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Onion prices rise 66% as traders overstocked for profits |
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PUNE: Onion traders have resorted to overstocking in the hope of reaping hefty profits as they did in 2013 but could not repeat last year due to measures taken by the Narendra Modi government, experts said as wholesale prices shot up 66% on average since the beginning of this month. Although retail prices have remained stable so far, a Mumbai-based exporter said traders in Maharashtra are stocking up heavily, anticipating a strike against market reforms likely to be initiated by the state government.
"Other factors like increase in demand and decline in arrivals are also at play, but to a smaller extent," said the exporter, requesting not to be identified.
Retail prices had touched a record high of Rs 100 per kg two years ago, when wholesale onion prices soared 50% in July over June. In 2014, prices zoomed 35% in July over June but the government managed to suppress the price rise the next month through a series of measures.
"The traders are aware that no one can take any action against them as it is not possible to check stocks. The government is also not taking any action on the export front. It takes at least a month for the cargo to reach India after finalising the contract," the exporter said.
Nothing unusual has happened to justify the 33% surge in onion prices in the past week, said one of the leading exporters in the country. "Some trader had some good demand, somewhere there was talk of traders going on strike, the rains haven't been so good so far and all this supported by some decline in arrival of onions," he said.
Wholesale onion prices have moved up most dramatically since July 17 at the main markets in Nashik, Ahmednagar and Solapur districts in Maharashtra.
"Traders have become aggressive, jacking up the prices every day without any specific trigger. They have stocked up onions at high prices. To make money, they have to take the prices up," said a functionary of Lasalgaon Agricultural Produce Marketing Committee (APMC).
The commission agents (adtiyas) operating at the APMCs currently charge their commission from farmers. A state government appointed committee has been deliberating about charging the commission from forward traders and not from farmers. However, the committee's meeting, planned for July 24, was postponed.
As it has not rained sufficiently in the onion growing belts, farmers have also started holding on to the crop. Most of them have either lost the kharif crop or will have to bear losses due to stunted growth in the past one month.
"The onions left with the farmer are his only hope. After carrying losses of about 30% in the past four months, if he gets some money now, it is justified," said Nanasaheb Patil, chairman of Lasalgaon APMC. "Though onion is not an essential commodity nor does it have any significant nutritional value, it is always under the radar just because it has become a political commodity." In the retail markets, however, traders expect prices to remain stable for the next 10 to 15 days.
Source : economictimes.indiatimes.com
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