Why onion prices will remain high

Onion prices on Tuesday continued to soar across the country, touching up to Rs 85 per kg in some retail markets, as the government virtually pleaded helplessness for another two-three weeks while Prime Minister Manmohan Singh stepped into the scene.

The prices of onions have soared to Rs 70-80 per kg in retail markets from Rs 35-40 just a few days ago due to shortage on account of damage to crops in Maharashtra, Gujarat and some southern states because of rains that has triggered hoarding.

"Onion prices will remain high for the next three weeks and the situation is likely to improve only after two-three weeks. Ban on onion exports should help reduce the prices," Agriculture Minister Sharad Pawar said on Tuesday.

On Monday, the government decided to suspend onion exports till January 15 in light of skyrocketing prices of the commodity.

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Onion prices in various Agriculture Produce Market Committees (APMCs) here soared to a high of Rs 7,100 per quintal following a shortfall in onion production this year due to untimely rains in November.

Onions were auctioned at major Laslgaon APMC at Rs 6,299 per quintal while in Pimpalgaon prices were Rs 6,263 per quintal; Manmad Rs 6,450; Nandgaon Rs 5,000 and at Rs 7,100 at Umrane, APMC sources said today. In open market, onions were being sold in the range of Rs 50-60-70 per kg.

Also, hoteliers here hiked the prices of dishes like 'pakoda' and 'misal' owing to price rise. According to APMC, onion crop perished in Maharashtra, especially in Nashik, the largest market, due to unseasonal rains leading to sky-high prices.

They said the situation will remain the same till January-end till the new crop arrives in markets in early February next year.

Amid soaring prices of onion in the country, truck loads of the commodity arrived on Monday from Pakistan through the Attari-Wagah land route for supply to northern markets in India.

As many as 13 truck loads (5 to 15 tonne per truck) of onion have arrived from Pakistan, a senior official of Customs Department in Amritsar told PTI without quantifying the total import consignment.

"About five (Indian) importers have brought in onion from Lahore today for supply in the markets of Ludhiana,Amritsar, Jalandhar in Punjab and Delhi," the official said.

The landed cost of onion from Pakistan stood at Rs. 18-20 per kg, he said adding this included custom duty, cess, transportation and handling charges.

According to importers, it was for the first time in this year, onions are being imported from Pakistan.

"We, this year exported onion to Pakistan in the month of March and April. Now we are importing it from them (Pakistan)," Rajdeep Uppal, the MD of a leading Amritsar trading company Narain Exim said.

Mr. Uppal said, as far as his company is concerned, it imported 100 Metric Tonne (MT) of onion today at a rate of $400 per MT .

He said it would import 500 MT of onion in coming days from Sindh provision in Pakistan.

Notably, onion prices in the country have doubled to Rs. 60-70 per kg in retail markets owing to low supply of crop from Maharashtra, Gujarat and southern States.

India and Pakistan agreed to commence truck movement from Attari Check post in Oct. 2007, after a gap of sixty years to boost bilateral trade.

India mainly imports dry fruits from Pakistan and exports perishable commodities like onion, potato, tomato, garlic, livestock, cotton and maize through road route.

Meanwhile, Delhiites hope to get some relief from the rising onion prices from today, with Agri cooperative NAFED deciding to make it available at Rs 35-40 per kg, about half the prevailing market rate of Rs 70 per kg.

The prices of onion have almost doubled in past couple of days in Delhi and other cities of the country. While traders are attributing the price rise to supply crunch, the government said it was mainly due to "hoarding and speculation."

"Nafed and NCCF will be undertaking retail sales in the National capital from today at Rs 35-40 a kg," NAFED Managing Director Sanjeev Chopra said.

NAFED and NCCF (National Cooperative Consumers Federation of India) have 25 stores in the national capital. Meanwhile, Agriculture minister Sharad Pawar expressed hope that prices of onion will moderate after three weeks.

The NAFED MD, who had chaired important meeting of Price Fixation Advisory Committee on onion on Monday hoped the steps will bring down the rate of the produce.

The meeting had decided to voluntarily suspend export of onion till January 15 and raise Minimum Export Price (MEP) to $1,200 per tonne.

"We hope the impact, the voluntary suspension of exports, raising of minimum export price and retail sales by Nafed and NCCF will definitely have a correction on prices. We can't understand the reasons for the price rise because there is no major damage of crops," Chopra, who is also Joint Secretary in the Agriculture Ministry, added.

He said all the existing NOCs for exports will be operated at raised price of $1200 from today onwards.