A decline in acreage and lack of improvement in crop yields is likely to result in a 13 per cent fall in onion output for the Kharif season 2022-23 to 9.5 million tonnes (mt) compared to last year, domestic rating agency Crisil said in its latest report.
In the 2021-22 Kharif season, the total onion output stood at 10.8 mt. However, price escalation following lower output is expected to be contained due to the ample availability of Rabi onion stocks.
The 2021-22 Rabi season witnessed bumper production to the tune of 20 mt, an increase of 17 per cent year-on-year. India consumes about 13 lakh tonnes of onions every month, making it one of the most important vegetable crops for household consumption, the report said.
The bulk of the supply comes from four states — Maharashtra (13.3 mt), Madhya Pradesh (4.7 mt), Karnataka (2.7 mt) and Gujarat (2.5 mt) — which together accounted for 75 per cent of India's production in 2021-22.
According to the report, weather fluctuations affected crop yield and erratic rains damaged the Kharif onion crop in the last three years, leading to a decline in crop yields and price rise.
In 2022-23, it is expected to be similar in terms of crop damage, the report stated. Both deficit and excess rains have damaged the crop in all key Kharif onion-producing regions, including Maharashtra, Karnataka and Andhra Pradesh (the states contributing 60 per cent share in the country's Kharif onion production).
In Maharashtra and Karnataka, deficient rains in June, followed by largely excess rains in July and August, affected crop sowing. While onion nurseries in Maharashtra were damaged in July, Karnataka farmers in rainfed areas could not grow onion amid deficient rains in June. As a result, Maharashtra onion farmers reportedly shifted towards crops such as maize and Karnataka farmers towards cotton in rain-fed areas and sugarcane in irrigated areas.
In Andhra Pradesh, too, excess rains led to field inundation, making transplanting onions difficult. Hence, Crisil estimates that yields will not improve this season and will be on par with the 2021-22 season.
Further, it revealed the area under onion crop is estimated to decline by almost 13 per cent to 5.8 lakh hectares in 2022-23, from 6.7 lakh hectares in 2021-22, following negative sentiment among farmers due to the 2021-22 Rabi onion price crash.
The Rabi onion prices declined by 27 per cent on-year in May 2022 to about Rs 8 a kg amid bumper Rabi production of about 20 mt.
Given the decline in acreage and lack of improvement in crop yields, the overall onion output for the 2022-23 Kharif season is expected to be 13 per cent lower year-on-year.
Meanwhile, the report stated that Rabi stocks get fully consumed by September and thereafter fresh Kharif arrivals take up market shelves.
But as per Crisil's on-ground interactions, currently, about 20 per cent, 25 per cent and 15 per cent of Rabi stocks are estimated to be available in Madhya Pradesh, Maharashtra and Rajasthan, respectively. This Rabi stock is expected to compete with fresh Kharif arrivals, the report added.