Export floor price of onion raised

Move to ease high prices and boost supply

The government on Monday increased the minimum export price (MEP) of onions by another $250 per tonne (around Rs 15,537) to $1,150 per tonne (around Rs 71,472.50) to ease prices and boost domestic supplies.

This is the third hike in the export floor price since August, as the onion prices showed no signs of easing. Experts say this will discourage onion exports, as traders can’t export it below Rs 72 per kg. According to officials, thiswould  also force traders to de-hoard the crop. Already, there is a shortage, as rain has delayed the arrival of fresh crop from south India.

“The fear that extended holidays in main onion trading hubs could also cripple supplies might have also contributed to the decision,” a senior official explained. On Monday, in places like Aizawl (Mizoram), onions were selling at about Rs 100 per kg, while in some places in south India, the prices have moved up over the weekend.

On September 19, the government had raised the MEP to $900 per tonne (Rs 55,935) from $650 per tonne (Rs 40,397.50), imposed on August 14. Although export volumes have declined and were just about 19,000 tonnes in September, the domestic retail prices still hover around Rs 60-70 a kg.      

“Export of all varieties of onions will be subject to an MEP of $1,150 per tonne,” said the director-general of foreign trade.  Traders, however, said the latest MEP rise may only create some “psychological impact”, as traders don’t want to export because domestic market is more lucrative.

Meanwhile, in a related development, Maharashtra Chief Minister Prithviraj Chavan on Monday said the crisis in onion is not man-made, as being projected in some quarters. He is of the view that sudden rains in some parts of the state have stopped supplies from reaching the market, which is why prices have gone up. The chief minister also expressed the fear that prices might crash in some days which could be detrimental to the growers.   

Onion exports in August had come down substantially to 29,000 tonnes after the MEP was imposed. The government has been keeping a close watch on the prices and has taken several measures to improve supplies, including more imports.

The Centre has also directed all state governments to crack down on hoarders and speculators who are keeping onion prices artificially high. There is short supply of onions as much of the stored crop from last year exhausted. Maharashtra, Karnataka and Gujarat are some of the main onion producing states.