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Onion Prices Expected To Stay High This Festive Season

Onions prices are expected to stay higher in October and November due to a delay in crop arrivals due to a rainfall shortfall, as August, the critical month for transplanting, saw no improvement in monsoon, according to Crisil.

Chintu Das

According to a research by Crisil Research, onion prices are anticipated to stay higher throughout October-November due to unpredictable monsoons, which cause a delay in harvest. Prices are anticipated to rise due to a delay in the delivery of the Kharif crop and a reduced shelf life of the buffer stock as a result of Cyclone Tauktae, it added.

"In comparison to last year, onion prices are expected to rise by more than 100 percent this year. Because of the difficulties in transplanting the crop in Maharashtra, prices are projected to surpass Rs 30 per kg in Kharif 2021, but this would be somewhat reduced year-on-year (1-5%) on a high base of Kharif 2020" according to the research,

Onions prices are anticipated to stay higher in October and November due to a delay in crop arrivals due to shortage of rainfall, since August, the critical month for transplanting, did not witness any improvement in monsoon. Rainfall deficits totalled 9% as of August 30, 2021, according to the report.

Kharif 2021 output will grow by 3% every year. "Though the Maharashtra onion crop is projected to come late, increased acreage, higher yields, buffer inventories, and planned export limitations are expected to contribute to a slight price decrease," it added.

Onion prices doubled over the festival season last year compared to the typical year of 2018, owing to supply disruptions created by the strong and unpredictable monsoon, which harmed the Kharif crop in Andhra Pradesh, Karnataka, and Maharashtra, the report said.

According to the report, the southwest monsoon began on June 3, signaling a strong start to the Kharif season, and farmers have favored crops like onion and chilli over highly perishable tomatoes. On average, India uses 13 lakh tonnes of onion every month, and the crop is cultivated in three seasons to satisfy this demand: Kharif, late Kharif, and rabi.

While the rabi onion accounts for 70% of overall onion output, the Kharif onion is critical for ensuring supply during the lean months of September to November, when India celebrates its major festival season, the report mentioned.

Maharashtra, Karnataka, and Andhra Pradesh are the top three Kharif onion-producing states, accounting for more over 75% of total Kharif production, according to the report, study added, The changing monsoon would make transplanting the crop difficult in Maharashtra, which produces 35% of the country's total Kharif onion production, as per the report.

As a result of the monsoon's vagaries, Kharif onion arrivals in the market are predicted to be delayed by 2-3 weeks till the end of October or the beginning of November, and prices are likely to be higher until then, it added. The government has taken a number of steps to combat rising onion prices, including establishing a 2 lakh-tonne onion buffer stock for fiscal 2022.

Almost all of the onion buffer stock that was intended has been obtained, with Maharashtra contributing the most (0.15 million tonnes).

The government has also recommended increasing Kharif onion acreage to 51,000 hectares from 41,081 hectares in the historically non-onion-growing states of Rajasthan, Haryana, Madhya Pradesh, Gujarat, and Uttar Pradesh, according to the agency.

In marketing year (MY) 2021, onion acreage is anticipated to rise by 1% year over year, according to the research (Kharif marketing year 2021 includes Kharif crops sown from April to August 2021 and harvested and sold in July to December 2021).

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