DNA Analysis: The Inside Story Of Skyrocketing Onion Prices

New Delhi: The cost of onions, a staple vegetable in Indian households, has surged once more. Market analysts forecast a potential increase to Rs 150 per kilogram in November. Previously sold at a mere Rs 5 to 10 per kilogram, the current price stands at Rs 100 per kilogram. In today's DNA, Zee News anchor Sourabh Raaj Jain anlaysed the factors driving the significant fluctuations in onion prices every six months.

Typically, vegetables have one growing season, but in our country, onions have two distinct seasons. In March-April, onion prices hit a five-year low, causing farmers to discard their produce. For instance, in the Rajkot market of Gujarat, a farmer received Rs 495 after selling 472 kg of onions, yet incurred Rs 590 to transport them to market. Viral videos depicted farmers holding nominal checks of two rupees each after onion sales.

This marked the onset of the first onion season, a distressing time for farmers. Now, the second onion season has commenced. Onions, once sold for Rs 5-10 per kilogram six months ago, are now priced at Rs 70, 80, 90, and even Rs 100 per kilogram. Experts warn that onion prices could soar to Rs 150 per kilogram by November.

DNA : शुरु हो गया प्याज का 'महंगाई सीज़न'. एक हफ्ते में प्याज की कीमतें दोगुना कैसे हो गईं ? #DNA #DNAWithSourabh #OnionPriceHike #OnionPrice @saurabhraajjain pic.twitter.com/gmyogPOyqa — Zee News (@ZeeNews) October 30, 2023

Compared to last year, October of this year has seen a doubling in onion prices. Traders in the onion markets suggest that prices would have surged earlier, but due to Navratri, demand was subdued. However, following Navratri, the swift increase in onion consumption is noticeable. People seem to be avoiding onions even after the festival.

The prevailing perception is that onion scarcity in the markets is leading to increased prices due to heightened demand. But that's not the entire story. India is the world's second-largest producer of onions after China. Despite this, an onion shortage persists. What could be causing this?

In India, onions are cultivated twice. The Rabi season sowing occurs in November-December and the harvest in April, constituting 60% of the onion production. The second Kharif season occurs in two phases: June-July and September-October. During the second phase, farmers grew fewer onions. The reason cited is that, due to low market prices in the past two years, farmers reduced onion cultivation. However, despite the reduced yield, India has harvested 10 lakh tonnes more onions this year than the previous one. This surplus led onion traders to export more abroad to maximize profits.

As onion prices began escalating in August, the government imposed an export tax of up to 40% to halt onion exports. Previously, no export tax was in place. However, this government action doesn't seem to have made a significant impact. Now, the central government aims to regulate onion prices by any possible means and is actively working towards this goal.