Domestic Onion Market Review – What Should Farmers do Now

Onion market currently remains stable with respect to demand conditions. In most mandis yesterday, market was slightly firm as per trade sources. The country usually produces more onions than it needs. But last year, heavy rains and flooding damaged stockpiles as well as the monsoon crop in the main growing areas. This pushed prices significantly up hence the government stepped in for controlling prices by banning exports, restricting hoarding and increasing imports. Still the upside rally continued till December, since overseas shipments arrived only after December 27. Onion prices had jumped to a record 111 rupees per kilogram on December 17, and farmers could get good profits last year.  

Market situation changed 2020 onwards and due to higher prices farmers were encouraged to plant more. At the same time stockists and farmers started selling due to better prices hence supply increased significantly after December 2019. Problem worsened after March month when Corona impact was observed and there was further selling in the market resulting in supply glut situation. Onion markets started falling and prices went even below Rs10 a Kg in few states post March.  

With lock down easing and wholesale demand reviving, onion prices started improving and the market stablised after May. These days, prices are fluctuating marginally but supply seems much higher than the consumer requirements. Only 35-40% of the stocks have been released by farmers and stockists after March 2020 and normally the new season onion supply will be available August/September onwards. Already arrivals of the new crop have started arriving in mandis of South India.  

Also, quarantine restrictions from different countries (because of Corona problem) are discouraging exports from India. Presently Bangladesh is the major buyer and that too buys in small quantities. It will take few more months for the quarantine restrictions to be removed. Therefore not much profit margins can be expected by farmers who are still holding onto their stocks. Market persons do not expect gains more than Rs 2-3 per kg, for good quality onions till August month. Therefore it is advisable that between July and August, farmers should prefer selling their stocks regularly after marginal rise in Mandi prices in coming weeks. Fresh stocking can be considered after or during September, because prices during that period may turn cheaper because of the new season supply pressure.