Govt mulls temporary ban on onion export

Monsoon shows revival signs in some areas

The Union government is contemplating a temporary ban on export of onion to improve domestic supplies, as a bad monsoon threatens to impact the coming crop.

Officials said a ban might be imposed for two months. Meanwhile, however, the prices of onion show a stabilising trend, albeit at an elevated level.

“We can go back to the present regime of Minimum Export Price (MEP) once the situation returns to normal,” a senior government official said. Last month, the government re-imposed an MEP on onion at $300 (Rs 18,021) a tonne after a gap of four month, later raised to $500 (Rs 30,035) a tonne on July 2, as prices showed little sign of relenting.

Data from the department of consumer affairs shows the the pace of increase in the retail price had considerably slowed after the MEP increase. From July 2 to July 14, it had risen from Rs 25 a kg to Rs 30 a kg.

“Yes, onion prices have stabilised after imposition of MEP and daily exports have dropped to almost half of the earlier level but the uneven monsoon poses a challenge,” the official added. He denied any move to import, as very few countries cultivate the bulb.

The proposal to put a temporary prohibition on exports might face resistance from the department of agriculture, which feels such "knee-jerk reaction" to price movements breaks farmers’ confidence. “It is our stated stand that any sort of ban on export of farm commodities destroys overseas markets for Indian produce,” a senior agriculture ministry official said.

The proposal has a backing of other "important" ministries, officials said.

Meanwhile, after a lull of almost 45 days, the southwest monsoon has started showing some sign of revival in Madhya Pradesh, Maharashtra and Gujarat, building hopes of a pick-up in sowing of kharif crops. The rains were absent from central and western India for all of June and the first half of July.

“We had a meeting with state representatives today (Tuesday) and are hopeful that sowing of oilseeds, pulses, cotton and coarse cereals will gather steam in the next few days,” said another official from the department of agriculture.

He said the kharif sowing area had fallen by half till July 10 as compared to the same period last year but the decline could come down by at least 15-20 per cent if the monsoon recovered strongly in the coming days.