After Sugar, Onion Prices Surge 76% In Nashik: What's Driving The Hike Across Markets?

Arvind Sharma, New Delhi: Like sugar, onion prices are rising across key markets. In Nashik, wholesale rates increased by nearly 76 per cent over the past month, while wholesale prices in several states doubled.

What's Driving The Hike?

Three main factors are driving the rise: delayed sowing of Kharif onions due to an uncertain monsoon, weaker arrivals of Rabi crops, and government procurement falling roughly half of the target. Hoarders have taken advantage of this shortfall, further affecting market supply.

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The government is preparing to release buffer stocks to provide relief, prioritising cities where retail prices are rising rapidly. However, questions remain about how much relief these limited reserves can provide.

Unlike sugar, where the government has multiple options, immediate relief for onions relies almost on buffer stocks. While the next month and a half could be challenging, the government has dismissed major concerns, claiming that total production is roughly equal to last year's.

Last year, onion production was 30.767 million tons. This year, it is estimated at 30.737 million tons. The current price increase stems from a drop in arrivals to the market rather than a drop in production.

Wholesale And Retail Prices

In the Nashik market, wholesale onion prices stood at Rs 3,750 per quintal on August 19, adjusted to Rs 3,551 on August 20, and then crossed Rs 3,600 on August 21. A month ago, rates were Rs 2,050 per quintal.

According to the data from the Department of Consumer Affairs, the national wholesale average stood at Rs 3,397 per quintal on August 22. Meanwhile, average retail prices stood at Rs 41.64 per kg, up 19 per cent from Rs 34.95 a month earlier.

Lower Procurement Targets Impact Buffer Stocks

Buffer stock targets have decreased over the past three years from 500,000 tons to 300,000 tons, and down to 200,000 tons for the current season. Procurement began in May, but only 120,000 tons were purchased by the end of July as farmers opted for higher open-market prices. To boost procurement, the government raised its procurement price from Rs 1,875 to Rs 2,125 per quintal on July 4, and later to Rs 2,645 per quintal.

The current buffer stock remains too low to pressure hoarders or offer significant relief to consumers. Speaking to Jagran.com, Vikas Singh, Vice President of the Nashik Onion Exporters Association, noted that buffer stocks are typically released starting in September.

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Prices typically rise in August and September as Rabi stocks deplete while the Kharif crop takes time to arrive. This year, poor weather and delayed Kharif sowing have further heightened market concerns.

Price Hike In A Month