Onion Price To Rise Once Again: Know Why?

Onion

Onion price is expected to rise once again in this festive season. According to a report by Crisil Research, the price of onion will go high due to erratic monsoon. The unpredictable climate has delayed the harvesting of onions, and this will be the reason for the price rise. The report also revealed that the onion prices are expected to cross ₹30 per kg for Kharif 2021 because of the challenges faced in transplanting the crop in Maharashtra, though this will be slightly lower on-year (1-5%) on a high base of Kharif 2020.

The report added, “delay in the arrival of the Kharif crop and shorter shelf life of buffer stock because of Cyclone Tauktae are likely to fuel a rise in prices.” Cyclone Tauktae has played a huge part in increasing the moisture content of the stored onion, hence shortening its shelf life. The Crisil Research forecasts an increase of more than 100% in onion prices this year as well, compared with 2018. Last year, in 2020 also, the onion price got almost doubled during the festive season.

Rainfall as a critical factor

The rainfall plays a critical role during the transplanting process as it helps seedlings to root firmly in the soil and confirms good bulb development. Rainfall and climatic conditions, especially the southwest monsoon play an important role in the production of one of India’s most consumed vegetable-onion. The heavy rainfall and deficit in rainfall both affect its production.

The heavy rainfall and erratic monsoon in the three highest onion-producing states- Maharashtra, Karnataka, and Andhra Pradesh have disrupted the supply chain. It is estimated that India consumes approx. 13 lakh tonnes of onion every month. Hence, onions are grown in all three seasons i.e. Kharif, late Kharif, and Rabi to meet the need and demands of people.

These three states contribute to 75% of total onion production in India. The Rabi onions contribute to 70 % of total onion production while Kharif season produced onion helps to maintain the supply chain during the lean period of September-November, which is a major festive season for India. Maharashtra alone contributes 35% of Kharif onion, but due to fluctuating monsoon, it gets affected.

The Crisil report noted “That said, monsoon remains the key monitorable. If untimely rains lash the key producer states in September and October, the crop could bring more tears with price inflation and reduced supplies.”

What government is doing?

The Crisil’s report revealed that the government is taking all the necessary measures to control the price rise. It has set up a buffer stock of 2 lakh metric tonne for onion for fiscal 2022. Almost 90% of the planned buffer stock for onion has been procured, with the highest contribution coming from Maharashtra.

The government has also advised non-onion-producing states like Rajasthan, Haryana, Madhya Pradesh, Gujarat, and Uttar Pradesh to increase the Kharif onion acreage from 41,081 ha to 51,000 ha. The report further suggested that the onion acreage is expected to increase 1 percent year on year in the marketing year 2021.

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