Onion export price raised to check soaring cost of bulb

The government has raised the export price of onion by $45 per tonne to $275 a tonne in order check prices which have doubled in the last one month in the retail market and are currently ruling at Rs 20 per kg.

The Minimum Export Price (MEP) of two superior varieties -- Krishnapuram onions and Bangalore Rose onions -- have been increased by $50 per tonne to $400 per tonne. These two South Indian varieties were spared from the hike last time in July.

"MEP of Bangalore Rose onions and Krishnapuram onions will be $400 per tonne... [and] MEP of onions other than Bangalore Rose onions and Krishnapuram onions will be $275 per tonne," the Directorate General of Foreign Trade (DGFT) said in a notification.

The onion MEP has been raised to discourage exports and boost the domestic supply, a senior government official said.

The decision comes in the backdrop of rising onion prices, which were stable during April-June period and had even fallen to Rs 10 per kg level in the retail markets.

The government seems to be worried also about high food inflation, which surged to a four-and-half month high of 9.9% for the week ended July 30, due to costlier onions, fruits, vegetables and protein-based items.

The onion prices went up by 36.62% year-on-year, as per wholesale-based inflation data.

In December last year, the government had imposed a ban on onion exports after its prices had skyrocketed to Rs 80-85 per kg in the retail markets across the country. The export ban was lifted in February this year after the cost eased.

While opening export, the MEP of onions was fixed at $600 per tonne. In subsequent months, MEP was revised downwards several times to $170 per tonne level.

With prices again inching upwards, the government has increased MEP three times since June to tame prices, and now it stands at $275 per tonne.

Traders at Azadpur in the national capital (Asia's biggest wholesale fruits & vegetables market) said onion prices have increased on lower arrivals as the stock from last year's crop is getting exhausted and prospect of supply of new crop, which starts from September, may get delayed.

Onion which was selling at Rs 10 a kg a month back, soared to Rs 15 per kg last week before touching Rs 20 a kg in the Delhi and NCR, traders said.

India produced over 14 million tonne of onion in FY11 season.

The exports dropped by over 31% in FY11 at 12.89 million tonne against the year-ago period.