The Onion Price Spiral

The current spike is believed to have been manipulated by traders and speculators

Onion prices across the country have been on an upward spiral since July. Wholesale prices in Delhi have shot from Rs 3,889 on 6 September to Rs 4,650 per quintal 10 days later. In Mumbai, during this same period, prices increased from Rs 6,350 to Rs 5,400. In Maharashtra’s Lasalgaon market, the largest for the bulb in India, prices went from Rs 4,410 to Rs 5,300 per quintal in the same time frame. According to media reports, about 90 per cent of last year’s onions that were stored are already exhausted. There is now about 350,000 tonnes left for consumption.

What the crop is currently going through is a seasonal shortage. Because of this, prices usually peak between September and November and fall between January and March. But the current spike is believed to have been manipulated by traders and speculators. Government officials claim that traders are hoarding and releasing stocks at a slow pace.

In a bid to reduce exports, the Government is mulling the option of raising the minimum export price of onions from $650 a tonne to $1,000. There is also talk of importing onions from Pakistan and China. The Government claims prices will soften by early next month when kharif crops from Andhra Pradesh, Karnataka and Tamil Nadu hit the market.

The vegetable’s price spikes have always held electoral ramifications. In 1998, the BJP lost power in several state elections in part because of the price rise. It is said that this was most evident in Delhi, where the BJP went from the leading party in the state legislature with 67 seats to the opposition with only 15 seats. The current hike has already become a rallying point for the BJP, which has set up stalls across Delhi to sell onions at discounted prices and call for the fall of the Congress government.

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