Onion Prices Surge Amid Retail Control Gaps, But Expected to Drop as Kharif Arrivals Begin

With onion prices soaring to nearly ₹100 per kilogram in some parts of the country, the lack of government control over retail pricing is being blamed for the sharp rise. However, prices are expected to fall quickly in the next two weeks as the Kharif onion harvest begins to come into the market.

“There is always an issue with retailers, as there is no control over their prices. The government only regulates wholesale trade. Retailers take advantage of this and hike prices,” said Ajit Shah, President of the Horticulture Produce Exporters Association (HPEA).

“Retail trade is not regulated by the government. Additionally, intermediaries hold a monopoly over the trade, as many cities lack adequate storage facilities,” said Parashram Patil, Senior Agricultural Consultant at Maharashtra Institution for Transformation and board member of APEDA.

Rabi Harvest and Retail Price Comparison

At the Agricultural Produce Market Committee (APMC) yards, especially in Lasalgaon, Nashik district of Maharashtra, the model price for onions on Tuesday was ₹5,851 per quintal for quality Rabi onions. This variety is harvested in April-May and has a longer shelf life. In contrast, Kharif (monsoon) onions, which are just beginning to arrive, were priced at ₹3,600 per quintal.

On the retail front, prices in the National Capital Region (NCR) rose sharply over the past week, with onions now selling for ₹70-75 per kilogram, up from ₹50-60. Meanwhile, the government has been selling onions through cooperatives such as NAFED, NCCF, and Mother Dairy at a subsidized price of ₹35 per kilogram.

“Onions from Nashik take 48 hours to reach Chennai. However, the ones being sold in cities right now were likely purchased the previous week,” said M. Madan Prakash, President of the Agricultural Commodities Exporters Association (ACEA).

Shah noted that transporting onions from Nashik to any part of the country incurs an additional ₹10 per kilogram. “For instance, if onions are bought at ₹40 per kg in Nashik, after accounting for transport and other costs, the price may rise to ₹50 per kg. A ₹10 markup for trade is reasonable, but retailers are charging much more,” he said.

Intermediary Practices and Market Transparency

The higher prices in retail markets are also driven by the lack of transparency in onion trade. “Onions sold in retail outlets are typically from the Rabi season, as the Kharif onions are just starting to arrive. Due to recent rains in Maharashtra, the arrival of Kharif onions has been delayed, pushing prices higher,” Shah explained.

“Retailers add instability premiums, and there is also a lack of accurate information, leading to higher prices due to intermediary involvement,” said V. Shunmugam, an expert on market research and financial markets.

Onion trading is largely unorganized, and intermediaries often charge hefty premiums, behaving like an organized trade. “There is no representation of retailers in places like Nashik. We don’t know how onions change hands after they are sold in the APMC yards. There is a lack of transparency at each level of sale in agricultural market terminals,” Shunmugam added.

Patil pointed out that cities like Chennai suffer from a lack of storage facilities, meaning retail traders are at the mercy of agents who control prices and set terms.

Price Hikes and Market Speculation

Retailers often exploit reports of crop losses to hike prices without verifying the claims. “Whenever news of crop loss surfaces, retailers quickly raise prices. This time, they have taken advantage of the delayed Kharif harvest,” said a trader who preferred to remain anonymous.

In parts of NCR, consumers noted that while government-supplied onions were cheaper, the availability and quality often left much to be desired.

I tried buying onions from the Mother Dairy booth once or twice, but they were out of stock. I stopped trying and had to rely on the local market,” said Kanti Devi, a resident of Noida Sector 134 in NCR. She added that some retailers who bought government-supplied onions were selling them 5-10 rupees cheaper than the market rate, though the quality was not as good. On November 9, the best quality onions in Noida’s wholesale vegetable market were priced at ₹300 for 5 kilograms.

Despite the government having brought in more than 2,400 tons of onions via train by October 30, no new shipments arrived until November 10, contributing to the price increase.

Kharif Harvest Onions to Arrive Soon

Shah from HPEA expressed hope that prices would start to decline within the next two weeks as Kharif onions flood the market. “The crop is good, and we expect a drop in prices soon,” he said.

Madan Prakash from ACEA also reported that 20-30 tractor loads of Kharif onions had reached Nashik on Tuesday, with more expected in the coming week. “This year, the quality of onions is excellent in terms of color and finish he added.

Lately Kharif onions will be available in the market within 15 days said Suvarna Jagtap, Chairperson of the Lasalgaon APMC. Thanks to a good monsoon, the crop is looking great in all aspects.

According to the Ministry of Agriculture’s Crop Watch Weather Group, the Kharif onion sowing has already covered 3.82 lakh hectares, surpassing last year’s area of 2.85 lakh hectares.

Outlook for Onion Prices

As the Kharif onions continue to arrive, price pressures are expected to ease. However, challenges such as supply chain inefficiencies, lack of transparency in pricing, and monopolistic practices by agents may continue to drive up prices in the short term. Consumers can expect a relief in prices as the Kharif harvest picks up, with better quality onions entering the market in the coming weeks.