Onion prices to come down after Diwali: Dikshit

New Delhi, Nov 2 (IANS) Delhi Chief Minister Shiela Dikshit Saturday said the onion prices in the national capital would come down after Diwali as new stocks were all set to arrive by next week.

Dikshit, who had come to power defeating the then Bharatiya Janata Party government in 1998 riding on high onion prices, said her government has spoken to the onion suppliers from various states in the country and managed to get stock of onions to tackle the crisis.

"The wholesale price of onion will be Rs.10 whereas retail price will be around Rs.45-46," she added.

Dikshit also released a three-minute short film, sung by pop singer-turned-politician Daler Mehendi, showing developments of the Congress government during her tenure of 15 years.

She said the film would be shown in every theatre of the capital and in the Congress vans that visit constituencies.

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Unilever hit by sliding emerging market currencies; India onion prices weigh

By Martinne Geller

LONDON (Reuters) - Unilever Plc reported slower sales growth after demand for its consumer goods was hit by the devaluation of a handful of emerging market currencies and other factors such as rising onion prices in India.

"This is a soft quarter without a shadow of a doubt," Chief Financial Officer Jean Marc Huet told Reuters in an interview On Thursday.

The Anglo-Dutch maker of Ben & Jerry's ice cream, Lipton tea and Dove soap posted a 3.2 percent sales increase in the third quarter, down from 5 percent in the second.

It had already warned in September that a slowdown in markets such as Indonesia, Brazil and India had accelerated and it expected quarterly underlying sales growth of only 3 percent to 3.5 percent.

Unilever generates more than half its annual sales from developing and emerging markets, where sales rose 5.9 percent in the quarter - down from 10.3 percent in the previous three months but still stronger than the slight decline seen in developed markets.

Turnover fell 6.5 percent to 12.5 billion euros, hurt by an 8.5 percent hit from foreign exchange rates.

"The reality is that the global economy is not in as good shape as some would like to make out," Chief Executive Paul Polman said on a conference call. "I believe we have to calibrate our expectations a little more as we navigate these choppy waters."

Polman added that in three decades operating in emerging markets, he had never seen such large declines in so many currencies at the same time.

"Whilst we normally can deal with one or another and compensate for that globally, this really came as a shock to the global economy in total," he said.

Uncertainty over when the U.S. Federal Reserve will scale back its bond-buying stimulus led to sharp falls in currencies such as the Indian rupee and the Brazilian real between May and September.

The drops were compounded, Polman said, by other factors including a government abolition of fuel subsidies in Indonesia and a more than trebling in the price of onions in India - a staple cooking ingredient - that further weighed on consumers' buying power.

CROSSING CATEGORIES

Unilever's performance looks relatively weak compared with peers such as Nestle , the world's biggest foods group, which said last week competitive pricing helped it lift sales growth in spite of tough conditions in emerging markets and Europe.

Reckitt Benckiser earlier this week reported higher-than-expected sales and raised its outlook.

Huet said Unilever's business crosses so many categories, including basics like shampoo and food used by people at all levels of the economy, while Reckitt's goods - like dishwasher detergent and headache tablets - appealed to higher-income consumers more immune to economic volatility.

Unilever's currency hedges typically give it a window of three to six months, during which time it can work to raise prices in local markets hurt by devaluations. Selective increases are expected to help in the coming quarters, it said.

For the full year, currency should hurt sales by about 6 percent and profit by about 7 percent, Huet said.

In North America, third-quarter sales volume fell due to a decision to stop selling some low-margin ice cream products and continued weakness of the company's margarine business.

Also, Unilever's market share in the high-margin personal care business was hurt by promotions by rival Procter & Gamble , whose Pantene and Herbal Essences shampoos compete with Unilever's Tresemme.

The company said it expects sales growth to improve in the fourth quarter, helped by new products such as Vaseline body sprays in Europe and Tony & Guy hair products in the United States. Still, Polman said developed markets like the United States were not recovering as fast as expected.

Following the divestiture of some less-profitable brands including Skippy peanut butter and Wishbone salad dressings, Polman said there were some small businesses left to sell but he declined to name them.

"It's better to announce the sale than to preannounce the intention," Polman said.

Unilever shares were up 0.7 percent in London at 1045 GMT.

(Reporting by Martinne Geller in London; Editing by David Goodman and Jane Merriman)

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Export greed resulted in onion crisis

By Krishna Kumar in Nashik

If sky-rocketing onion prices are giving poll jitters to the Congress- led governments at the Centre and in Delhi, the UPA government has no one but itself to blame. In August, the government exported nearly 30,000 tonnes of onion when people across the country were literally shedding onion tears, buying the kitchen staple at Rs 70- Rs 80 a kilo.

The export came despite a supply crunch in the market at that time. In fact, the government had imposed a minimum export price ( MEP) of $ 650 per tonne in the same month to restrict shipments in a bid to rein in prices. But despite tell- tale signs of a crisis, it did not put a ban on exports.

Government’s failure

Ironically, the National Agricultural Cooperative Marketing Federation of India ( NAFED) floated tenders in August for importing onions from countries such as China, Pakistan and Iran.

The consumer may be paying the price of this logic- defying policy now, as prices continued to sell at Rs 90 to Rs 100 per kg on Thursday — and parties may have to pay a political price in the coming elections.

Another front where the government seems to have failed completely is in controlling the unscrupulous trader lobby.

Experts say that in spite of a dip in production — caused by unseasonal rains that destroyed crops in Maharashtra — onions prices should not have exceeded Rs 60 per kg in retail markets. But they are going through the roof because of price manipulation by the traders who buy onions from farmers.

Each day hundreds of quintals of onion land up in Lasalgaon, Asia’s largest onion market, where traders buy stocks in auctions.

The average price in Lasalgaon even today is in the region of Rs 4,000 to Rs 4,500 per quintal.

At this rate, the maximum retail rate in Mumbai should be Rs 45- Rs 50 a kilo.

Manipulation

But it doesn’t work that way because traders manipulate the prices ( see box). “ Most of the onion crops in the market are sold by farmers in the region of Rs 4,000- Rs 4,500 per quintal. But one particular consignment goes up for Rs 5,600- Rs 5,800 per quintal. This is deliberately done because after purchasing at this price, the traders set this price as their benchmark and then sell their entire stock at these rates,” said C. B. Holkar a member of NAFED, which is a farmer’s co operative.

According to Holkar, despite this the prices in retail markets should not be higher than Rs 70.

“ However, if onions are being sold at higher rates, that’s because traders buy from farmers and sell their stocks to other traders. These traders then sell it to small wholesalers and from there it comes to retailers. At each step, the price goes up Rs 5 to Rs 10,” he said.

The Chairman of the Lasalgaon Agricultural Market Produce Committee ( APMC), Jayadutt Holkar, also held the trader lobby responsible for the increase in prices.

“ For the last few days, the average rate of onions sold here is the region of Rs 4,000- Rs 4,500.

Only a few quintals are purchased by traders at Rs 5,600- Rs 5,800 and above,” he said.

Solution

“ Yet, the traders are using this higher rate as the benchmark to sell their entire stock. So, they are fooling both the farmers and the consumers,” he added.

According to him, the only solution is that state governments should directly buy onions from the market and sell it to the people.

This is what the Delhi government seems to have finally decided to do — a decision it should have taken earlier.

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