Why Onion Price Is High In India & When Will Rates Go Down?

Onion price hike reason: As all-India average retail onion price shoots up by 57 per cent to Rs 47 per kg, the Centre last week decided to step up the sale of buffer onion at a subsidised rate of Rs 25 per kg in retail markets in order to provide relief to consumers. The all-India average retail price of onion rose to Rs 47 per kg on Friday, from Rs 30 per kg in the year-ago period, as per the data maintained by the consumer affairs ministry.

In the national capital, retail price of onion was at Rs 40/kg on Friday as against Rs 30/kg in the year-ago period, the data showed.

On Saturday, onion prices further rose to Rs 65-80 per kg in the retail market of the national capital on lower supply.

Mother Dairy was selling loose onions at Rs 67 per kg. E-commerce portal Bigbasket was selling at Rs 67 per kg, while Otipy at Rs 70 per kg.

Local vendors are selling onions at around Rs 80 per kg.

“We have been offloading buffer onions since mid-August and we are stepping up the retail sale in order to check further rise in prices and provide relief to the consumers,” Consumer Affairs Secretary Rohit Kumar Singh told news agency PTI.

According to the ministry, onions are being offloaded from the buffer stock in both wholesale and retail markets in states where there is a sharp rise in prices. Since mid-August, about 1.7 lakh tonnes of buffer onion has been offloaded in 22 states at different locations.

In retail markets, buffer onion is being offloaded through two cooperative bodies NCCF and NAFED outlets and vehicles at a subsidised rate of Rs 25 per kg. In Delhi too, buffer onion is being sold at this subsidised rate.

Why is onion price so high?

A senior ministry official said the delay in kharif onion sowing due to weather reasons has resulted in less coverage and late arrival of the crop. The fresh kharif onion should have started arriving by now but it has not. With stored rabi onion getting exhausted and delay in arrival of kharif onion, there is a tight supply situation, resulting in price increase in both wholesale and retail markets, the official added.

He also mentioned that the government has doubled the buffer onion stock for the current year and this should improve domestic availability and check prices in the coming days.

For the 2023-24 fiscal year, the consumer affairs ministry through NCCF and NAFED has maintained a buffer onion stock of 5 lakh tonne and plans to procure an additional 2 lakh tonne onion in the coming days.

According to the Department of Consumer Affairs data, on Saturday the all-India average retail price of onion is Rs 45 per kg, but the maximum price is Rs 80 per kg. In Delhi, the average price is ruling at Rs 75 per kg.

Govt action

The government on Saturday imposed a minimum export price (MEP) of USD 800 per tonne on onion exports till December 31 this year with a view to increase availability of the vegetable in the domestic market and contain prices. The decision came into effect from October 29.

Besides, the government has also announced the procurement of additional 2 lakh tonnes of onion for the buffer, over and above the 5 lakh tonnes already procured. The MEP is there for all varieties of onion except Bangalore Rose and Krishnapuram onions; and for cut, sliced, or broken in powder forms.

“Export of onions is free. MEP of USD 800 FOB (free on board) per tonne is imposed till December 31, 2023,” the Directorate General of Foreign Trade said in a notification.

An official statement said that the step will help in maintaining sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored Rabi 2023 onion is declining.

The USD 800 per tonne MEP translates into about Rs 67 per kg. Onion from the buffer has been disposed continuously since the second week of August in major consumption centres all over the country, and also supplied to retail consumers at Rs 25 per kg through mobile vans operated by NCCF and NAFED.

“Till date about 1.70 lakh metric tonnes of onion has been disposed of from the buffer. The continuous procurement and disposal of onion from the buffer are undertaken to moderate the prices for consumers while ensuring remunerative prices to the onion farmers,” the statement said.

The DGFT notification added that certain onion consignments will be allowed to be exported without MEP and that included consignments that have been handed over to the Customs before this notification and is registered in their system.

(With agency inputs)