Ban on onion exports won't impact domestic prices

Horticulture body says prices to cool down in next few weeks

A section of the Department of Agriculture feels export curbs on onions would have little impact on the prices of the commodity, as the price of Indian onions is more than prices abroad and exports have shown a slowing trend.

Officials said Indian onions were priced at about $480 a tonne in the international markets, while prices of onions from Pakistan and China stood at $410 a tonne and $300-350 a tonne, respectively.

“Therefore, to expect an export ban on onions to have a major impact on domestic prices is unreasonable, as exports have already slowed because of the price differential,” said a senior official.

In June, India exported about 1,50,512 tonnes of onions, a 23 per cent fall compared to May and a 9.01 per cent fall compared to April. In the April-June period, onion exports stood at 5,11,616 tonnes, worth Rs 776.47 crore, around 1.09 per cent less than in the corresponding period last year. In 2012-13, exports stood at 1.82 million tonnes.

The official said domestic prices of onions were lucrative for traders and farmers. Therefore, the tendency to export was low. A recent report by the Nasik-based National Horticulture Research and Development Foundation (NHRDF) said the current rise in onion prices was primarily due to the slow release of stored onions by farmers, especially in Maharashtra, in anticipation of better prices in the coming days.

It added the situation would ease in the next few weeks, as farmers would be compelled to sell stored onions in the market, as losses would rise because of high humidity conditions in Maharashtra. "The arrival of the new crop from Andhra Pradesh, which will start from August, will also ease the situation," NHRDF said.

"The Ramzan season is underway in most parts of West Asia, a big market for Indian onions. Therefore, overall international demand is slack," said a trader from a leading export house.

According to the Department of Consumer Affairs, in the last month, the average retail price across the country had risen Rs 10-20 a kg. In areas such as Siliguri, Indore, Gwalior, Dehradun and Delhi, prices rose by about Rs 20 a kg in the last month.

Alarmed by the sudden and sharp rise in retail price of onions, the government is believed to have been contemplating a ban on exports as the option of increasing the Minimum Export Price (MEP) is no longer available as the method was scrapped last year.

Few days back a PTI news report quoting an unnamed government official said that the government was keeping a close watch on onion prices and was considering various options including a ban on export to control prices. Total onion production in 2012-13is expected to be 15-16 million tonnes, almost the same as last year.