Centre bans onion exports, allows wheat shipment

Wary of the steep price rise that could lead to domestic food inflation, the Centre on Thursday banned exports of onion to increase domestic supplies. The ban comes a day after the government raised the minimum export price of the commodity by a whopping $175 per tonne to $475

This is the second time in less than a year that the government has decided to ban exports of onion to ensure that there was no repeat of last year when the prices had skyrocketed to Rs 90 a kg. In the last three months retail prices of onion had almost doubled.

Sufficient stock of foodgrain also prompted the Centre to lift the ban on wheat, after almost four years. Two million tonnes of wheat and an additional two million tonnes of non-basmati rice was allowed to be exported under the open general license.
 

IMPORTANT DECISIONS

* Onion exports banned till further notice

* Exports of 2 million tonnes wheat and further 2 million tonnes of non-basmati rice allowed.

* Zero import duty on crude palm oil and 7.5 per cent duty on refined oil extended by one-year

* Programme of distribution of subsidised edible oils to poor families extended by one-year starting October 1, 2011

* Exports of 10,000 tonnes of coconut oil allowed from Kochi port.

“The empowered group of ministers (eGoM), which met on Thursday, has decided to put a ban on onion exports till further notice but allowed exports of two million tonnes of wheat and two million tonnes of non-basmati rice,” said a senior food ministry official. “Exports of onions were banned as a precautionary measure ahead of major festivals as retail prices has jumped by more than 100 per cent in the last two months.”

The government had banned onion exports in December 2010, after surging onion prices catapulted food inflation, which was otherwise showing signs of moderation. In fact, surging onion prices in wholesale markets had pushed food inflation to 10.05 per cent for the week ended August 20. For August 27, food inflation had moderated to 9.55 per cent, as onion prices declined. However, analysts attributed the rise in dip in inflation to base effect rather than any acutal decline in prices on the ground.

“The eGoM also allowed exports of 50,000 tonnes of high-value ‘ponni’ and 15,000 tonnes of ‘matta’ varieties of rice,” the official said.The government had banned exports of wheat and rice in 2007 as domestic prices had jumped due to supply constraints.

Since then, retail price of grains have remained largely stable, but the government had stopped exports because of the adverse impact on procurement. Of the two million tonnes rice that was allowed to be exported, one million tonnes of raw rice and one million tonnes parboiled rice could be sent in outbound shipments.

The official said exports which were allowed on Thursday were in addition to the one million tonnes exports of non-basmati rice allowed in July. Among other key decisions, the eGoM extended the order for duty-free import of crude palm oil for one year starting October. The import duty on refined edible oil has been fixed at 7.5 per cent for another year starting October.

The scheme to provide subsidised edible oils to poor families has also been extended by one-year starting October 1.

Under the scheme, the government gives a subsidy of Rs 15 per kilogram for sale of edible oils to poor families.

The ministerial panel has allowed exports of 10,000 tonnes of coconut oil from Kochi port. Officials said export of rice was allowed because of strong demand from millers in Andhra Pradesh ahead of the annual procurement season.

The government is planning to purchase a record 35.3 million tonnes of rice from farmers in the next season starting October — up by eight per cent purchased this year.

As on August 1, the government had more than 61 million tonnes of grains in its warehouses, almost double the quantity required under the buffer norms and strategic reserve needs.