Garlic prices double in two months despite bumper crop
Moneylife Digital Team 27 June 2011

Farmers, traders said to be holding stocks with the hope of getting higher prices. Experts believe fresh crop will eventually reach market and this should pull down prices

The retail price of garlic has doubled in the past two months, this despite a bumper harvest this season. Experts suggest that this has happened most likely due to farmers delaying sending the garlic crop to the market and traders hoarding stocks, in the hope of getting better prices.

But they also believe that going forward traders would not benefit much as the bumper crop will eventually find its way to the market.

The price of garlic in the retail market is in the range of Rs90-Rs140 a kilogramme (kg). In the wholesale market, the current price is in the range of Rs50-Rs60 a kg. In March, retail prices were about Rs50-Rs65 a kg.

Dr RP Gupta, director, National Horticultural Research and Development Foundation (NHRDF), told Moneylife, "This year there was a bumper crop and the prices had fallen steeply. Farmers and traders are now storing the crop and supplying less quantity in anticipation of a price rise. This won't happen as the price will remain stable due to expected bumper crop for the coming season."

According to NHRDF, in 2010-11 the garlic production was at 11.31 lakh metric tonne (mt), an increase of about 2 lakh mt from the previous year.

The price of garlic reached its peak in December 2010, when it was sold at Rs200/kg, on account of a shortage. The prices stabilised as fresh produce flooded the market.

Some traders say that the prices have gone up because benchmark quality garlic, for which there is high demand, has been in short supply.

S Altamash of Gemini Trading, which is based in Panvel, said, "There is a lot of demand for the 5.5cm garlic (benchmark quality), but there is a supply crunch and prices have increased. The small variety of garlic is available in plenty. There has been talk about some traders and farmers releasing less produce. Even I had to cancel my export order, as insufficient produce was available despite a bumper harvest. But with the arrival of the expected bumper crop season, the prices will decline."

Mr Altamash believes that "the current prices of garlic are hiked on speculation. This was also the case with onions a few months ago when there was hoarding of the produce in anticipation of a price rise. But this won't work for garlic due to the expected bumper crop."

Some industry experts also attribute the rising costs to a seasonal change in prices. Ashok Walunj, director, APMC Mumbai, said, "Input costs such as transport, labour charges are increasing and hence the price rise."

Asked if traders were hoarding garlic stocks, Mr Walunj said, "There is no storing by anyone. Prices are normal in the wholesale market and it will soon come down in the retail market as well."

Free Helpline
Legal Credit