Price squeeze on onion exports to ease supplies

With onion prices remaining high, the government on Thursday hiked the minimum export price (MEP) of the kitchen staple to $ 900 a tonne to curb exports.

When onion prices shot up last month, the government revived the MEP mechanism and fixed the minimum export price at $ 650 a tonne.

“Export of all varieties of onions will be subject to an MEP of $ 900 a tonne,” the Commerce Ministry said on Thursday as the vegetable was sold at retail markets across the country at Rs 80 per kg.

The MEP on onions had instantaneous effect with exports in August dropping to 29,000 tonnes from 1.56 lakh tonnes in the same month last year.

Government sources said that a temporary export ban was also being considered if the prices of onions do not ease by mid-next month.

Indians’ love for raw onions as a side dish or as a blend in a variety of curries, coupled with a sharp rise in its prices, has sent household budgets for a toss and leave the ruling Congress worried.

Food Minister K V Thomas ruled out declaring onion an essential commodity, a move which allows the government to ensure easy availability and protect consumers from exploitation by unscrupulous traders.

The Centre has already asked the state governments to crackdown on speculators and hoarders to check the price rise.

Agriculture Minister Sharad Pawar said he expected onion prices to ease within the next two to three weeks when fresh arrivals from Karnataka and Andhra Pradesh are expected.

Market watchers said that onion prices are usually high in July-September as supplies are down to a trickle as the crop is not harvested during the monsoon season. Prices stabilise around mid-September when fresh supplies begin.

However, the delayed withdrawal of monsoon, particularly in southern states, has led to further delay in harvesting of onions.

Traders of Andhra Pradesh and Karnataka are not transporting onions to other consumer states as the new crop has high moisture content due to the rain. Farmers are not able to dry the crop resulting in consumption of most of the produce locally.

Prices of onions are known to be volatile. The last time onion prices soared in December 2010 and January 2011, they halved within a month as more supplies hit markets.