Onion export price raised 6.5%

The minimum export price (MEP) of onion has been hiked by 6.5 per cent, effective July 2, to align rising domestic prices with export rates.

"We have hiked the MEP by $20 to $325 a tonne as domestic rates are ruling at a high of Rs 8,000-9,000 a tonne," said Alok Ranjan, managing director of the National Agricultural Cooperative Marketing Federation (Nafed).

The federation revises the MEP monthly and no exports can take place below this price.

The kharif sowing of onion was estimated at about 20 per cent higher than last year and there was no supply concern. Therefore, prices would remain stable, he said.

In the Delhi market, the wholesale price of onion ranges between Rs 7,000 and Rs 11,500 a tonne, while at the retail level, it sells in the range of Rs 14 to Rs 18 a kg.

In February, retail prices surged from Rs 10 to Rs 24 a kg on account of rising exports. This forced the federation to raise the MEP by $25 a tonne to make exports less lucrative.

Following this, prices slipped to Rs 12-14 a kg. Onion exports jumped by about 44 per cent in 2006-07 to 11.26 lakh tonnes compared with 7.78 lakh tonnes in 2005-06. In value terms, it stood at Rs 1,070 crore in FY07.

In the first three months of the current year, about 2.04 lakh tonnes, valued at Rs 215 crore, was exported, down by nearly 40 per cent from 2.85 lakh tonnes in the corresponding period last year.

"Demand was low in the international market. Moreover, Pakistan also had a good crop and was exporting onion," said Ranjan.

According to the National Horticultural Research and Development Foundation, domestic onion production in 2006-07 was 66.68 lakh tonnes, up about 7 per cent from 62.23 lakh tonnes in 2005-06.

Reuters adds: According to the National Horticulture Research and Development Foundation, the area under onion cultivation in this 'kharif' monsoon season is expected to increase by half on the back of good prices, but timely rains will hold the key.

India, the world's second largest producer, in 2006/07 cultivated onions on 478,440 hectares, of which 100,000 hectares came from kharif season.

This year, the area could expand to as much as 150,000 hectares, said R P Gupta, director of National Horticulture Research and Development Foundation. "Area is increasing, but we can't say production will also increase. Many things depend on monsoon rainfall," Gupta said. Maharashtra and Gujarat, in particular, could see a sharp rise in area, he said.

Onion, a major ingredient in Indian food and a politically sensitive commodity, is typically cultivated thrice a year - in monsoon, winter and summer.