The general feeling in the market circles is that influential traders in Nashik region are in collusion with wholesalers in a few selected cities who appear to be hoarding and release supplies by bottle-neck despatches to increase prices

Exactly a month ago, on 2nd June, the modal price, or the rate at which most trades took place, at Lasalgaon, Asia's largest onion market, was Rs1,050 per quintal or 100 kg. It has shot up to Rs1,850 for fair average quality while it is even higher at Rs2,300 for still better quality!

The Agricultural Produce Marketing Committee (APMC) yard in the primary markets such as Lasalgon, Pimpalgaon, Pune and Solapur receive the onions from various producing centres nearby. From the last year's production of 16.81 million tonnes, this year's output is estimated at 19.2 million tonnes. And yet, the retail prices throughout the country has been shooting through the roof! The reason is not far to seek: due both to hoarding and controlled "release" of the goods!

The general feeling in the market circles is that influential traders in Nashik region are in collusion with wholesalers in a few selected cities causing this price rise. They appear to be hoarding and release supplies by bottle-neck despatches.

Despite higher arrivals at Lasalgaon, averaging 1,500 tonnes a day, the price rise has resulted in food inflation. Earlier, to manage the domestic price situation, the government imposed a minimum export price of $300 per tonne, on 17^th June, as large shipments are effected to the Gulf countries which great number of Indians and other Asians live. Due to the demand, and short supply, some exports were also effected, as reported in the press, at a higher level of $400 per tonne.

Pakistan, our traditional competitor, has always quoted about $10 to $40 less than Indian price, depending upon the market situation for supplies to Dubai, from where substantial transhipments take place to neighbouring gulf countries. India exports about 1.4 million tonnes annually to various countries, but the bulk goes to the Gulf Arab countries.

Since the domestic market situation continued to deteriorate, and supplies began to trickle down again, the Government revised the minimum export price (MEP) of onions to $500 per tonne, effective from 2nd July. The price rise in the domestic market has not abated and has been attributed to hoarding and the fear that there is most likelihood of poorly distributed monsoon which may also affect the Kharif crop.

As though the steep rise in onion price was not enough to put the pressure on the aam aadmi's kitchen budget, the price of potato has also been rising rapidly. Retail price of potato has been increasing by sudden leaps to reach Rs25-35 per kg level and the quality has also been not upto the mark.

In the meantime, it has been reported that the prices of fruits and vegetables have pushed up the whole sale price index (WPI) to a record high of 6.01% in five months to touch this level in May.

In order to prevent further increase in the domestic price of potato, the Directorate General of Foreign Trade, who had earlier fixed the MEP of $300 for onions, which was raised to $500, has announced the MEP of $450 for Potato with immediate effect.

In the meantime, unfortunately, due to damage caused by fungal infection, also known as "Blight attack", there has been reports of potato crop damage in West Bengal, which is India's 2nd largest producer. As many as 4 million potato farmers in Bengal may be affected by this Blight attack. Since the intensity of Blight attack is directly related to changing weather conditions, it is reported in the press that private weather forecasting agencies are also attempting to educate the farmer to be on guard to prevent this.

Out of 4.63 million tonnes of potatoes produced in the country, only 100,000 tonnes are exported. Considering the popularity of this vegetable and the bright opportunity for export, it is essential that the Ministry of Agriculture do what they can to obtain better quality seeds and increase the cultivable area, besides educating the farmer to prevent Blight attacks.

It may gratifying to note that the Government has brought down both Onions and Potatoes under the Essential Commodities Act 1955, so as to improve availability throughout the country. Under this, a stockholding limit ensures that traders cannot stock more than the prescribed quantum. It is now expected that State officials take immediate steps to prevent hoarding and stern action taken against such traders.

Such a move is expected to ensure greater release of these essential commodities and fall in prices.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)