Why onion prices have crashed in Lasalgaon wholesale market

Source: The post is based on the article “Why onion prices have crashed in Lasalgaon wholesale market” published in Indian Express on 28th February 2023

What is the News?

Farmers forced the suspension of trading at Lasalgaon, India’s largest wholesale market for onions located in Maharashtra’s Nashik district following a crash in onion prices.

When do farmers grow onions?

Farmers grow onion in bulk: kharif (transplanted in June-July and harvested in September-October), late-kharif (transplanted in September-October and harvested in January-February) and rabi (transplanted in December-January and harvested in March-April). 

The harvested crop isn’t marketed in one go; farmers usually sell in tranches, ensuring no price collapse from a bunching of arrivals.

The kharif onions are marketed right up to February and the late-kharif till May-June.Both kharif and late-kharif onions contain high moisture which allows them to be stored for a maximum of four months. 

This is unlike the rabi onions which, grown during the winter-spring months, have low moisture content and can be stored for at least six months.It is the rabi crop that feeds the market through the summer and monsoon months, till October.

Why have onion prices crashed?

Sudden rise in Temperature: The current price collapse has primarily to do with a sudden rise in temperatures.Onions containing high moisture are prone to quality deterioration from heat shock, with the abrupt drying-up leading to shrivelling of the bulbs.

Normally, farmers would have been selling only the kharif crop now.But the extreme heat this time has forced them to offload even the late-kharif onions, which can no longer be stored. Since both kharif and late-kharif onions are arriving at the same time, prices have fallen.

Water availability: Improved water availability from good monsoon rains this time has induced farmers in MP, Rajasthan, Karnataka and Gujarat to plant onions over a larger area.The influx of the onion from all these states has also triggered the price collapse.

What can the government do

Farmers have demanded that the government fix a floor price of Rs 1,000/quintal and not allow any purchase to happen below that rate. 

Further, it should direct the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) to start procuring.