Onion prices set to soon decline in Karnataka

December 22nd, 2010 - 8:19 pm ICT by IANS  

Bangalore, Dec 22 (IANS) Onion prices, which shot up to Rs.75-80 a kg in Karnataka this week, are set to decline in the coming weeks with more stocks entering the wholesale markets, a top official said Wednesday.”The sudden export ban and fear of government intervention, including raids, are forcing growers and intermediaries to bring their onion stocks into the wholesale market for auctioning,” state-run Horticultural Producers Cooperative Marketing & Processing Society Ltd (Hopcoms) managing director K. M. Parashivamurthy told IANS.

“With supplies increasing, we will see a gradual decline in the prices in the retail outlets,” he asserted.

Following an average decline of Rs.500 in the auction prices at the state-run Agricultural Marketing Board (APMC) yards across the state Wednesday from the previous two day’s levels, Hopcoms have decided to sell onions at Rs.60 a kg Thursday against Rs.72 a kg Wednesday.

“We are pricing onions at Rs.60 a kg for Thursday and Friday and may reduce further if we are able to procure more stocks at lower rates than we bought during the last two-three days. More than supplies, it is the auction price that determines our retail pricing,” Parashivamurthy said.

Noting that the export ban, reduction in import duty to zero from five percent and greater monitoring of the movement of goods was having a cascading impact on the wholesale prices, the official said onion prices in the retail market would stablise by mid-January when fresh stocks enter the market.

“With supplies from major onion-growing districts in central and northern regions of the state drying up, we have been depending on supplies from Maharashtra and other states. We hope to see prices stabiliing around Rs.30 a kg only after the Makar Sankranti festival in mid-January. Till then they will range between Rs.50-40 a kg,” Parashivamurthy pointed out.

The state-run Hopcoms operate about 270 retail outlets in the four southern districts of the state comprising Bangalore Urban and Rural, Kolar and Ramanagara.

The horticultural department also runs similar outlets in other cities, towns and district headquarters across the state.

“Though we have tripled buying onions to nine tonnes from three tonnes a day in the APMC yards during the last couple of days to ensure supplies through our retail outlets at the prevailing market rates, our profit margins have reduced, as wastage accounts for 10-15 percent when the stocks are graded and good ones are separated,” Parashivamaurthy said.

Admitting that un-seasonal rains in November caused about 60 percent damage to the onion crop in the state, the official said similar adverse conditions in other states such as Maharashtra, Andhra Pradesh and Tamil Nadu led to drastic reduction in supplies to the APMC yards.

“For instance, as a major market for onions due to high population density (seven million) and higher consumption patterns, Bangalore requires about 1,000 tonnes of onions per day. With stocks dwindling to about 200-500 tonnes over the last 10 days, auction prices have suddenly shot up to Rs.600-700 per quintal (100kg) from Rs.200-300 per quintal,” Parashivamurthy noted.

Welcoming the export ban, the official said growers and intermediaries, who were hoarding in anticipation of prices shooting up due to the shortfall in production, would have no option but bring the stocks to the APMC yards for auctioning before the next crop arrives by mid-January.

“About 2,000 tonnes of onions were exported from Karnataka till November this fiscal,” Parashivamurthy added.

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