Lifting of ban on onion export pushes up prices

The Union government’s decision to lift the ban on onion exports has led to volatility in Bengaluru’s onion markets. The price of onions, which was around ₹20-₹25 per kg until last week, has jumped to ₹35-₹40 per kg in retail markets.

With getting costlier vegetables, onions, which were among the cheaper items in the basket, provided some stability to consumers. However, after export was allowed again, most farmers tried to make the best of the situation in both local and international markets, leading to a price increase.

On April 29, the price of big-sized onions was between ₹1,600 and ₹1,800 for 100 kg, while the best Gola variety was priced at ₹1,900–₹2,100 for 100 kg at the Agricultural Produce Market Committee (APMC) yard in Yeshwanthpur .

On May 7, the same varieties were priced between ₹2,200-₹2,400 and ₹2,400-₹2,500 for 100 kgs, respectively. The spike has led to a ripple effect in retail markets.

“Because the government allowed exports, farmers sold their onions at higher prices, and both prices and arrivals went up in the market,” said B. Ravi Shankar, an onion merchant and secretary of the Onion Merchants Association of Bengaluru. He said the prices fell slightly on Wednesday, but they might go up as some farmers sell their stocks in intervals.

“Currently, farmers, especially in Vijayapura and the surrounding regions, have stored good quality onions for a good day and are only selling what is in excess. In fact, only 10% of what is coming to the market is of good quality, and that is why the prices of such varieties are high. When it goes even higher, the farmers will sell in intervals,” Mr. Shankar said.

C. Udayashankar, another onion merchant, said onion arrivals were less this week in the market. “The export rates are good, and that is why farmers are directly exporting onions from their districts instead of bringing them to the market here. “We are expecting the market to stabilize by Monday.”

The merchants also said while the prices might go up by another ₹5-₹10 per kg in the upcoming weeks, this year’s monsoon will be very crucial. “If it rains well between June and August, the price will be stable, but with onions, there is no guarantee until the bulbs are out of the ground. Both too much and too little rain can damage the bulbs,” Mr. Udayashankar mentioned.

In 2023, the price of onions breached the ₹100 mark due to a supply crunch and subsequently crashed by January 2024 due to the export ban.

Export allowance

Just a week before the export ban was lifted, Lakshmikanth, a farmer from Lingavarahatti in Chitradurga district, sold his onions for as low as ₹10 per kg. That same variety is now ₹28 per kg. Like him, many farmers from Chitradurga, which is one of the major onion growing regions of the State, sold their onions for lower rates, with no hopes of price going up. Some even left them in the fields instead of harvesting as the bulb size was too small due to weather factors. However, now they are happy that their new crops will get reasonable rates.

“Allowing the export of onions will help farmers a lot. Now if all the stocks get empty due to exports and regular sales, then there will be good demand for the new crop. Hence, we will get good prices too,” Mr. Lakshmikanth said.