India is the second-largest producer of onions in the world, following China. Onions are in high demand in India, not only for domestic consumption but also for export. The onion value chain in the Nashik region consists of farmers, suppliers, commission agents, wholesalers, retailers, and consumers. Today, through this blog, we will explore in detail the reasons behind the record-breaking increase in onion prices.
After a long wait, onion prices in Maharashtra have reached record levels. In Maharashtra, the country’s largest onion-producing state, the maximum price has soared to ₹3200 per quintal, the highest of the season. Minimum prices range between ₹1000 and ₹2000 per quintal in most mandis. Onion farmers are pleased with this development, as sustained prices at these levels for a few months could offset the year’s losses.
Onion Price in Maharashtra
In Solapur's mandi, onion prices have spiked even with a high supply that previously kept rates lower. According to a Maharashtra Agricultural Marketing Board official, on June 3, the arrival of onions reached 11,695 quintals, leading to a peak price of ₹3,200 per quintal. The average price rose to ₹1,600, though the minimum remained at ₹100 per quintal. Similarly, despite the influx of 12,445 quintals at Mumbai's Onion and Potato Market, prices held strong, ranging from ₹1,700 to ₹2,500 per quintal, with an average of ₹2,100. In Pen Mandi, Raigarh, the lowest price was ₹2,400 per quintal. Maharashtra farmers typically urge the government for a wholesale price of ₹3,000 per quintal, as their production costs are between ₹1,500 and ₹2,000. This season marks the first Rabi harvest where wholesale onion prices have soared this high; for instance, on May 29 in Solapur, the rate also peaked at ₹3,200 per quintal.
Reason for Increasing Prices
The surge in wholesale onion prices can largely be attributed to the recent lifting of the export ban. On May 4, the government removed the restriction on onion exports, possibly to avoid potential backlash in the Lok Sabha elections. This change gradually drove prices upward, and by the election results, onion prices had peaked for the Rabi season.
To manage this spike, the government introduced a minimum export price (MEP) of $550 per tonne and implemented a 40% export duty on onions. Despite these controls, onion prices have continued to increase, largely due to steady export demand. Now, a month since the export ban was lifted, farmers are pushing for the removal of the MEP and export duty, hopeful that higher prices could help offset their previous year’s losses.