Indian Onion Scenario
A research paper prepared under the project
Agricultural Outlook and Situation Analysis Reports
National Council of Applied Economic Research
Parisila Bhawan, 11, I.P Estate, New Delhi
i
ii
Indian Onion Scenario
National Council of Applied Economic Research
New Delhi
iii
Indian Onion Scenario
Introduction
Onion is an important vegetable crop in India and is an integral component of Indian
culinary. Being an essential food item, it is also a highly politically sensitive commodity.
This report analyzes the production, consumption, trade and price behaviour of onion in
India.
Production
India ranks second in global onion production after China and with an annual production of
16 to 17 million tonnes accounts for around 20% of global production. However, Indian
onion yield is one of the lowest. The inherent lower productivity in sub-tropical countries
vis-à-vis European counties, shortage and high prices of quality seeds, high incidence of pests
and diseases typical under tropical conditions, moisture stress or excess rains during critical
growth stages are factors constraining yield. Wide price fluctuations make it a risky crop
discouraging large scale adoption of input intensive production techniques and good
management practices by farmers.
In India onion is grown in three crop seasons, namely kharif (harvested in OctoberNovember), late kharif (January February) and rabi (April – May). Rabi season crop is the
largest accounting for about 60 percent of annual production with kharif and late kharif
accounting for about 20 percent each. Major producing states are Maharashtra, Karnataka,
Madhya Pradesh, Andhra Pradesh, Bihar, Gujarat, Rajasthan and Haryana, which together
account for 85 percent of total production (Figure 1).
Figure 1: Onion Production by State (% Share)
HARYANA
3%
RAJASTHAN
4%
Other
15%
MAHARASHTRA
29%
GUJARAT
4%
BIHAR
8%
KARNATAKA
15%
ANDHRA
PRADESH
MADHYA
9%
PRADESH
13%
1
2
Table 1: Area (1000 Ha), Yield (Kg/Ha) and Production (1000 Mt) of Onion by State
STATES
2007-08
A
Y
2008-09
2009-10
2010-11
2012-13
2011-12
P
A
Y
P
A
Y
P
A
Y
P
A
Y
P
A
Y
P
Maharashtra
254.5
15.7
4,003.1
250.0
15.7
3,932.5
200.0
15.7
3,146.0
415.0
11.8
4,905.0
382.0
14.8
5,638.0
260.0
17.9
4,660.0
Karnataka
Madhya
Pradesh
157.3
18.4
2,887.4
165.1
18.4
3,031.8
141.3
18.8
2,662.2
190.5
13.6
2,592.2
177.2
13.8
2,451.2
159.6
15.0
2,395.9
39.0
16.6
648.6
53.0
16.6
881.8
57.3
16.6
952.3
58.3
17.5
1,021.5
88.1
22.2
1,957.0
96.9
22.2
2,150.7
Andhra Pradesh
35.6
17.0
606.0
39.0
17.0
662.6
39.0
17.0
662.6
47.8
17.0
812.6
48.5
17.0
824.8
85.8
17.0
1,458.8
Bihar
51.3
19.9
1,019.6
51.6
18.3
946.6
53.0
18.3
972.0
53.3
20.3
1,082.0
53.8
23.0
1,236.7
54.3
24.1
1,308.6
Gujarat
84.3
26.6
2,238.3
57.6
24.5
1,409.6
43.3
24.9
1,078.6
62.0
24.4
1,514.1
61.3
25.5
1,562.2
28.9
24.4
704.4
Rajasthan
42.7
9.2
391.6
41.0
9.0
369.1
45.0
16.5
742.5
49.0
10.1
494.2
73.5
9.0
664.2
73.5
9.1
670.8
Haryana
17.7
19.6
346.6
18.8
18.5
347.9
18.4
17.9
330.3
22.2
20.4
453.9
27.5
21.5
589.8
27.8
18.6
518.5
Uttar Pradesh
21.6
13.7
295.8
22.3
13.8
308.0
24.3
13.2
320.3
23.2
15.9
368.6
23.7
16.2
383.5
26.1
17.5
455.8
Odisha
28.8
9.1
262.4
31.5
9.2
289.6
32.1
9.3
298.8
34.8
11.1
385.9
35.2
11.9
419.0
34.9
12.0
419.1
Jharkhand
12.1
20.0
242.2
15.1
20.0
301.8
12.0
20.0
240.0
14.6
20.9
305.0
15.7
20.3
318.2
17.2
18.7
322.2
West Bengal
18.7
13.3
248.8
20.0
13.7
273.8
21.0
13.8
290.0
21.3
14.0
298.0
21.7
14.1
304.6
22.0
14.1
309.1
Tamil Nadu
32.1
8.7
280.3
35.0
8.7
305.5
35.3
9.6
339.7
33.8
10.0
338.9
37.1
15.0
556.5
25.3
11.0
277.9
Chhatishgarh
8.8
15.5
136.7
8.8
15.5
136.7
9.1
17.7
160.3
11.2
15.6
174.2
13.9
15.9
222.2
18.0
15.0
269.3
Punjab
Jammu &
Kashmir
8.0
21.5
171.7
8.1
21.4
173.6
8.1
21.5
175.1
8.2
22.2
182.3
8.2
22.2
182.7
8.2
22.2
182.9
1.8
19.7
35.5
3.0
21.1
63.2
2.6
24.6
64.8
2.8
22.7
63.5
2.8
22.9
65.3
2.8
22.9
65.3
Uttarakhand
Himachal
Pradesh
3.4
10.4
35.2
3.6
11.3
40.5
3.6
11.3
40.5
3.8
10.0
38.0
3.8
10.3
39.3
3.8
10.3
39.4
1.6
16.2
25.9
1.9
16.9
32.1
2.0
33.9
2.2
16.3
35.9
2.2
16.5
36.3
2.2
16.5
36.3
Other
1.7
14.3
24.3
8.6
6.8
58.3
8.5
17.3
41.1
834.0
16.3
13,565.0
756.0
16.1
59.7
17,511.
