After tomato's inflation, will onion be the next pocket bleeder?

According to wholesalers and analysts, supplies of the culinary staple are becoming increasingly scarce in several of the world's largest marketplaces because of a yearly lean period when stock prices fall. If that occurs, it will damage household finances, which are already tightened by the sharp increase in tomato prices, which retail for more than $200 per kg in major areas.

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In the case of onions, the government has close to 250,000 tons of reserves, which it releases to the markets when supplies bottom out, unlike tomatoes or the majority of greens, whose elevated costs have hurt people.

However, price volatility is a feature of the primary ingredient found in the majority of Indian recipes. Trends also demonstrate that once onion inflation as a phenomenon takes hold, it takes a long time to fade.

Heavy rains over the previous month have "decreased supplies" and caused "a lot of damage to stored onions," farmers, according to Narendra Wadhwane, secretary of the Lasalgoan agricultural market committee, Asia's largest onion market in Maharashtra.

"The government is keeping an eye on the demand and supply for onions at 536 locations across the nation, just as we do for 22 other important goods. There is no anxiety because we have enough stocks to interfere in the market, according to a government official.

Those in the onion business claim that this year's winter crop, which meets 70% of the annual demand, wasn't as robust as last year's crop. India frequently imports onions in times of economic hardship, however in 2021–22 and 2022–23, the nation didn't do so.

Prices for onions have been fair over the previous four months. August and September typically mark the beginning of a dry season. The following onion harvests will occur in October. According to official data, modal retail prices have remained constant at 25 for a kilogram. A form of average is the modal price.

However, analysts predict a costly spell. "The acreage under rabi (winter-sown) 2023 (December 2022-January 2023) is estimated to have been lower by 3.5%, led by 25-27% lower realization by farmers in the previous season," according to Pushan Sharma, an economist with Crisil Market Intelligence & Analytics.

High temperatures in February caused onions to mature early, advancing harvests. This has reduced their shelf life, adding to the current strain, according to Sharma.

"Rabi stocks are expected to decline significantly by end-August due to reduced shelf life and panic selling in February-March, exposing markets to tight supplies and high prices," Sharma added.

In comparison to many other commodities, consumers are extremely sensitive to an increase in onion costs. While retail rates frequently rise, especially at this time of year, price drops are not uncommon.

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