Explained: What determines onion prices -Parthasarathi Biswas

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published Published on Oct 24, 2020   modified Modified on Oct 25, 2020

-The Indian Express

In back-to-back moves aimed at controlling onion prices, the government has relaxed import norms and now reintroduced stock limits. Why have prices been rising, and how far can these moves check the rise?

With less than a week to go for the Bihar elections, the Centre on Friday reintroduced the stock limit on onions — a move aimed at controlling rising prices, which crossed Rs 80 per kg in many cities on Friday, including nearly Rs 100/kg in Mumbai.

Barely a month ago, Parliament had amended the Essential Commodities Act, 1955 to exclude onions — besides potatoes, edible oils, oilseed and pulses — from the list of essential commodities, thus freeing them from stock limits. Since then, possibly with the Bihar elections in mind, the government has acted twice towards controlling onion prices; it relaxed import norms on Wednesday, followed by Friday’s reintroduction of the stock limit.

A look at the dynamics of onion prices and the impact of the government intervention:

* Why have onion prices been rising?

They have been rising since the last week of August, as reports started coming in of massive losses to kharif onions caused by heavy rainfall in north Karnataka. This crop was meant to arrive after September and was expected to feed the markets until the arrival of the kharif crop from Maharashtra towards the end of October.

There are three main onion crops — kharif (June-July sowing, post-October harvest), late kharif (September sowing, post-December harvest), and rabi (December-January sowing, post-March harvest). The rabi crop has the least moisture content, making it amenable to storage. Farmers, especially in Maharashtra, store it in on-field structures called kanda chawls to protect it from moisture and light. This crop feeds the markets till the next one arrives.

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The Indian Express, 24 October, 2020, https://indianexpress.com/article/explained/simply-put-what-determines-onion-prices-6858709/

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