Day after MEP rise, onion prices show mixed trend

Officials said actual impact will be felt once traders return from Diwali holidays

A day after the government raised the export floor price of onions, the third increase since August, prices of the commodity in wholesale markets across the country showed a mixed trend. While prices in major southern markets, where the price rise was the steepest in the last few days, remained high, prices in eastern India fell.

Prices in the wholesale markets of Bhubaneswar and Cuttack dropped Rs 200 and Rs 500 a quintal, respectively, compared to Monday. In the Thiruvananthapuram and Ernakulam wholesale markets in Kerala, prices rose by Rs 400 and Rs 200 a quintal, respectively. In wholesale markets in Delhi, onions were sold at Rs 3,700 a quintal, about Rs 600 a quintal more than the price quoted last week.

On Monday, the government had increased the export floor price (also called minimum export price) of onions by $250 a tonne to $1,150 a tonne to boost domestic supplies. Officials said the actual impact of the move in wholesale markets across the country would be felt in the next few days, as traders returned from Diwali holidays.

"In Maharashtra, which has the largest onion wholesale markets, most traders are absent, as business is closed due to Diwali holidays," said a senior agriculture ministry official. He added though exports had declined substantially because of previous increases in the minimum export price, the government felt traders might be hoarding the crop to sell at a later date to exporters.

 

Official data showed in August 2013, India exported 29,247 tonnes of onions; in September, this fell to 19,218 tonnes. "We feel 8,000-10,000 tonnes of onions were exported in October, which is why the minimum export price had to be raised," the official said.

 

Meanwhile, onion prices in wholesale markets of Bhubaneshwar and Cuttack markets, dropped by Rs 200 and Rs 500 per quintal as compared to Monday, while in the wholesale markets of Thiruvanthapuram and Ernakulam in Kerala, prices rose by Rs 400 and Rs 200 per quintal respectively. 

 

In Delhi, onion was selling in wholesale markets at Rs 3,700 per quintal, which was almost Rs 600 per quintal more than the price quoted last week.

 

Meanwhile, Competition Commission of India (CCI) had in a report on cartelisation in onion markets released sometime back had criticized the policy of raising MEP to curb exports. 

 

It said that some big traders manage to export onions below the MEP by producing fake documents, which negates the very purpose of increasing the export floor price.