Onion prices drop after govt allows imports by state agencies

Onion prices are reported to have dropped for the first time in three weeks after the government decided to allow import of the essential commodity in view of the rising prices in the domestic market.

The decision was taken at a meeting of the Price Stabilization Fund Management Committee (PSFMC) headed by Avinash K Srivastava, secretary in the consumer affairs ministry, on Thursday.

It was decided to import onions through government agency to augment the availability of onions in market to moderate prices, an official release stated.

Officials said the committee also decided that the National Agricultural Cooperative Marketing Federation (NAFED) and the Small Farmers Agribusiness Consortium (SFAC) would procure 10,000 tonnes and 2,000 tonnes of onions, respectively, from the producing areas, including Delhi and supply it to consuming areas to enhance availability and to help moderate prices.

Onion prices have long been a sensitive political issue in India. A sharp rise in their prices in the past in India has even resulted in the government being toppled.

In Mumbai retail prices of onion have touched Rs50 per kilogram, while in northern states prices have overshot the Rs50 a kg mark.

Reports said the price of onion is hovering around Rs50 to Rs55 per kg, rising from Rs25 to Rs30 a few days earlier.

Onion prices have been on the rise for over a month due to tight supplies. At present, retail prices of onions are in the range of Rs 65-70 per kg in the national capital and other cities.

The tight supply is attribute to a likely drop in area sown under the kharif (summer) onion crop owing to unseasonal rains. It is expected that there could be at least 10 per cent fall in the total kharif output, a senior consumer affairs ministry official said.

Nearly 40 per cent of the country's total onion crop is produced in the kharif season, and the rest during the rabi season. The kharif crop, however, cannot be stored.

Imports will help to improve supplies and discourage hoarding by traders and thereby moderate prices.

The quantity to be imported has not been decided yet. MMTC will issue tenders. The crop could be sourced from countries like Egypt and China, PTI quoted a senior official as saying.

So far, the consumer affairs ministry has been facilitating onion imports through private traders, who have purchased 11,400 tonnes from the overseas market. To discourage speculative and unscrupulous trade, the Department of Consumer Affairs has empowered states to impose stock limit on onion.