Onion prices may go up in March as exporters warn of major shortage in supply

India is expected to face a major shortage in onion supply until it harvests the next kharif crop, reported The Economic Times quoting Industry experts. The report further added that this may reverse the current scenerio of excessive supply of onion and stable prices amid an export ban.

Harvest Drop

The report quoted industry experts and warned of a 30% drop in rabi harvest, potentially leading to a spike in onion prices around Ramadan in early March. The drop in harvest is attributed to the deficient rainfall experienced by Maharashtra, Karnataka, and several other states in peninsular India.

Onion exporters have cautioned the government about the consequences of allowing onion exports without adhering to a proper mechanism to control export volumes in a letter to the Union government.

Also Read: India bans onion exports until March 2024 amid price surge

As per The Economic Times, the exporters, who met government officials on Monday, claimed that exports of reportedly 300,000 tonnes of onions will result in prices soaring to Rs 35-40/kg at markets in Nashik district and to Rs 50-60/kg in other retail markets.

"We expect the onion prices and demand to increase considerably from the beginning of March due to increased demand of the Ramadan festival on one side and reduced arrivals of kharif crop and some gap in the rabi arrivals," the exporters told the publication, adding, "This year the rabi crop is considerably lower in Maharashtra as well as Madhya Pradesh. The kharif crop is in the last stage and arrivals will reduce in the next 15 days. The rabi crop, expected to arrive to the markets after mid-March, is not in excess and is likely to be less than last year."

Onion Export

Onion export were banned between December 2023 till March 2024 to control rising domestic prices and potential shortages.

However, the export ban had led to a crash in onion prices, causing widespread farmers' protests in Maharashtra, the top producer of onions in the country.

The Economic Times quoting onion exporters mentioned that here is a tremendous shortage of onions in the global market and India is the only source of fresh onions. International prices range between $1000-1400 per tonne, while Indian onions are available at $350 per tonne.

Meanwhile, the average wholesale rates of onion at Lasalgaon Agriculture Produce Market Committee zoomed by 40% on Monday. Average price of onions per quintal rose from Rs 1,280 to Rs 1,800 on Monday with minimum and maximum prices being recorded at Rs 1,000 and Rs 2,100 per quintal respectively

Along with Onion, Tur output is also expected to fall by about 13% over the previous year. By this, the Tur prices is likely to be expensive for the entire year till the next harvest arrives.