Onion prices soar as farmers' protest leads to supply crunch

Onion supply to wholesale markets (mandis) has taken a hit due to sporadic demonstrations by farmers across Nashik district in Maharashtra. This has led to prices touching two weeks' high.

The prices have bounced 37% to touch Rs 37.29 per kg at the benchmark Lasalgoan mandi on Monday, the Business Standard reported. The wholesale market is Asia's largest spot onion selling market. Tuesday's prices were not available on account of Dussehra holiday.

"Many small farmers' groups have joined hands to start protesting the holding limit and the export ban. We are also supporting it. We demand the government withdraw both," Hansraj Wadghule, a local leader of Swabhimani Shetkari Sanghatana told the news daily.

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Onion supply to Lasalgaon dipped to 137 tonnes - the lowest this year - on Monday.

"The supply situation has changed quite a bit. There is very little onion left with farmers from the previous harvesting season. Excess rainfall and an extended monsoon have led to massive crop damage," Jaydatta Sitaram Holkar, chairman, Agricultural Produced Market Committee, Lasalgaon told the news daily.

He also stated that the crop quality arriving in the market was poor, "hence onion prices are going up. There is very little opportunity for further price hike from the current level."

Also Read: After India's ban on onion exports, Asia has eye-watering prices

The mandi prices of the staple hovered around Rs 3-4 a kg in January which spiked to around Rs 15 a kg in July.

The monsoon arrived around three weeks late this year which delayed seeding and replanting of saplings. This led to onion prices shooting to Rs 45 a kg at Lasalgaon with retail prices soaring to Rs 60 a kg.

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The steep rise in the staple's prices drove the government to impose a minimum export price (MEP) of $850 a tonne on September 15. This was followed by an export ban and imposition of stock limits.

The government enforced a stockholding limit of 50 tonnes and 10 tonnes for wholesalers and retailers respectively.

Also Read: Govt bans export of all varieties of onions after prices touch Rs 80 per kg