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Rainless June and April hailstorm to send onion prices skyrocketing

Tuesday, 1 July 2014 - 6:05am IST | Place: Mumbai | Agency: dna

Adverse conditions, like the one-month delay in monsoon and the hailstorm that hit the onion belt of Maharastra in April, are likely to push up the prices of onion to close to Rs100 a kg in a couple of weeks, according to available market indications.

According to data released by the Agriculture Produce Market Committee (APMC) at Vashi, the supply of onions has been steadily going down. In the past, the wholesale market used to receive 80 truckloads a day; but now their number has dropped to 60. Each truck carries 12 tonnes on average. But, not only has the supply come down but the quality of the onion is also bad. At least 20 per cent of the supply is non-usable and is declared as waste during sorting. "Really speaking only 50% is of usable quality which can be stored for more than a week. Thus, the shortage is huge," director of APMC, Ashok Walunje told dna on Monday. The Vashi APMC market is the vegetable and fruit selling hub and is the main source for supply to Mumbai city and suburbs.

According to Walunje there will be a record increase in prices in July and August. "Currently, we are selling onion at the rate of Rs22-27 per kg. Last year, the record was Rs60 per kg in the wholesale market," Walunje said. Given the huge profit margins of the retailers, the price is likely to hover close to the Rs100 per kg mark in the retail markets.

Meanwhile, late in the evening, PM Narendra Modi, aware of the looming prices, asked states to take urgent measures to remove hitches in supply chain and ensure "uninterrupted" flow.

Modi directed consumer affairs secretary Keshav Desiraju to write to chief secretaries of all states to take corrective steps. Soon after, Desiraju wrote to the states saying urgent measures at the state level are required to tackle the situation.

Nanansaheb Patil, chairman of APMC at Lasalgaon, told dna that this year there was a double whammy for onion crops that resulted in a surge in prices. Lasalgaon is the biggest onion-supplying market in Asia. "A few months ago, most of the onion crop was damaged in hailstorm and unseasonal rainfall. And, whatever the crops were harvested by farmers were not of storable quality and were disposed of immediately. Normally, farmers stock summer-time-produce for sale during August. But this time, they were forced to dispose of their stocks early because of the high levels of rotting. Therefore, only 20 per cent super quality of onion has remained in the farmers' godowns," Patil said.

He said another major reason for onion price rise is delay in monsoon. "Entire June has gone without rainfall. So, there is no new onion plantation activity in major onion supplying districts in Nashik. It will have affect onion prices further. Even, suppose the rain starts in first week of July as per the Indian Meteorological Department's predictions, still there will be a gap of 90 days before the crop is harvested. Thus, an upward push in prices is to be expected. This crisis is beyond the control of farmers," Patil added.

Tukaram Patil, potato and onion commission agent in Dhule said if the central and state governments are really serious about easing the prices of onions and other vegetables, then they should directly buy the produce from farmers and sell through retail chains like Apana Bazaars or NGOs. "Otherwise, putting a cap on export and cracking on hoarding is not going to help this time. There is no high production of onion and hence there is no question of anyone hoarding them for better prices," said Patil.

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