Citizens' Issues
IB submits reports on price rise; little change expected in onion, garlic prices

Prices of several essential commodities have risen sharply over the past couple of months and the seriousness of the situation has been conveyed to the government by the Intelligence Bureau. Traders, however, don’t see prices coming down soon

The most loved bhakri, lasun chutney and kanda which makes up the daily diet of the common man is making him cry, literally!

Onion prices have climbed to around Rs50 a kg, garlic is as high as Rs200 a kg and traders suggest that these prices will stay high for a while. But one can continue to enjoy the French fries as potato prices have stabilised.

Over a decade ago, spiralling prices of onions contributed to the downfall of Bharatiya Janata Party in the Delhi Assembly elections. While price rise has been a major political issue in the country, strangely there isn't much of a noise heard over increasing prices today.

Moneylife tried to contact politicians across party lines, but got no response to phone calls and messages.

In the middle of this silence, the Intelligence Bureau (IB) has been collecting data on the prices of a range of food items, which it has submitted to the prime minister's office, the cabinet secretary and the union home and finance ministries.

According to the IB reports, copies of which are available with Moneylife, in June there was a decline in prices of onions and potatoes from the levels in January due to an increase in production and better storage. In August, onion prices softened further on adequate stock and a decline in exports during the month to 0.88 lakh tonnes from 1.86 lakh tonnes in August 2009. Potatoes prices also declined with wholesale prices falling 8-44% from January to September.

But in its September review report, the IB records galloping prices. Onion prices hardened mainly due to damage after heavy rainfall. Retail onion prices were up at Rs22-35 a kg from Rs12-22 a kg in the month before. Retail prices of potatoes also increased by 7-67% in most markets.

This rise in prices has been mainly due to unseasonal rain showers that destroyed most cultivated crops and a decline in the storage space.

Satish Bhonde, additional director, National Horticultural Research and Development Foundation, said productivity was affected due to increase in the moisture level of the soil caused by rain which resulted in lower yield of onions. The highest price of onions in the wholesale market was Rs2,000-2,500 per quintal. At the retail it was about Rs40 a kg on average.

Currently, the retail rates in Mumbai are about Rs45-50 a kg for onions, Rs10-17 a kg for potatoes (depending on the quality) and around Rs200 a kg for garlic.

Hasmukhlal Udani, an onion and potato trader at the APMC in Vashi, said, "Due to untimely rain the onion crop was more impacted and this has resulted in the price rise. The wholesale rates of onions are around Rs300-330 per 10 kg. These prices will remain for a while."

Ram Singh Yadav of Kanaiya Trading also attributed the price rise to the destruction of crops by unseasonal rain showers. "The APMC prices of onions are Rs30-35 a kg at wholesale and Rs45-50 a kg at the retail. These prices are expected to continue for some more time."

The potato crop was also affected, but the adequate storage of the produce last year ensured there was no shortage. Hence, traders say, the prices of potatoes would remain stable. "Potato storage is adequate so there won't be shortage in the coming days and prices will be stable," Mr Yadav said.

Onion prices might see some relief by the end of January. According to S Altamash, of Gemini Trading, based in Panvel, "The prices of onions are high due unseasonal rains in which 1,000-2,000 metric tonnes of onions in the Nashik region was destroyed. The prices might see some relief by the end of January as the new crop of around 2,000 metric tonnes will enter the market."

The maximum concern is around garlic, which is selling at around Rs200 a kg, and the price is not expected to come down till the next crop comes to the market. According to a report by Spice Board India of the Ministry of Commerce & Industry, the average price of garlic in Mumbai markets in November was Rs97.50 a kg, an increase of 45% over that at the same time last year. Garlic prices started rising in August this year, when the average price was Rs90 a kg.

"The situation of Garlic will remain critical and the prices will remain high till the next production comes in the market. Garlic being a rabi crop it is grown once a year and it is stored. There have been storage losses caused by factors such as a rise in the temperature, which has affected the supply and led to high prices," said Mr Bhonde.

Mr Altamash, from Panvel, said there had been a decline in demand for garlic on account of the high price, so he had stopped trading in the commodity.
 

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