Agri ministry proposes further cut in onion MEP

With retail prices of onion falling due to bumper harvest, the agriculture ministry has proposed further lowering of the minimum export price (MEP) to $175 a tonne from the current $225 a tonne.

The MEP of onion has already been lowered by almost $375 a tonne since the time exports were allowed in February.The earlier revision was done on March 23 when MEP was brought down from $275 a tonne to $225 a tonne. MEP of Bangalore Rose and Krishnapuram varieties of onions has also been reduced from $1,400 a tonne to $600 a tonne in the last one month.

However, despite the reduction in MEP, exports have not picked up because of poor demand from overseas markets and high MEP.

Last month, the government had lifted the ban on onion exports after farmers’ protests on crashing domestic prices. It, however, capped MEP at a higher level of $600 a tonne as a precautionary measure to control retail prices, which had shot up to Rs 80-85 a kg in December last year.However, agriculture minister Sharad Pawar had subsequently indicated that MEP of $600 a tonne was almost double the prevailing rate in international markets, rendering exports uncompetitive.

Onion production in the country is likely to be around 10.5 million tonnes in 2010-11, down from 12 million tonnes last year. In 2010, India exported around 1.1 million tonnes of onions.

According to the department of consumer affairs data, the wholesale price of onion in Delhi has dropped by almost Rs 500 a quintal since February 1.