Onion MEP to be slashed next week

Inter-ministerial meeting called on Monday

The minimum export price for onion may be slashed by another $10-15  a tonne  next week.

An inter-ministerial meeting has been called on Monday ,early next week to discuss the issue with inputs from  relevant ministries after the onion prices have crashed  to Rs 6-7 per kilo in the wholesale markets in Maharashtra.

While the ministry of agriculture had suggested for complete removal of the MEP to facilitate easy exports, department of  consumer affairs have strongly opposed it stating that it will not only push up prices in the domestic market  but it may lead to unfair trade practices.

According to consumer affairs, one of the reasons for the abnormal hike in onion prices some time back was uneven distribution in the domestic market. Reports from states suggested that there has been large scale hoarding to export rather than supplying in the domestic market  as exports  were profitable, said an official source.

Ministry of agriculture is of the view that new harvest is expected to arrive in mid March which will add to abundance of supply of onion in the market. Therefore, according to the ministry, onion MEP need to be abolished for free choice to the farmer as to trade its produce in domestic or export market as per the profitability.

In December 2013,  the ministry of commerce reduced minimum export price (MEP) of onion to $150 a tonne from $350 for the third time  in a year  to boost exports  and check sharp fall in domestic prices.

In December itself, the government  had reduced the onion MEP to $800 a tonne from $1,150 a tonnes and just three days after that MEP was slashed to $350 a tonne.

The government had imposed MEP on onion in September 2013 and then it was raised several times to curb exports and boost domestic supplies as retail prices had shot up as high as Rs 100 per kg in major parts of the country. The country had to even import onion to control price rise.

MEP reduction has helped in checking exports, which  as per reports, fell to  8.53 lakh tonnes (LT) during April-November period of this fiscal against 18.22 LT in the same period in 2012-13.

Currently, the  wholesale onion prices in Maharashtra are between Rs 8 a kg to Rs 10 while the retail prices are in the range of Rs 20 a kg to Rs 25.

Bangladesh is one of the prime buyers of Indian onions. Although Pakistan, Iran and Egypt are competing with India, the exports have increased substantially after the reduction in the minimum export price (MEP) to $150 a tonne.