Heavy rains, delay in harvest to keep onions pricey this Diwali (2024)

Pune: Onions, which are selling at ₹60-80/kg in retail, will remain expensive through Diwali as incessant rainfall in Maharashtra, Karnataka, Telangana and Andhra Pradesh has damaged the crop and delayed the arrivals extending the supply tightness. The surge in prices of onions, tomatoes and cooking oils, which had led the September inflation figures to hit a 9-month high, are expected to keep the food inflation high in October.

The wholesale prices of onions at the benchmark Lasalgaon wholesale market in Nashik have been in the range of ₹45-50/kg for more than a month. The government was expecting the prices to moderate with the harvesting of the kharif crop, which has started in most of the southern states. However, the persistent and heavy rainfall in the onion growing regions has damaged quality of the onions in some pockets, where fields have been waterlogged and delayed the harvest by 10 to 15 days affecting keeping supply situation tight.

"The harvest of the kharif onions would be delayed in the areas that have been getting rainfall, which could keep the onion prices firm for at least two to three weeks," said Vikash Singh, an onion exporter from Maharashtra.

The Centre has started retail sales of onions from its buffer stock to cool the onion prices. It has also used 'kanda train' to transport onions from Nashik to Delhi to reduce the transport cost and increase supplies in north India.

The ongoing rains have affected the harvest ready crop of onions in most of the southern states. "The quality of onions has been damaged considerably due to heavy rainfall in Kurnool and other parts of Telangana and Andra Pradesh," said Hyderabad-based onion trader Tonkini Pramod Kumar, proprietor, Sri Swami Ayyappa Traders.

The steep increase in prices of onions, tomatoes and cooking oils caused India's retail inflation, which had eased to a five year low of 3.65% in August, to hit a nine-month high of 5.49% in September. The food inflation, which is about half of the Consumer Price Inflation (CPI), had increased from 5.66% in August to 9.24% in September.

The prices of edible oils rose for the first time in September in nearly two months and are also likely to stay firm in the coming months. The key reasons for the increase in cooking oil prices includes the increase in import duty by the Indian government in September, which was followed by a global surge in palm oil prices.

India meets almost 60% of its cooking oil requirements through imports, of which, palm has the highest share."Palm oil prices are expected to hold steady above RM 4,000 per tonne in October. Ongoing uncertainty and sharp decline in year-over-year palm oil inventories from Malaysia will keep prices elevated," said the Malaysian Palm Oil Board (MPOB) in a note shared with ET.