The prices are crashing due to excess Kharif supply and poor export off take; prices are expected to come down further
Excess supply and poor off-take by the exporters has taken a toll on the prices of onions. In the wholesale market of Lasalgaon, Nashik, the country’s largest onion producing area, prices are crashing down, leaving the farmers to bear the losses. Experts are cautious about the situation in anticipation of a further fall in prices.
The boost in the Kharif production and lower exports due to higher minimum export price (MEP) has resulted in the commodity being flooded in the domestic market.
“In the Lasalgaon market, the prices are between Rs500-900 per quintal while the total production is 5%-10% more compared to last year. The Kharif crop is adding to current production. Prices are further expected to fall in the month of December. Meanwhile, farmers are burdened with losses,” says RP Gupta, director, National Horticultural Research and Development Foundation.
On Monday, wholesale prices of onion in the Lasalgaon market were in the range of Rs331-Rs1,161 per quintal. Surprisingly, in Mumbai market the prices are stable between Rs800-Rs1,200 per quintal. “Prices are stable in Vashi market, with around Rs8-Rs10 per kg (retail),” says a trader from the Agriculture Product Market Committee (APMC) market at Vashi.
According to a media report, following the fall in the onion prices in Karnataka, last week farmers from staged protested at Amargol APMC and blocked the Hubli-Dharwad road.
“Everyone in the cycle—from production till the time the produce reaches the retail market—except farmers, at some point are benefitting either from the falling or rising prices. When price falls, consumers are happy, when it rises, traders cheer. But unfortunately, farmers continue with losses in both situations. There are instances where produce was thrown away by onion growers due to lower prices. But nothing is been done to address the issue and safeguard the interest of farmers who can’t even recover his production cost,” says a professor of media studies.
The government reduced the MEP to $350 per tonne from the earlier $475 per tonne, to encourage exports. Indian onion faced a dip in exports in the international market due to higher MEP.
“Higher MEP resulted in poor export offtake. Now they have reduced it, I think it should encourage exports. But still the current MEP should also be brought to around $250 per tonne,” Mr Gupta said.
“Any action we take now (will) have to take into account the fact that these actions might have consequences a little further down the road. So we have got to balance out actions with risks or a potential increase in vulnerability later on...” RBI deputy governor Subir Gokarn said
Mumbai: Describing the sharp depreciation of the rupee as ‘disruptive’, the Reserve Bank of India (RBI) today said any action to arrest the fall will be guided by medium-term considerations, reports PTI.
“We don’t really have a target or a rate in mind. It’s moving as per market dynamics. It (fall in the value of the rupee) is disruptive, there is no question. There (will be) impact on our import bill, particularly for energy. It’s having an impact on companies and it is a problem,” RBI deputy governor Subir Gokarn told reporters here.
The rupee has been depreciating for quite some time and fell to a historic low of Rs52.73 per dollar in early trade today.
On the possibility of action by the central bank to arrest the fall of the rupee, Mr Gokarn said, “Any action we take now (will) have to take into account the fact that these actions might have consequences a little further down the road. So we have got to balance out actions with risks or a potential increase in vulnerability later on...”
“Actions have to be weighed in terms of their medium-term risks,” he added.
The immediate impact of the fall in the value of rupee, he said, will be on the inflation rate, which has been hovering near the double-digit mark for several months.
“We should not be looking at only the short-term when we make these judgements. Every action that has been suggested... that has been debated also has potentially adverse consequences down the road. So we have got to balance out those too.”
Although the RBI has been maintaining that the exchange rate should be market-determined, it is volatility that has been worrying the central bank.
“... Volatility is another thing. This is the sharpness and speed of the movement that is obviously creating some disruptions. We don’t know where it is going to go, but it is something we need to watch out for,” Mr Gokarn said.
The domestic currency had tumbled by 81 paise to close at a nearly 33-month low of Rs52.15/16 per dollar in the previous session on sustained dollar demand from banks and importers
Mumbai: The Indian rupee depreciated by 35 paise to a lifetime low of Rs52.50 per US dollar in early trade on the Interbank Foreign Exchange today on sustained demand for the American currency from banks and importers, reports PTI.
Dollar gains against other currencies overseas also put pressure on the Indian rupee.
The domestic currency had tumbled by 81 paise to close at a nearly 33-month low of Rs52.15/16 per dollar in the previous session on sustained dollar demand from banks and importers in the backdrop of an eight-session losing streak in the stock market and a deepening euro-debt crisis.
Meanwhile, the BSE benchmark Sensex recovered by 50 points to 15,996 in opening trade today.