Export floor price raised to $900/t as onion at Rs 70 brings tears to eyes

Pawar says prices will come down in two-three weeks on fresh arrivals from south

As high onion prices showed little sign of abating, the Centre on Thursday clamped on exports by raising the minimum export price (MEP) to $900/ tonne. Agriculture Minister Sharad Pawar blamed exploitation of the logistics and transportation problem in the Nashik-Lasalgaon belt — perpetuated by heavy rains — by retail traders for the current crisis.

“My assessment is that supplies have fallen as transportation of onion from villages to mandis in the main markets of Nashik and Lasalgaon has become difficult due to rains, which has  created a physiological problem for traders in other regions,” Pawar told Business Standard.

Hoping the price situation would normalise in two-three weeks when the new crop starts coming into the market, Pawar said onions in Delhi had become costly as  traders were getting a good price in nearby areas and squeezed their supplies to the national capital.

The MEP  was previously increased on August 14, after prices rose in retail markets. Since then, there has only been a temporary blip in rates. According to data from the consumer affairs department, onion prices on Thursday rose Rs 5 a kg in Lucknow, Rs 10 in Agra, Rs 7 in Bhopal and Rs 5 in Bhagalpur from Wednesday.

In most parts, except southern states, onion was selling at an average rate of Rs 65-70 a kg. “The situation in southern India is slightly different as the gap between the rabi and kharif harvest of onion is less. Therefore, there are very few days when supplies drop,” a senior official from the Nashik-based National Horticulture Research and Development Foundation(NHRDF) told Business Standard.

Food Minister K V Thomas, who met Pawar to review the situation, said there was not much difference in the arrival of onions in various markets at present, compared with the situation earlier this month. He directed state governments to take strict action against the hoarders.

“By increasing the MEP, the government might have been giving an indication that exports are responsible for the recent spurt in prices but in reality, it is huge hoarding at the farmers and not traders which is pushing up prices,” said an official with NHRDF.

He added the new rabi crop  is expected to be good, which is why farmers have started hoarding the crop, as their opportunity to earn some decent margin is very less.

According to a recent report by NHRDF, 85-90 per cent of  stocks are exhausted and just 300,000-400,000 tonnes was left.

“If supplies from southern states don’t start in right earnest from October, then there could be serious shortage as stocks are getting exhausted fast,” another official explained.