Indian farmers hit by tumbling onion prices

By Rajendra Jadhav

MUMBAI (Reuters) - As prices in India shoot over the roof, the value of a politically sensitive, perishable commodity has tumbled, troubling farmers whose pleas for aid have gone unheard as the government battles runaway inflation.

Onion prices have nosedived 82 percent in the last seven months, as farmers boosted acreage due to higher prices last year, resulting in a bumper crop, but inflation shot up at an alarming pace during the period, aided by higher food prices.

"When we cultivated the crop prices were high. Good weather also supported production, but the onion price dip erased profits," said Yashwant Patil, a farmer in Nashik district, a key producing region in the western state of Maharashtra.

Wholesale price of premier quality produce in the country's largest onion trading hub, Lasalgaon in Maharashtra, has plunged 82 percent to 351 rupees per 100 kg on Tuesday, from a peak of 1,951 rupees on October 1, 2007. But average price has fallen to 180 rupees in many spot markets during the same period

Onion is typically cultivated thrice a year -- in monsoon, winter and summer. In 1998, the then federal ruling party, the Bharatiya Janta Party, suffered heavy losses in a key state poll, which was blamed by observers on high onion prices.

Rise in onion prices usually gives opposition parties an opportunity to put the ruling front on the mat and gather votes in India. India's annual inflation rose to a 3-½ year high of 7.61 percent in late April, helped by higher food prices.

"Arrivals have increased from all major producing states but demand was almost steady," Satish Bhonde, additional director, National Horticultural Research and Development Foundation (NHRDF), told Reuters.

India's onion output in the year to March 2008 was likely to rise 11.9 percent to a record 7.45 million tonnes, according to NHRDF estimates.