Govt lifts ban on onion exports

Barely a day before the Bombay high court’s final order on a petition by a Mumbai-based exporter, the Centre has lifted the ban on onion exports. The move comes after pressure from farmers and political parties, particularly those outside Maharashtra.

Commerce Secretary Rahul Khullar said in a press statement that onion could again be exported, subject to a minimum price (MEP) of $475 a tonne. “This is the position prevailing on September 8, before the ban was imposed,” Khullar said.

Officials said the decision was taken as the price situation had stabilised. Moreover, the new crop is due in the coming weeks. That should further ease the situation, officials added.

The empowered group of ministers (EGoM), headed by Finance Minister Pranab Mukherjee, also decided to extend the stock holding limit on sugar by one more month till November 30 and deferred the decision on rice for a month. The stock holding limit on pulses and edible oils has been extended by a year.

On September 9, the government had decided to ban onion exports after the retail price rose by more than Rs 10 a kg in less than three months in some cities because of a delayed harvest of the kharif crop. However, the decision did not go down well with traders and farmers. The court heard the first arguments on September 14. The final hearing will be done on September 21, followed by the order the same day.

Traders at the wholesale markets of Nashik, the country’s largest market for onions, have gone on strike since the decision to ban exports was announced.

Exports were banned barely a day after the directorate general of foreign trade raised the MEP by a whopping $175 a tonne to $475 a tonne. Hoping a ban would not be levied so soon, exporters had contracted nearly 45,000 tonnes with various overseas traders, largely in Dubai. These traders were in various stages of shipment as almost all of them had obtained a no objection certificate from the customs and other regulatory authorities.

“We had already transported 2,600 tonnes of contracted onion to the port for loading in containers. The ban order not only hit the shipment but also added to the overall cost of trade due to re-transportation back to warehouses,” said the exporter.

A delegation of senior ministers from Maharashtra, the country’s largest onion producing state, had met the food minister and others last week to demand lifting of the ban. Last week, agriculture minister Sharad Pawar is believed to have met Prime Minister Manmohan Singh to apprise him of the situation.

In fact, officials in the agriculture ministry believe the decision was unjustified, as it was done barely days after the MEP was raised significantly. “There was not enough time given to see the impact of raising the MEP,” officials said. Data sourced from the department of consumer affairs showed price in some wholesale markets had dropped by around Rs 100 to Rs 325 a quintal since September 9.