With onion at Rs 70 a kg, export floor price may be raised to $1,000 a tonne

Only those above Rs 65 a kg in wholesale markets can be exported; meeting chaired by the Cabinet secretary to be held soon to further assess the situation

With the retail price of onion increasing by Rs 10-20 a kg in a few days, the government is likely to raise the minimum export price (MEP) to $1,000 a tonne from the current $650 a tonne.

However, the government might not immediately put a blanket ban on exports, as that would have a direct impact on the growers.

“After the MEP was re-imposed at $650 a tonne last month, there has been a slowdown in exports but it has not entirely stopped. Therefore, we may hike the MEP further,  which would make exports difficult,” said a senior government official.

He added a final decision is expected over the next few days. “Our assessment shows that even after the MEP was hiked around 600-700 tonnes of onions were exported daily, which will stop once MEP is raised further to $1,000 a tonne as then onion priced only above Rs 65 a kg in the wholesale markets can be exported,” the official explained.

He said a meeting under the chairmanship of the cabinet secretary could be held in the next few days to further assess the price situation.

The wholesale and retail prices of onion rose by Rs 10 a kg  here on Tuesday as supplies from Maharashtra and Rajasthan tapered, while arrivals from the southern states are not in full swing due to rains there.

In Delhi’s Azadpur market, the wholesale price rose to Rs 60 a kg on Tuesday from Rs 50 a kg on Monday. The price rise is reflected in retail markets with vendors charging as high as Rs 70 a kg on Tuesday, compared with Rs 55-60 a kg a few days ago.

Prices have shot up in other parts of the country, too. Prices had shown some signs of stabilisation around early September after the government re-imposed the export tax and canalised all exports through the National Agricultural Cooperative Marketing Fedration of India Limited.

In a related development, Food Minister K V Thomas has expressed the hope that onion prices would soften by early next month. He added the Centre has asked producing states such as Maharashtra to crack down on hoarders of onion, a politically sensitive commodity.

According to the minister, apart from high onion prices, the slight increase in food inflation in August was due to the increase in the minimum support prices of major farm items by the government.