Data | Onion costs hit ₹100 as supply to markets dip

Hike not likely to help farmers as much as other players in the supply chain

Workers unloading onions in Chennai's Koyambedu market on Tuesday

In Hyderabad, average retail prices of onion have surged to ₹100/kilo, with other cities close on the heels. Supply crunch, either naturally due to failed crops/flooded fields or artificially by hoarding of the vegetable , is the reason behind the drastic hike in prices.

With COVID-19 further straining an already fragile household food budget , many may omit onions from their diet. Notably, the price hike will not help farmers much, as other players in the supply chain corner a big chunk of profits from perishables.

Know your onions

The graph shows average retail price (₹/kilo) of onions in the first 21 days of October 2020 across ten cities. The deeper the shade of green, the cheaper the onion. The deeper the shade of red, the costlier. In most cities, cost of onions suddenly shot up in the last two days.

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Missing bulbs

In Hyderabad, only 845 tonnes of onion arrived at the markets in the first fifteen days of October this year, a significant fall from similar periods in the last two years. Other major cities also recorded a significant shortfall in onion arrivals.

The table lists onion arrival (tonnes) in markets in the first 15 days of October.

 

Eating into the budget

An urban household in India spends ₹1,618 per month on an average on food and ₹178 on vegetables. As onions are selling at ₹72/kg on an average in urban areas in the second half of October, even purchasing a kilogram of them will consume 40% of a household's vegetable budget that month.

The table lists the % share of expenditure on onions of the total food and vegetable budget. For instance, an average urban household has to spend 18% of their monthly food budget to buy 4 kg of onions.

 

Farmers' share

Farmers’ average share in retail prices is lower in the case of perishables like onion and higher for non-perishables. Only 33% of onion’s retail price percolates back to the farmer, and the rest goes to other players in the supply chain.

 

Source: National Horticulture Board; NSS survey on consumer expenditure 2017-18; "Supply chain dynamics and food inflation in India", RBI study