Why onion prices are as high Rs 80/kg?

Prices of onions in recent times have caused major concern.

Economists are losing sleep over why the vegetable's price is soaring as high as Rs 80 per kilogram.

Some traders have attributed the rise in wholesale price to increase in prices of the bulb in Lasalgaon Mandi in Nashik.

The entire country seeks an answer.

Steps taken by the central government have not been fruitful in curbing the onions' price hike.

At this juncture, the Centre has directed all state governments, including Maharashtra, to take action against traders and speculators keeping onion prices artificially high by taking advantage of the seasonal shortage.

Onion prices both in wholesale and retail markets in most parts of the country have seen a sharp increase since July.

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"All states and Union Territories have been asked to take action against traders/speculators creating artificial price increase of onion taking advantage of seasonal shortage," a senior Consumer Affairs Ministry official told PTI.

Maharashtra, where maximum onion is stored for use in lean season, has been asked to ensure steady supply of the staple vegetable in the consuming markets, the official said.

The state government has been directed to intimate the Centre if there is any blockage in supply chain as that can cause price rise, the official added.

Onion prices are under pressure even in the current month as 90 per cent of stored onions of last year's crop are exhausted and there is only 3-4 lakh tonnes available for

consumption, the ministry said in the status report on onion.

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Around 27.5 lakh (2.75 million) tonnes of onion were stored in the country for consumption in 2013.

Of this, 15.50 lakh (1.55 million) tonnes were kept in godowns in Maharashtra, 1-2 lakh tonnes each in Gujarat, Bihar, Karnataka, Madhya Pradesh, Uttar Pradesh, Rajasthan and Tamil Nadu, it said.

Normally, stored onions are consumed during lead period of June-August.

The prices continue to rule high as supply of fresh crops from Karnataka and Andhra Pradesh has not been in full swing yet due to delayed harvesting in the wake of rains.

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"The onion price situation depends on production and market arrivals. Prices tend to peak during September-November and fall during January-March every year. Generally, onion storage gets depleted by August-September," the report said.

The harvesting of early kharif crop in Andhra Pradesh, Karnataka and Tamil Nadu is continuing. Arrival of fresh crop from these states are expected to increase further in the coming days, it added.

The government has taken several measures to check prices of onion and improve its domestic supplies.

These include allowing their imports and restricting exports.

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Sharp downfall of supplies in wholesale markets resulted in high onion prices of Rs 80 per kg in most retail markets on Wednesday.

Wholesale prices of onion in Azadpur mandi, Asia's largest wholesale market, rose by Rs 5 per kg to Rs 60 per kg due to fall in supplies, Onion Merchant Traders Association president Surendra Budhiraj said.

"Onion supply to the Azadpur mandi, which comes from Rajasthan, Maharashtra and Madhya Pradesh, has come down to 9,000 quintals from 12,000 quintals till last week," Budhiraj added.

Moreover, wholesale price of edible bulb also increased by more than five times to Rs 60 per kg in Delhi, according to the data maintained by the National Horticultural Research and Development Foundation.

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At Mother Dairy outlets, onions are being sold at Rs 65-67 per kg, while local vendors are selling it at 70-80 per kg depending upon the quality and location.

According to NHRDF data, prices of the politically sensitive commodity at Lasalgaon in Nashik, rose slightly to Rs 58 per kg today from Rs 57 per kg as supplies fell sharply to 2500 quintals from 4300 quintals on Tuesday.

"It cannot be ruled out that traders are manipulating the prices by controlling the supply, a senior official of NHRDF told PTI.

Wholesale Price Index-based inflation had risen for the third straight month to 6.1 per cent in August, driven by a whopping 244.62 per cent jump in onion prices on annual basis.