ONION PRICE ANALYSIS

%
Share in production

15
3
33
3

7
17
10

Maharastra Karnataka Gujarat Bihar M.P A.P Rajasthan Haryana others

FACTORS AFFECTING PRICES

 DEMAND AND SUPPLY

The requirement of onion is almost constant throughout the year and availability of fresh
onion is limited to 7 or 8 months and there is lean periods when prices shoot up because of
poor storage conditions available in the country.

 HOARDING
Traders are keeping the stock and selling it at high price and thus making full advantage of
the seasonal shortage. This is also causing the price of onions to increase. So even if the
country has high produce, the trader-intermediaries who operate in groups encourage
hoarding to keep the prices high.

 POOR INFRASTRUCTURE
Some of the business leaders also say that poor infrastructure for storage and transport of
fresh produce is causing the entire hoax. Some even say that price rise in India is man-made
rather than seasonal.

 ENVIRONMENTAL FACTORS
Excessive rains adversely affect the onion crop. Depending on the time of
occurence rains can cause considerable damage to nursery and saplings. During kharif
season of 1998 and 2005 crop was damaged by excessive rain. During rabi 1998 there
was an above normal increase in temperature in march which is not favourable for
onion bulb development. The cardinal temperatures for optimum seedling growth,
vegetative growth, before bulb formation, and bulb development are 20-25, 13-24,
15-21 and 20-25 o C, respectively.
 OTHER REASONS
A detailed study by the Bengaluru-based Institute for Social and Economic Change for the
Competition Commission of India (CCI)—which had suo motu decided to investigate
cartelization in onion prices—reveals an unholy nexus among a clutch of traders. The report,
submitted in 2012, drawing from secondary data and a primary survey of mandis in
Maharashtra and Karnataka, concluded that not only was there lack of competition in onion
trading, but there were also entry barriers—according to it, the retail mark-up over
wholesale prices in December 2010 was as much as 150%, with most of the gains accruing to
traders.