers.

1. The Rise in Onion Prices

Onion prices have skyrocketed over the past few months, with retail prices reaching up to Rs 180 per kilogram in some regions. This significant increase is attributed to a combination of factors, including supply shortages, high demand, and manipulation by traders.

According to The Hindu, the Centre has taken several steps to combat this issue, including export curbs on onions, foodgrains, and sugar. Union Consumer Affairs Secretary Rohit Kumar Singh maintains a watch on the prices of essential grocery items, vegetables, and milk products through the price monitoring cell of his Ministry.

The availability of onions is driven by domestic production minus exports. India exports onions to countries like Bangladesh, Sri Lanka, Malaysia, Qatar, and Indonesia. However, the perishable nature of onions means that 70% of the supply comes from the rabi season, which lasts only four to five months. The kharif harvest is usually delayed, leading to a supply shortage during these months, which traders exploit by spreading news of shortage and engaging in speculation.

The government has increased the buffer stock of onions to five lakh metric tonnes to stabilize the market. This measure aims to ensure that the market remains wary and helps farmers get better prices.

To address the immediate issue, the Centre has intervened in both retail and wholesale markets. The price monitoring cell checks prices at 550 locations daily, providing a comprehensive database reflecting the entire country. On the retail front, onions are being sold at around Rs 25 per kilogram in 100 cities across the country through various channels including mobile vans and e-commerce platforms.

Additionally, the government has imposed a 40% export duty and implemented a minimum export price to curb excessive exports and stabilize domestic prices.

2. Government Interventions

The Indian government has taken several measures to stabilize onion prices and ensure availability during the festive season. One of the key initiatives is the 'Kanda Express' train, which will transport 1,600 tonnes of onions from Nashik to Delhi NCR by October 20, 2024.

According to CNBCTV18, this shipment is part of a larger effort to release onions from buffer stocks via rail to key consumption centers and e-commerce platforms. The onions will also be sold through Kendriya Bhandars and mobile vans at subsidized prices.

The 'Kanda Express' initiative aims to increase the availability of onions in major consumption centers, thereby reducing prices. Out of the total government buffer of 0.47 million tonnes, 91,960 tonnes will be disposed off as part of this effort. This is the highest quantity of intervention in one go, indicating the seriousness with which the government is addressing this issue.

The onions will be distributed across various states including Maharashtra, Bihar, Gujarat, Manipur, Nagaland, Goa, Uttar Pradesh, and Karnataka to sell through their own networks.

The government is also keeping a tight vigil on tomato prices, which have been affected by excessive rainfall in Karnataka. However, with harvests starting in Maharashtra, prices are expected to fall. The Centre's focus on stabilizing prices of essential commodities like onions, tomatoes, and potatoes reflects its commitment to addressing consumer concerns during festivals like Diwali.

As The Economic Times reports, the government's efforts include direct intervention in retail sales by picking up transportation costs when prices reach unprecedented levels.

3. Impact on Consumers

The rise in onion prices has significantly impacted consumers, particularly during festivals when essential commodities are in high demand. The price increase has led to concerns about affordability and accessibility of onions for various dishes.

As The Kathmandu Post reports from Nepal, where India is a key source market for onions, retail prices have risen by over 47% compared to last year. In Nepal's Kalimati market, wholesale prices have increased by 20.32% within a month and by 71.29% within a year.

The price hike in India directly affects Nepal due to its heavy dependence on onion imports from its southern neighbor. Traders in Nepal attribute the price increase to the rise in India and expect it to cool down once the new harvest starts arriving in the Nepali market.

Mohan Baniya, president of the Potato-Onion Import-Export and Wholesaler Association, stated that while prices will hover around Rs130 per kg until then, they may reach Rs200 per kg due to customs duties and other taxes.

For consumers like Banshi Acharya, who was buying vegetables in the Kalimati market on Saturday, price hikes on essential commodities are a major concern. 'Without onion, it is impossible to prepare many dishes,' he said, highlighting the failure in controlling market malpractices.

The decline in onion arrivals in the Kalimati market has further exacerbated the situation, with the market receiving only 24 tonnes of onion on Friday compared to 35 tonnes last year.

The Indian government's efforts to stabilize onion prices include selling onions at subsidized rates through various channels. Union Food Minister Pralhad Joshi flagged off vans of two government cooperativesthe National Cooperative Consumers Federation (NCCF) and the National Agricultural Cooperative Marketing Federationto sell onions at Rs35 per kg.

This initiative aims to provide affordable onions to consumers during festivals like Diwali.

In conclusion, the rise in onion prices is a complex issue driven by supply shortages, high demand, and manipulation by traders. The Indian government's interventions through measures like export curbs, buffer stock management, and direct retail sales aim to stabilize prices and ensure availability during festivals.

As the festive season approaches, these efforts are crucial in addressing consumer concerns and maintaining economic stability.

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