The government has hiked the minimum export price (MEP) of onion by $20 a tonne to $255 with effect from August 1 to restrict exports and contain domestic prices. This is the highest MEP in the current calendar year. Onion MEP has been hiked thrice since July 1. In July, the MEP was hiked in two phases-by $25 and $50 a tonne.
Market price of onion has been rising owing to the delayed monsoon in Maharashtra, Andhra Pradesh and Gujarat, which may affect kharif onion crop to be harvested October onwards. Kharif season accounts for 40 per cent of total onion production while the rest is grown in Rabi season.
Wholesale price in Delhi mandi has rose about 40 per cent to Rs 600-900 a quintal since July while retail price has moved up by 25 per cent to Rs 12 per kg. The wholesale price index (WPI)-based inflation has been hovering close to 12 per cent.
“There has been a psychological impact on domestic onion prices since the sowing of kharif crop got delayed in Maharashtra, Gujarat and Andhra Pradesh (the main onion growing states) due to late monsoons. We are keeping a close watch on domestic prices and may revise the MEP further if required,” said an official at the National Agricultural Cooperative Marketing Federation (Nafed), the agency that revises MEP on a monthly basis.
He, however, added that the country has onion stocks of about 2 million tonnes and it would suffice for three-four months.
The country has exported 535, 000 tonne of onion in the April-July period this year, up 72 per cent from 311,000 tonne exported during the corresponding last year. Better export realisation and rupee appreciation of about 5 per cent since April is also helping exports.
“Sowing has got delayed but it is picking up in most growing states except Karnataka. The delay may result in a 15-20 days delay in harvest while crop could be marginally affected”, said R P Gupta, director, National Horticultural Research and Development Foundation (NHRDF).
According to the NHRDF, onion output for 2007-08 is estimated at 7.45 million tonne, up nearly 12 per cent from previous year's 6.66 million tonne.