Export demand, rainfall delay, damage keep onion prices firm

Onion prices are staying firm at a five-year high as a combination of strong export demand and delayed and damaged kharif crop due to prolonged monsoon rainfall has impacted an expected fall in prices post Diwali season.

Onion prices are expected to return to comfortable levels by mid-December, trade insiders said.

At the benchmark Lasalgaon market in Maharashtra’s Nashik district, onions traded in the range of Rs 15/kg to Rs 53/kg on Wednesday, while the average price was Rs 40/kg. The average wholesale price of the red onion at Lasalgaon was Rs 34/kg in 2020, Rs 21/kg in 2021, Rs 20/kg in 2022 and Rs 37/kg in 2023.


The export demand is higher by about 50% than seen during this period of the year.

“We usually export to the Far East at this time of the year. However, as Pakistan's crop is over, there is demand for Indian onions in Sri Lanka and the Middle East,” said Vikas Singh, vice president at Horticulture Producer (Produce) Exporters' Association.

Kharif onion is being harvested in states like Rajasthan, Gujarat and Madhya Pradesh. Prices are higher in Maharashtra than elsewhere due to support of the export demand.

Onion prices, which were expected to soften from the second half of November, are declining slower than expected.

“The prolonged heavy rainfall in October has not only delayed the harvest of the kharif crop, but also damaged the crop quality,” said Ajit Shah, veteran onion exporter from Maharashtra.

The retail food inflation touched a 14-month high in October due to sharp rise in vegetable prices led primarily by onions.

So far, National Agricultural Co-operative Marketing Federation (Nafed) has brought five shipments of onions from its buffer stock from Nashik to Delhi by train. It has been selling onions at Rs 35/kg in retail in Delhi, Chennai and Guwahati.

Trade experts expect onion prices to cool down to comfortable levels from mid-December when arrivals from Gujarat, Madhya Pradesh and Maharashtra are expected to increase. “The quality of the onions that are coming to the markets has gradually started improving. We expect prices to become comfortable after December 1,” Shah said.

Trade insiders also said alleged irregularities in onion procurement operations by farmer producer companies may be keeping onion prices firm for a prolonged period.