Traders blame supply shortages, unseasonal rains and El Niño conditions for the sharp rise in onion prices ahead of the festival season.
Chennai: Onion prices at Chennai’s Koyambedu wholesale market have surged by around 71% since the beginning of August, rising from ₹35 per kg on August 1 to ₹60 per kg on Tuesday.
Traders have attributed the sharp increase to El Niño conditions, unseasonal rainfall in Maharashtra and reduced supplies from neighbouring states. With the festive season approaching and supply constraints continuing, traders expect prices to potentially rise to ₹80–₹100 per kg.
Onion Arrivals Halve
SS Muthukumar, president of the Koyambedu Semi-Wholesale Vegetable Traders Association, said the market was earlier receiving around 1,400 tonnes of onions every day from Maharashtra, Karnataka and Andhra Pradesh.
However, arrivals dropped to just 700 tonnes on Tuesday, creating significant pressure on wholesale prices.
Traders have urged the state government to take steps to increase supplies. According to them, governments have previously procured vegetables from Maharashtra during shortages and supplied them to traders to help control prices.
National Onion Prices Also Rising
Data from the Department of Consumer Affairs shows that India’s average retail onion price has reached around ₹42 per kg.
This represents:
- 19% increase compared with July
- 45% increase compared with the same period last year
- Chennai’s retail onion price last year was around ₹33 per kg
- Wholesale prices have risen to approximately ₹2,897 per quintal
Why Are Onion Prices Rising?
The current price spike is linked to disruptions across the onion crop cycle.
The rabi crop faced production losses due to a combination of factors, including El Niño-related weather conditions, unseasonal rainfall, hailstorms and harvesting-related damage. Maharashtra, one of India’s major onion-producing states, was particularly affected.
The lower production also reduced the government’s buffer stock, which is normally built through procurement during the March-April period.
Delayed Kharif Crop Adds to Supply Pressure
The kharif crop normally helps bridge the gap between the rabi crop and the arrival of the main October harvest.
However, delayed monsoon conditions have slowed fresh arrivals from major producing regions in Karnataka, Telangana and Andhra Pradesh.
Onion arrivals from major trading centres such as Nashik and Kurnool have declined sharply, pushing wholesale prices to around ₹500 per 10 kg in some markets.
Government Raises Procurement Price
To encourage procurement and improve availability, the central government has raised the onion procurement price to ₹26.45 per kg.
However, rapidly rising prices in Nashik have made procurement more difficult, with official procurement reportedly falling short of the government’s 2-lakh-tonne target.
‘Kanda Express’ Trains to Boost Supply
To address the supply shortage and help stabilise prices, the government has started transporting onions through special ‘Kanda Express’ trains from Nashik to major consumption centres.
The initiative includes destinations such as Delhi, Chennai, Kochi and Guwahati.
The move is aimed at transporting large quantities of onions more efficiently to areas experiencing supply shortages.
Festival Season Could Push Prices Higher
Traders at Koyambedu expect onion prices to remain elevated through the upcoming September-October festival season, when demand is likely to increase.
They believe prices could rise further if supplies do not improve, potentially reaching ₹80 to ₹100 per kg at the retail level.
The arrival of the new kharif crop is expected to provide some relief and help moderate prices once supplies increase.
Source: Department of Consumer Affairs data and traders at Chennai’s Koyambedu wholesale market, as reported by DT Next.
