Oversupply hits big onion market

by Gamini WARUSHAMANA

The price of big onions at the Dambulla Special Economic Centre remains low, despite the intervention of the Government to increase the import tariff. Farmers said that they are incurring huge losses selling their harvest. Big onion harvesting has commenced in the Matale district and the price has fallen due to oversupply. On Friday big onions were traded at Rs. 40-52 per kg at the Dambulla market while the Government purchased it at Rs. 55 per kg through Lak Sathosa.

A farmer organisation chairman, R.D. Herath said that farm gate prices had fallen below Rs. 40 per kg, which is below the cost of production. “To earn a reasonable profit the price should be above Rs. 55 per kilo,” he said. Due to the kerosene price hike and the drought farmers had to pump water for cultivation this year.

Therefore, the cost of production is high this year, he said.

On August 13, the Government increased the import duty on big onions by Rs. 25 to reduce imports and to keep the wholesale price up. On Friday there were no imported onions at the Pettah wholesale market and the total supply was from local farmers. Prices at the Pettah wholesale market were between Rs. 45-60 per kg.A trader at the Pettah market said that big onions which come to the market in several grades are based on the size and small onions fetch a lower price - around Rs. 40 per kg. “The price is determined here by supply and demand and we cannot increase the price.

Due to dry weather conditions the quality of the onions is high this year and if the farmers can stock the harvest they can get a higher price in the near future because this price decrease is short term, he said.

Market analysts said that import control alone cannot address this issue. Farmers do not have bargaining power especially in perishable commodities such as big onions. On the other hand, they are in a hurry to sell their harvest to settle their debts as they have no other source of income.

Lack of storage facilities and poor knowledge of post harvest handling are other issues. The supplies to the Colombo wholesale market comes through intermediaries in the supply chain and therefore the farmgate price is far below the wholesale price.

Agro products marketing is a serious issue that seriously affects the growth of the agriculture sector in Sri Lanka.

Every year farmers have to protest demanding reasonable prices for their paddy, big onions, potatoes and vegetables as price drop during the harvesting season. Government institutions that engage in commodity trading cannot purchase significant quantities to influence market prices.

In 2005, the local production of big onion was 33 percent of the total local demand and it declined to 26 percent in 2011. The local demand is increasing continuously and, therefore, this marketing issue is surprising, an analyst said.

This is totally a result of poor planning in post harvest handling and marketing. Local big onion production as well as demand is increasing continuously. In 2005 local production was 55,552 tonnes and it has increased to 61,037 tonnes in 2011.