(Any opinions expressed here are those of the author and not of Thomson Reuters)
The size and swiftness of the current price spike in onions has surprised everyone, even those who have been dealing with India’s most politically sensitive commodity for decades. How come retail prices have doubled in Mumbai in a week? Why did prices at Lasalgaon, India’s largest wholesale onion market, rocket 38 percent on Monday?
Sure, stocks are low after a drought last year in Maharashtra state, the top onion producer in the country. And there have been reports that this year’s crop is damaged in some pockets because of heavy rains – but that’s just a few thousand hectares.
It’s getting so bad that the government has had to cease its mantra of buy less, export more for other costly commodities and import onions for Indians to cook their classic dishes.
Mumbai housewife Radhika Patel can partly explain things. She bought 10 kg of onions at a Reliance Fresh grocery store in the financial capital – five times the amount she normally buys for a week’s use. This time, she picked up two bags of five kg each because “news channels were saying prices will rise to 100 rupees per kg.” So she thought buying in bulk at 58 rupees a kg was a smart move. Reliance Fresh has seen a spurt in sales of five kg bags compared with onions sold loose.
Television channels and other media have hyped the 100 rupees per kg fear this month, busy reporting how onion prices are bringing tears across the country. That prompted consumers to buy more and advance purchases.