Weak monsoon fuels inflation, Onion prices are at a two-year high

Onion price has jumped to its highest in nearly two years and could fuel food inflation as scant rains delay plantings.At the country’s largest wholesale onion market of Lasalgaon in Maharashtra, the average price has leaped 54 per cent in two weeks to ₹2,550 a quintal, its highest since November 2013.Prices could jump further as a mismatch between demand and supply is expected to worsen due to weak monsoon rains, said Changdev Holkar, former Director of the National Agricultural Cooperative Marketing Federation.Rains in Maharashtra, India’s top onion producer, has been over a third less than normal so far in the June-September monsoon season.[caption id="attachment_1590319" align="alignleft" width="380"] Costlier commodity. PTI[/caption]The southern state of Karnataka, another major producer of the bulb, has had a quarter less rain and the official forecast is that this year India could suffer its first drought since 2009 due to the El Nino weather pattern.The government has already decided to create a small buffer stock of onions to check any price spike but more needs to be done, industry body Assocham has said.The country harvested 18.9 million tonnes in 2014/15, but a significant amount was damaged due to untimely rains and hailstorms during February to April.“Sensing a shortage, farmers are slowly releasing old crop,” said RP Gupta, Director at the National Horticultural Research and Development Foundation.A Lasalgaon trader said usually new-season supplies rise from end-September but this year that could happen only from November. “Until then prices will remain firm at the current level or could rise further.”Reuters