1
5.6
13,900.0
11.1
1,087.
2
11.4
16.9
52.2
15,118.
0
5.4
821.0
10.0
1,064.
0
5.2
Total
-350.9
12,159.
0
958.7
17.0
64.1
16,309.
0
3
14.2
16.1
4
Onion production has shown a steady upward trend, with a few exceptions, in response to
increase in planted area and to a lesser account due to improvement in productivity. Area
doubled in ten years reaching a record 1.09 million hectares in 2011-12 from about a half a
million hectares in 2001-02. Yield increase during the same period was almost 70 percent
reaching 16.1 tonnes per hectare in 2011-12, with most of the yield increase taking place
during the second half. Consequently production more than tripled from 5.3 million tonnes in
2001-02 to 17.5 million tonnes in 2011-12. Yield has tended to stabilize in recent years.
Most of the increase in production was in Madhya Pradesh, Andhra Pradesh and Maharashtra
whereas in Gujarat there was a significant decline. In 2012-13, all India production declined
by around 7 percent to 16.3 million tonnes due to a decline in planted area in response to poor
planting conditions in major growing regions despite yield scaling a new record of 17 tonnes
per hectare.
Although 2013-14 kharif production estimates are not yet available, heavy monsoon rains and
late season rains coinciding with harvest season in major growing states reportedly caused a
decline in production and some deterioration in quality. However, the prevailing record
prices should provide incentives to farmers to bring more area under late kharif and rabi
season crops. As a result, total production is likely to match or exceed 2011-12 record
production of 17.5 million tonnes.
Figure 2: Onion Area, Yield and Production Trend
5
Consumption
Per capita onion consumption has shown a significant growth in recent years. Based on
NSSO data, per capita consumption at household level during 2004-05 to 2009-10 (5 years)
for which data is available has increased by 32 percent in rural areas and 18.6 percent in
urban areas, implying an average annual growth rate of 6.4 percent and 3.7 percent
respectively (Table 2). On an annual basis per capita consumption in 2009-10 works out to
be 9 kilograms in rural areas and 10 kilograms in urban areas. On a longer term, per capita
monthly consumption increased from 380 grams per person in rural areas and 500 grams in
urban areas in 1987-88 to 740 grams in rural areas and 850 grams in urban areas in 2009-10
(Table 2). Furthermore, the mushrooming of eateries and fast food chains and the increasing
trend towards eating out also must have added to increasing consumption of onions. Being
an essential ingredient in most non-vegetarian cooking, the increasing consumption of meat
and poultry meat should also translate into increased onion consumption. Besides, about 1
million tonnes of onion goes for further processing such as dehydration, pickling, etc. Seed
use of onion bulbs is estimated to be around 50,000 tonnes per year. Thus total annual
consumption requirement of onion is 2012-13 is estimated at 12.5 million tonnes, growing at
around 6 percent annually.
Post harvest loss in onion cultivation is believed to be very high, reportedly as much as 25 to
30 percent. Physical injury during and after harvest, greening of onion due to exposure to
sunlight, sprouting and injuries during storage due to ammonia, controlled-atmosphere
storage, and freezing also cause postharvest losses. Postharvest diseases on onion such as
bacterial soft rot, black mould, bulb rot, neck rot, and smudge, cause significant losses in the
quantity and quality of onions during storage.
