Prices could jump further as a mismatch between demand and supply is expected to worsen due to weak monsoon rains, said Changdev Holkar, former director of the National AgriculturalCooperative Marketing Federation.
Rain in Maharashtra, India's top onion producer, has been over a third less than normal so far in the June-September monsoon season. Karnataka, another major onion producer, has had a quarter less rain and the official forecast is that this year India could suffer its first drought since 2009 due to the El Nino weather pattern. Unseasonable weather, hoarding and price manipulation have in the past led to dramatic price rises, and the administration of Prime Minister Narendra Modi is keen to avoid the fallout that had hit the state governments of Delhi and Rajasthan.
The government has already decided to create a small buffer stock of onions to check any price spike but more needs to be done, industry body ASSOCHAM has said. (https://bit.ly/1g7RFqD)
Indians eat up to 15 million tonnes of onions a year, using them as a base for most of their dishes. The country harvested 18.9 million tonnes in 2014/15, but a significant amount was damaged due to untimely rains and hailstorms during February to April. "Sensing a shortage, farmers are slowly releasing old crop," said R.P. Gupta, director at theNational Horticultural Research and Development Foundation.
A Lasalgaon trader said usually new-season supplies rise from end-September but this year that could happen only from November. "Until then prices will remain firm at the current level or could rise further."