Govt slashes onion MEP to $275/tonne

The government slashed the minimum export price (MEP) of onions for the third time this month to $275 a tonne from the earlier price of $350 a tonne as retail prices declined.

“MEP of onions other than Bangalore Rose onions and Krishnapuram onions would be $275 a tonne FoB (freight-on-board),” the Directorate General of Foreign Trade said in a notification.

On March 1, the MEP was lowered to $450 a tonne from $600 a tonne and again on March 8, it was reduced to $350 a tonne from $450. The wholesale price of onion in major cities across the country has dropped by more than 50 per cent in the last one month because of bumper rabi harvest. Last month, the government had lifted 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 70-80 a kg in December last year.

However, agriculture minister Sharad Pawar had subsequently indicated that the MEP of $600 a tonne was almost double the prevailing rate in international markets, rendering the onion exports uncompetitive.

MEP for Bangalore Rose and Krishnapuram onions was $1,400 a tonne.

The government had imposed a ban on export of the kitchen staple after its prices rocketed and touched as high as Rs 80-85 a kg.

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.