6
Table 2: Monthly per capita consumption of onion (kg)
State
Andhra Pradesh
Arunachal
Assam
Bihar
Chattisgarh
Delhi
Goa
Gujarat
Harryana
HP
J&K
Jharkhand
Karnataka
Kerala
MP
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Punjab
Rajasthan
Sikkim
Tamil Nadu
Tripura
UP
Uttarkhand
West Bengal
A&N
Chandigarh
Dadrra
Daman
Lakshadweep
Puduchery
India
2009-10
Rural
Urban
0.961
1.021
0.443
0.635
0.362
0.483
0.797
0.905
0.618
0.879
0.680
0.769
1.060
1.326
0.775
0.878
0.940
1.037
0.880
1.079
0.910
0.819
0.753
0.930
0.802
0.901
0.746
0.792
0.715
0.848
0.797
0.903
0.268
0.312
0.388
0.337
0.289
0.373
0.160
0.283
0.575
0.704
1.146
1.263
0.777
0.786
0.381
0.432
0.757
0.877
0.359
0.520
0.674
0.688
0.631
0.778
0.651
0.728
0.634
1.004
1.017
1.315
1.158
1.239
1.111
0.997
0.652
1.080
1.022
1.162
0.741
0.854
2004-05
Rural
Urban
0.719
0.720
0.262
0.391
0.357
0.472
0.574
0.714
0.477
0.646
0.936
1.084
0.702
0.736
0.585
0.593
0.697
0.820
0.583
0.745
0.592
0.634
0.622
0.840
0.660
0.701
0.543
0.586
0.527
0.618
0.608
0.709
0.166
0.260
0.399
0.428
0.685
0.243
0.214
0.314
0.423
0.575
0.894
0.897
0.533
0.559
0.370
0.528
0.602
0.648
0.319
0.412
0.516
0.587
0.481
0.608
0.485
1.180
0.630
0.768
1.050
1.163
0.520
0.705
0.544
0.438
0.980
0.761
0.699
0.744
0.561
0.720
% Incrrease
Rural
Urban
33.66
41.81
69.08
62.40
1.40
2.33
38.85
26.75
29.56
36.07
-27.35
-29.06
51.00
80.16
32.48
48.06
34.86
26.46
50.94
44.83
53.72
29.18
21.06
10.71
21.52
28.53
37.38
35.15
35.67
37.22
31.09
27.36
61.45
20.00
-2.76
-21.26
-57.81
53.50
-25.23
-9.87
35.93
22.43
28.19
40.80
45.78
40.61
2.97
-18.18
25.75
35.34
12.54
26.21
30.62
17.21
31.19
27.96
34.23
-38.31
0.63
30.73
-3.14
13.07
122.69
75.74
104.23
127.63
-33.47
41.92
46.21
56.18
32.09
18.61
Source: Household Consumption of Various Goods and Services in India: NSS 66th Round
and 61st Round
7
Table 3: Per Capita Consumption (grams/30 days)
1987/88
1993/94
1999/00
2004/05
2009/10
Rural
380
460
580
561
741
Urban
500
560
720
720
854
Source: Various Rounds of NSSO Consumer Expenditure Surveys
Price Trend
Onion prices typically exhibit a seasonal trend peaking during the lean season of SeptemberOctober and falling during April – May coinciding with the peak arrival season of the major
rabi season crop (Figure 3). However, there were aberrations. For example in 2010-11, y-oy onion inflation peaked in January 2011 instead of September – October, 2010, ostensibly
due to a decline in kharif season output. In 2012-13 also onion inflation after remaining low
in September-October 2012, started strengthening from November 2012 onwards and
continued to strengthen in ensuing months peaking at 182 per cent in February. However
after a short period of seasonal weakening of prices during March through May, inflation
continued to strengthen reaching a new peak of 323 percent in September 2013. According
to current indications, onion inflation is expected to further strengthen in October because of
the expected damage to kharif crop and high festive season demand, and is likely to persist,
perhaps at a lower degree, until the rabi crop start arriving in the market in April 2014.
Although damage to the kharif crop due to heavy untimely rains is one of the factors
contributing to prevailing high onion prices, distribution network bottlenecks and suspected
trade cartel are believed to be other factors.
