Centre takes steps to cool onion prices amid fresh supply shock

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₹80 a kg, up from ₹60 last week and ₹30 two weeks ago. Prices are similar in other cities such as Chandigarh, Kanpur and Kolkata. Supply-chain intermediaries said they could spiral further.

A deficient June-September monsoon damaged the kharif onion crop in Maharashtra and Karnataka, two large suppliers, pushing back harvests while stocks from the winter crop have almost been exhausted, driving up prices again. Wholesale prices of the vegetable have dipped in Maharashtra, the largest producer, following measures to curb exports, the consumer affairs ministry, which monitors prices of 22 essential food items, said in a statement. The government on 28 October imposed curbs on onion exports, setting a minimum export price (MEP) of $800.

The imposition of MEP has shown an “immediate impact of price correction in Maharashtra markets, where prices recorded a decline of 5% to 9% from the highest price registered during last week," the government said. MEP is a price below which traders cannot sell to global buyers. It is a measure designed to limit cheap exports and boost domestic availability, thereby helping to cool prices.

According to data cited by the consumer affairs ministry, the weighted average price of onion in Maharashtra across all the markets has declined 4.5%. Retail prices usually come down with a lag. Supply-chain intermediaries however said prices could spiral further as supplies have thinned following a delay in harvesting of the summer-sown crop.