Crisil Research predicts onion prices to remain high during October-November due to the unpredictable monsoons, which delay harvesting. Due to a delay in the delivery of the Kharif crop and a reduction in the shelf life of the buffer stock due to Cyclone Tauktae, prices will likely rise.
Due to the difficulty in transplanting the crop in Maharashtra, onion prices are expected to rise from Rs 30 per kg to Rs 50 per kg in Kharif 2021, although this would be reduced year-on-year (1-5%) from Kharif 2020, according to the research.
It is anticipated that onion prices will remain high in October and November due to a delay in crop arrivals due to a lack of rainfall. Monsoon conditions did not improve in August, a critical month for transplants. According to the report, rainfall deficits totaled 9% as of August 30, 2021.
In 2021, Kharif’s output will grow by 3% each year. “Though the Maharashtra onion crop is projected to come late, increased acreage, higher yields, buffer inventories, and planned export limitations are expected to contribute to a slight price decrease,” it added.
According to the report, onion prices doubled over the festival season last year compared to the average year of 2018 due to disruptions caused by the solid and unpredictable monsoon, which affected Kharif crops in Andhra Pradesh Karnataka, and Maharashtra.
The southwest monsoon began on June 3, signaling a strong start to the Kharif season. Onion and chili have been preferred by farmers over highly perishable tomatoes. Indians consume 13 lakh tonnes of onion every month, and the crop is cultivated in three seasons to meet this demand: Kharif, late Kharif, and Rabi.
The Kharif onion is crucial for ensuring supply during the lean months of September to November when India celebrates its first festival season, as 70% of overall onion production comes from the Rabi onion.
Maharashtra, Karnataka, and Andhra Pradesh account for more than 75% of all Kharif onion production; the study added that changing monsoons would make it difficult to transplant the crop in Maharashtra, which produces 35% of the country’s total Kharif onion production.
Due to monsoon vagaries, Kharif onion arrivals in the market are likely to be delayed by 2-3 weeks until the end of October or the beginning of November, and prices are reasonable to be higher until then. The government has taken several measures to combat rising onion prices, including establishing a 2 lakh-tonne onion buffer stock for fiscal 2022.
Most of the onion buffer stock has been obtained, with Maharashtra contributing the most (0.15 million tonnes).
Government officials have also recommended expanding Kharif onion acreage to 51,000 hectares from 41,081 hectares in the historically non-onion-growing states of Rajasthan, Haryana, Madhya Pradesh, Gujarat, and Uttar Pradesh.
According to the research, onion acreage in marketing year (MY) 2021 should rise by 1% year over year (Kharif marketing year 2021 includes Kharif crops sown from April to August 2021 harvested and sold in July to December 2021).