Why has price of onions surged in last two weeks
What's the story
Onion prices have seen a significant increase of 30-50% in the past fortnight amid increasing demands for the product ahead of Eid-al-Adha (Bakra Eid).
The Economic Times reported that the average wholesale price of onions at the Lasalgaon mandi in Nashik climbed from ₹17 per kg on May 25 to ₹26 per kg on June 10.
Additionally, premium onion prices have exceeded ₹30 per kg in several wholesale markets across Maharashtra.
Stockpiling trend
Anticipated lower yields drive onion stockpiling
The primary cause of the price hike is a supply-demand imbalance.
Onions entering the market in June are largely from existing stocks held by farmers and traders, but these stakeholders are retaining their stocks in anticipation of higher prices due to expected lower yields in the upcoming 2023-24 rabi crop.
Another major factor contributing is the optimism among farmers and stockists regarding a potential removal of export duties by the central government, Horticulture Produce Exporters' Association president Ajit Shah said.
Market dynamics
Government restrictions and strong domestic demand
On May 3, the government imposed a 40% duty on onion exports until March 31, 2025, with exceptions to certain nations like the United Arab Emirates (UAE) and Bangladesh.
However, domestic demand for onions remains robust, particularly with Eid-al-Adha approaching on June 17.
"There is strong demand for Maharashtra's onions, especially from the southern states," said Vikas Singh, an onion trader.
Bangladesh
Onion prices jump in Bangladesh too
The ripple effect of the onion crunch was felt in Bangladesh too, despite the Indian government permitting a specified quantity of onion exports to the country.
The Bangladesh-based Daily Sun reported the price of local onions in the country has increased by 3.03% in a week and is sold at Tk80-90 per kg, compared to Tk80-85 per kg a week earlier.
It reported that the price surge started from Wednesday and that there was no imported onion at local shops.