Govt to hold on to MEP for onion and potato for sometime

The Ministry of Commerce has decided to hold on to the minimum export price ceiling levied on potatoes and onions for some time. It was decided at a review meeting of the Commerce Ministry aided by feedback from ministries of agriculture and food.

The review was done in the backdrop of the revived monsoon in the last week of July across the country and the fact that prices of onion and potato continue to remain firm. According to official sources, the MEP of $450 per tonne  of  potato is acting as a disincentive for  the traders to opt for potato export. As per figures, potato export post setting the MEP is just around 700 metric tonne as against 2700 MT before.

Due to adverse weather conditions, including hailstorm in some parts of the country, the potato crop has been  estimated to be lower by 13% compared to the previous year.  

Prices of potatoes had risen to about Rs 25-30 per kg across the country and continue to remain so.  

Rising prices of essential food items like vegetables, fruits and cereals pushed up wholesale price index based inflation to a five-month high of 6.01 per cent in May.

Last month, in a move  to  bring down the  rising onion and potato prices, the government had brought these two vegetables within the purview of stockholding limits under the Essential Commodities Act, 1955.

With this move, it became the call of the  State governments to take up de-hoarding operations and control the prices of onions and potatoes and improve availability by imposing stock holding limits for bulk purchasers as in case of pulses and edible oil.

The move followed the  decision to hike the minimum export price (MEP) of onions to $500 a tonne from $300 a tonne so as to make exports costlier and no longer profitable for traders to prefer exports over domestic sale. On June 26, the Government had imposed an MEP of $450/tonne for potato.

Once these commodities come under the purview of the Essential Commodities Act, states can take action to impose stockholding limit for the one year period till which time these items will feature under the said Act.

Six state governments - Delhi, Chhattisgarh, Madhya Pradesh, Mizoram, Tripura and West Bengal - had demanded re-introduction of onions and potatoes in the ECA to help them take action against hoarders.

These were removed from the Act in 2004 by then agriculture and food ministry. In the previous NDA government, the order was enforced from 1999 to 2004At present, pulses, edible oils and oil seeds are under stock limits till September 2014. Storage curbs on rice and paddy will remain till November this year.