The increase in retail prices has been steeper due to high retail margins. In Delhi, the onion
retail mark up in the past has ranged from 50 percent to 200 percent- the mark up percent is
high when wholesale prices are low and vice versa (Figure 4)
8
900
350.0
800
300.0
700
250.0
600
200.0
500
150.0
400
100.0
300
50.0
200
0.0
100
-50.0
Y-on-Y Inflation
Aug
Apr'13
Dec
Aug
Dec
Apr'12
Aug
Apr'11
Dec
Aug
Apr'10
Aug
Dec
Apr'08
Aug
Dec
Apr'09
Aug
Dec
Dec
Apr'07
Aug
-100.0
Apr'06
0
Inflation Y-o-Y
WPI
Figure 3: Onion wholesale price index trend and y-to-y inflation
WPI
Source: Office of the Economic Advisor, Government of India
Figure 4: Delhi onion wholesale and retail prices and retail margin (%)
7000
250
6000
200
5000
Rs per 100 kg
3000
100
2000
50
1000
0
M
Ja
n09
ar
-0
M 9
ay
-0
Ju 9
l-0
Se 9
pN 09
ov
-0
Ja 9
n1
M 0
ar
-1
M 0
ay
-1
Ju 0
l-1
Se 0
pN 10
ov
-1
Ja 0
n1
M 1
ar
-1
M 1
ay
-1
Ju 1
l-1
Se 1
pN 11
ov
-1
Ja 1
n1
M 2
ar
-1
M 2
ay
-1
Ju 2
l-1
Se 2
pN 12
ov
-1
Ja 2
n1
M 3
ar
-1
M 3
ay
-1
Ju 3
l-1
Se 3
p13
0
Margin %
Whlesale
Source: Department of Consumer Affairs
9
Retail
Retail Margin %
150
4000
Trade
Besides fulfilling the increasing demand of domestic population, India has emerged as a
major exporter of onion. Exports during the past decade have increased by over 300 percent
to 1.7 million tonnes in 2012-13. India also exports significant quantities of dried
(dehydrated) onion, which in 2012-13 was around 52,000 tonnes (300,000 tonnes fresh onion
equivalent). During April to June 2013, India exported around 520,000 tonnes of fresh
onions and 12,000 tonnes of dried onions. Exports are mainly to Bangladesh, Malaysia, UAE
and other Middle East countries, Sri Lanka, Indonesia, and Vietnam. The prevailing high
onion prices have prompted the government to consider imports. However, considering the
limited global availability, high prices, and infrastructure bottlenecks, large imports appears
unlikely.
One of the reasons for the high domestic onion prices is believed to be increasing exports. To
check the increasing exports in order to contain domestic prices, the government increased
the minimum export price of onions to $900 per tonne effective September 19, 2013 from
$650 per tonne earlier. This is likely to result in lower exports in 2013-14.
Table 4: Supply and Distribution of Onion
Area (1000 Ha)
Yield (tonnes/Ha)
Production (1000
tonnes)
Imports
Total Supply
Exports
Domestic Utilization
2008-09
834.0
16.3
2009-10
756.2
16.1
2010-11
1,064.0
14.2
2011-12
1,087.2
16.1
2012-13
958.7
17.0
2013-14 F
1,100.0
16.5
13,565.0
0.1
13,565.1
1,670.2
11,894.9
12,158.8
0.6
12,159.4
1,676.6
10,482.8
15,118.0
12.5
15,130.5
1,182.3
13,948.2
17,511.1
0.0
17,511.1
1,309.9
16,201.2
16,309.0
0.5
16,309.5
1,666.9
14,642.6
18,150.0
10.0
18,160.0
1,000.0
17,160.0
Conclusion
Onion production has shown a steady upward trend, with a few exceptions, in response to
increase in planted area and to a lesser account due to improvement in productivity. Per
capita onion consumption has shown a significant growth in recent years. Postharvest
diseases on onion cause significant losses in the quantity and quality of onions during
storage. Hence there is need to increase and improve onion storage infrastructure.
Onion prices typically exhibit a seasonal trend peaking during the lean season of SeptemberOctober and falling during April – May coinciding with the peak arrival season of the major
rabi season crop. The onion retail mark up in the past has ranged from 50 percent to 200
percent- the mark up percent is high when wholesale prices are low and vice versa.
Besides fulfilling the increasing demand of domestic population, India has emerged as a
major exporter of onion. One of the reasons for the high domestic onion prices is believed to
be increasing exports.
10
References
1. Household Consumption of Various Goods and Services in India: NSS 66th Round
and 61st Round. Central Statistical Organisation - http://mospi.nic.in
2. Various Rounds of NSSO Consumer Expenditure Surveys Central Statistical
Organisation - http://mospi.nic.in
1. Directorate of Economics and Statistics - http://eands.dacnet.nic.in
2. Department of Agriculture and Cooperation - www.agricoop.nic.in
3. National Horticulture Research and Development Foundation – www.nhrdf.com
4. National Horticulture Board – www.nhb.gov.in
5. Office of the Economic Adviser - www.eaindustry.nic.in
6. Department of Consumer Affairs. http://consumeraffairs.nic.in
11