Govt abolishes minimum export price for onion

Price declines by 50% in December

The government has abolished the minimum export price (MEP) for onion, to encourage traders to ship some quantity outside India to prevent a price crash once kharif and late-kharif season crops overlap in next month.

The government first levied an MEP of $250 a tonne in May. This was raised to $425 a tonne in June, to restrict export and increase domestic supply. However, prices continued to move up and the government to raise MEP again to $700 a tonne in August when onion price jumped to Rs 44-45 a kg in the wholesale market at the benchmark Lasalgaon mandi in Nashik. Not only did onion prices cool since then but its exports also came to a grinding halt, as prices in foreign markets were at $400-450 a tonne.
 
Prices started easing in November in the wake of the government’s raids on stockists and various other measures, including imports. On December 11, MEP was reduced to $400 a tonne.

“The government had convened a meeting of stakeholders on Wednesday to seek the impact of a bumper production. Apprehensions are that kharif and late-kharif onion output would overlap in a month from now, which might create a situation of price crash. So, it was necessary for the government to open up exports by lowering the MEP,” said R P Gupta, director, National Horticultural Research and Development Federation.

According to trade sources, onion prices in foreign markets are now $225-250 a tonne. India exports nearly 1.5 million tonnes of onion annually.

The kharif season accumulatively contribute around 60 per cent of India’s annual onion output of 19 million tonnes; the rabi season crop shares the remaining.

Gupta added sowing and re-plantation of kharif season onion started late, owing to the delay in monsoon rainfalls. Therefore, harvesting of kharif onion would be delayed by a month. Since the late kharif season crop is on time, crops from both the seasons would hit mandis together.

Onion prices have almost halved in December, to Rs 10 a kg in Lasalgaon from Rs 20 a kg early this month.