Onion MEP cut by $50

The government has cut the minimum export price (MEP) of onion by $50 to $200 a tonne with effect from January 1, 2008, to contain the declining trend in the domestic rates of the commodity.

"Arrivals are heavy and onion prices have come down in all mandis. At Nashik, prices are as low as Rs 370-380 a quintal. The cut has been taken to provide support to the falling domestic prices," said Alok Ranjan, managing director, National Agricultural Cooperative Marketing Federation (Nafed), the agency that revises MEP on a monthly basis.

In New Delhi, the modal price of onion has come down from Rs 600 to Rs 500 a quintal since December 1. The modal price is the price at which maximum arrivals take place. Retail prices have also slipped to Rs 10 a kg from Rs 12 in the same period.

Between May and October, the MEP has more than doubled from $225 to $495 a tonne to discourage exports and boost domestic availability.

This was followed by two cuts of $70 a tonne (in November) and $175 a tonne (in December) since domestic prices had softened and arrivals were good.

According to the National Horticultural Research and Development Foundation (NHRDF), this year's kharif crop of onion is estimated at 1.7 million tonnes, up 30 per cent from last year.

India has exported 475,711 tonnes of onion in the April-November period this year, a decline of about 40 per cent compared with 802,504 tonnes for the corresponding period last year. This decline is mainly due to the higher MEP in the August-November period that made exports unattractive.