Onion prices in India have soared to eye-watering heights, leading to worries about food inflation and consumer unrest as climate change hits production of one of the country’s most important vegetables.
Extreme heat earlier this year followed by excess rainfall from the annual monsoon has led to a drastic fall in production in India’s key growing areas. The monsoon is critical for the country’s agriculture, but the weather event has become increasingly erratic due in part to the changing climate, with warming oceans leading to extreme rainfall.
Wholesale onion prices at Azadpur, a leading hub for onion traders near New Delhi, have jumped by almost 500 per cent from the start of the year to Rs1,908 per 40kg after soaring to a six-year high of Rs2,400 in April.
“Prices are rising and rising,” said Sachin Gangawani, a vegetable vendor in a Mumbai market. “Our profits have reduced drastically. People instead of buying a kilo, they’re buying a quarter kilo,” he added.
India has two annual onion harvests. The first of this year was devastated by a severe drought, with production down 50 per cent from 2018, according to Rutika Ghodekar, analyst at commodities data firm Mintec. “Onion prices in India have spiked on the back of significant losses of the crop,” she added.
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The second crop, currently being harvested, had been damaged by heavy rains during the monsoon, leading to lower planting and production as well as quality, said Ms Ghodekar. With rains still continuing, there were now worries about next year’s harvest as the seedlings available were of poor quality while volumes had also fallen, she said.
Line chart of Rupee per 40kg showing Indian onion prices hit eye-watering levels
The sharp rise in onion prices is an unwelcome development for Prime Minister Narendra Modi, coming at a time when his government is struggling to address a steep economic downturn. The economy’s growth rate has fallen to a six-year low, cutting into the income of rural farmers and urban consumers alike.
The price of onions, an important crop and a core ingredient in most dishes across the country’s rich regional cuisines, is a particularly sensitive subject.
Millions in India still spend more than 50 per cent of their household income on food, and onion-related strife has been linked to the downfall of more than one government since 1980. It is also blamed for the defeat of Mr Modi’s Bharatiya Janata party in a local election in 1998.
Faced with rising prices, the government has been releasing its national buffer stocks of 50,000 tonnes into the market. In late September, to quell rising prices it placed a limit on stocks held by traders to prevent hoarding and banned onion exports. Earlier this month, it pledged to import 100,000 tonnes of the vegetable.
India’s export ban has had a knock-on impact for importers of its onions such as Bangladesh, which suddenly found its own supplies constrained.
Dhaka has been calling for the ban to be lifted, and in a recent visit to New Delhi, Sheikh Hasina, Bangladeshi Prime Minister, joked that “it has become difficult for us to get onions”, adding “I’ve told my cook to make food without onions.”
