Onion tears befuddle nation, high prices to stay

No one knows for sure why the price of onion is skyrocketing even as Agriculture Minister Sharad Pawar says the prices are likely to stay for next three weeks.

The commodity, a must ingredient in Indian cuisines, especially in the Hindi belt, failed to attract the buyers on Tuesday even as the Centre imposed ban on onion export with immediately effect.

The onion prices ranges between Rs 70 and Rs 90 a kilo across the country, but nobody knows why this and who is being benefitted, retailers and wholesellers in Kolkata wondered.

“Do not look for any relief just yet when it comes to onion prices,” Agriculture Minister Sharad Pawar was quoted as saying. The “situation is serious” and the are likely to stay high for the next three weeks.

Asked about the reasons for the sharp rise in onion prices, Commerce and Industry Minister Anand Sharma said: “price rise is because of hoarding. There is enough stock of onion in the country”.

In Nasik in Maharashtra, a major producer of onions, wholesale prices are up 50%. And in retail markets in metros, prices are up by between 50-60%.

Delhi is paying between Rs. 60 and Rs. 80 a kilo; in the South, Bangalore and Chennai have onions priced between Rs. 70 and 80 a kilo.

Farmers and traders say that the price rise is due to unseasonal rains in onion-producing areas in Maharashtra, Gujarat and Southern India – a part of the standing crop has been ruined and resulted in a major shortfall.

The next batch of onions will take between a fortnight and a month to arrive in stores.

The government announced Monday night that exports of onions have been suspended till Jan 15 to help improve the supply and reduce prices. Agriculture cooperative major Nafed, a regulating agency, has been asked to stop giving fresh clearance to exporters.

The government has also made exports almost impossible for those who are already in possession of ‘no objection certificate’ (NOC) given by the Nafed and 12 other agencies.

The meeting was chaired by NAFED managing director Sanjeev Chopra and attended by representatives from ministries of agriculture, consumer affairs and commerce.

“There will be voluntarily suspension of issuance of NOC by NAFED, National Consumer Cooperative Federation (NCCF) and other STEs for exports,” an official statement said.

In Delhi Chief Minister Sheila Dikshit had called a meeting to discuss the crisis on Monday. Dikshit had called an emergency meet to discuss price control. Besides onions, tomatoes and garlic prices have also risen considerably.

Some traders in North India have started importing onions from Pakistan, where the prices are a third of Indian rates.

The government has more than doubled minimum export price (MEP) to USD 1,200 per tonne from USD 525 for exporters who have already got no objection certificates (NOC).

“The NOCs which have already been issued till today will be effected only on USD 1200 per tonne cost and freight,” the statement added.

Asked that MEP has been raised substantially, Sharma said: “We will make it (exports) prohibitive till the domestic situation improves.”

A government official said the members were “baffled” over the “unprecedented” rise in prices of onion since Saturday and doubted speculative forces behind it.

According to the agriculture ministry estimates, the total production of onion in 2010 is about 5 million tonnes, up from 4.87 million tonnes last year.

India has exported 11.5 lakh tonnes of onion in April to Nov period this year as compared to 18.73 lakh tonnes in the entire 2009-10 fiscal.

India exports onion mainly to Gulf countries, Sri Lanka and Bangladesh.