Onion prices likely to remain stable.

New Delhi: Onion prices are expected to remain stable during July-September period, normally considered as lean season for onion production, thanks to a bumper rabi harvest and adequate stocks with farmers and traders.

Price of onion in the wholesale markets have been largely stable at around Rs 500-Rs 600 per quintal in Nasik, the country's biggest market for the commodity, mainly due to a bumper harvest. India is expected to produce a record 8.5 lakh tonne of onions this year, almost 12% more than last year's production of 7.6 lakh tonne because of favourable weather.

With farmers storing large stocks of rabi production in key producing states like Maharashtra, Gujarat, Madhya Pradesh and Rajasthan, traders said supplies would be sufficient in the next three lean months to keep prices under check.

Rabi onion output contributes almost 60% of the total output while late kharif and normal kharif contributes 25% and 15%, respectively.

“We have enough stocks for the next four months to keep prices at a reasonable rate,” National Horticulture Research and Development Foundation (NHRDF) president CB Holkar told FE. However, he warned that there might be a flare up in prices if kharif production sowing for which starts around July is not adequate.

Meanwhile, a recent crop report by NHDRF advocates increasing the area under kharif onion in southern states of Andhra Pradesh, Karnataka and Tamil Nadu to meet increased domestic and export demand.

According to a department of consumer affairs data, retail price of onion in Delhi has come down to Rs 10-12 a kg from Rs 18-20 a kg in the last four months.

The government had decided to keep the minimum export price (MEP) of onion unchanged at $200 a tonne in June to boost exports of the commodity.

The government kept MEP low since April after prices declined few months back. In March, the MEP was $400 a tonne. The MEP is reviewed every month depending on price and stocks.

In the 2009-10 financial year, India's onion exports rose marginally to 1.81 million tonne against 1.78 million tonne in the previous year. India exports onions to Bangladesh, the West Asia, Singapore and Malaysia. Maharashtra contributes more than 40% of total onion production in the country.

Source : Financial Express