Govt sharply cuts onion MEP to USD 350 a tonne

Govt sharply cuts onion MEP to USD 350 a tonne

Govt sharply cuts onion MEP to USD 350 a tonne

The government today steeply cut the minimum export price of onion to USD 350 a tonne from USD 800 per tonne, a move aimed at encouraging exports amidst a crash in wholesale prices leading to protest by farmers in producing states.

"Exports of all varieties of onions... will be subject to a MEP of USD 350 per tonne," the Director General of Foreign Trade (DGFT) said in a notification.Three days ago, DGFT had reduced the MEP to USD 800 from USD 1,150 a tonne.

An official statement said an inter ministerial panel, after factoring in improvement in arrivals in the latter half of November and in early December, decided to reduce the MEP.

"Now that the arrivals have shown marked improvement and on expectations of better crop prospects and the sharp decline in the wholesale model prices in production mandis of Maharashtra and other places, it has now been decided by the government to slash the MEP to USD 350 with immediate effect."

It may be noted that there had been a sudden and sharp hike in onion prices across the country starting from July. Rates continued to rise through August, September, October and November. Price in retail markets had soared to almost Rs 100 a kg in the middle of October due to various reasons such as untimely rain and speculative hoarding by traders.

This had prompted the government to impose MEP on onion in order to curb exports and boost domestic supplies.

Onion exports had come down substantially to 29,000 tonnes in August due to export curbs. In April-November period of this year, exports were 8.53 lakh tonnes against 18.22 lakh tonnes in the same period in 2012-13.

Wholesale prices in Lasalgoan market, Asia's largest onion market, have also come down below Rs 10 from Rs 60 in September, while in retail markets rates have fallen from Rs 100-level to Rs 30 a kg.

With wholesale prices declining, farmers in producing states like Maharashtra have been protesting. They demand removal of export restrictions. Government said cut in MEP will help arrest the sharp fall in prices realised by farmers besides help stabilise prices by balancing interests of farmers and consumers.