Centre bans onion export, imposes stock holding limit to check price rise

To control onion prices ahead of the festive season, the central government banned its export with immediate effect. And, perhaps for the first time, directly imposed a stock holding limit on retailers and wholesalers across the country, bypassing state governments.
 
Earlier, it had authorised states to impose stock limits for certain items under the Essential Commodities Act. However, in an unusual move on Sunday, directly imposed a holding limit of 100 quintals on retailers and 500 quintals on wholesale onion traders across the country.
 
The price has over the past month soared to almost Rs 80 a kg in some retail markets, including in the capital, Delhi. The effect of the latest moves remain to be seen, as prices have risen due to depleted supply after months of rain in the major producing states of Madhya Pradesh, Maharashtra and Karnataka.

“The sharp increase in prices is because of lower supply. Only around 15 per cent of last year's output is left with famers and stockists. Imposing stock limits or a ban on export will not help much,” Sanjay Snap, an onion wholesaler in Nashik, told Business Standard.
 
Some said the move could have a cascading impact on growers. “Onion prices rise once in four-five years, the only time farmers get the opportunity to earn some money. The government should allow farmers to earn. Stock limits and export restrictions would help correct prices temporarily but discourage farmers from sowing (more in the future).
 
Unfortunately, the government also takes no action when the onion price goes down,” said Jaydutta Holkar, chairman of the huge wholesale centre at Lasalgaon in Maharashtra’s Nashik district.
 
Central government data showed the retail price last week was around Rs 60 a kg in Delhi, Mumbai and Lucknow (and Rs 42 in Chennai). In Kanpur, it was Rs 70; in Port Blair, Rs 80 a kg.  On September 13, the Centre had imposed a Minimum Export Price of $850 a tonne (Rs 60 a kg). Even so, some export continued to neighbouring Bangladesh and Sri Lanka. Sunday’s announcement is meant to stop all such shipment. Bangladesh, Sri Lanka and UAE are the top three destinations for Indian onion. The country exported fresh and chilled onion worth $496.8 million in 2018-19. In the first four months of 2019-20, around $154.5 mn.
 
The Centre had also directed states to take stringent action against illegal hoarding of onion. And, urged all states to utilise the 57,000 tonnes of onion it has as buffer stock. So far, the governments of Delhi, Haryana and Andhra have done so, to cool prices. On Friday, Delhi chief minister Arvind Kejriwal said his government would provide it at Rs 23.9 a kg to buyers.
 
India produced 23.48 million tonnes in 2018-19 (third advance estimate), up from 23.26 mt in 2017-18.