Government Considers Imposing Stock Limits on Onion Traders after Prices Surge to Rs 70-80 per kg

The Government is considering imposing stock limits on onion traders as the retail prices of the key kitchen staple has increased to Rs 70-80 per kilogram in Delhi and many parts of the country owing to supply disruption in the wake of surplus monsoon rains in the major growing states.

As per the data maintained by the consumer affairs ministry, retail onion prices rose in different parts of India - Rs 57/kg in Delhi, Rs 56/kg in Mumbai, Rs 48/kg in Kolkata and Rs 34/kg in Chennai (last week) The prices were quoted at Rs 60/kg in Gurgaon and Jammu in the same period.

However, trade data showed that the onion rates skyrocketing to Rs 70 to 80 per kg towards the end of the last week from Rs 50 to 60/kg in the previous week, and it may rise to 90-100/kg in upcoming weeks. Prices of onion are on the rise day by day despite several measures taken by the Centre to increase supply.

Sources told that "The government has taken several measures in the last few weeks to improve the domestic supply and check further increase in prices of onion. However, retail prices have suddenly shot up in the last 2-3 days because of supply disruption due to excess rains in the growing states".

Sources added that, it is a short-term supply disturbance and if the situation does not get normal in the coming weeks and prices will rise, then the government may consider seriously imposing stock holding limits on onion traders.

According to the Met Department, the main reason for the increasing price is – the main onion producing regions i.e. Maharashtra, Karnataka, Andhra Pradesh, Gujarat, eastern Rajasthan and western Madhya Pradesh have received excess monsoon rainfalls in the last two days. Right now, stored onions are being sold in most parts of the country as fresh summer crop will hit the market from November onwards.

Traders said that there is ample supply of stored onion of the previous year's in the country but its transportation has been affected because of heavy rains in some parts of the country. Plenty of the onions are stored in Maharashtra, where rains disturbed the transport of the kitchen main to other parts of the country, said by a wholesale trader who is from Lasalgaon in Maharashtra, which is Asia’s largest onion market.

The Centre has taken several measures to seize the prices of onion in Delhi and other parts of the country. It is unload onion from its buffer stock through several agencies like Nafed and NCCF which are selling onions at around Rs 22/kg in the national capital.

The state governments have been asked to boost supply in their states by picking up central buffer stock. Some states of the country have shown interests so far. The centre has a total stock of 56,000 tonnes of onion and of which 16,000 tonnes has been supplied so far.

Besides heavy rain, prices are under pressure due to fall in kharif production this year owing to less planted area under onion on account of surplus rains.