Govt hikes onion MEP to USD 700/tonne to check prices

The government today hiked the minimum export price of onions sharply by USD 275 per tonne to curb shipments and boost domestic supply to control spiraling retail prices that have touched up to Rs 80 per kg.

The decision to increase onion MEP to USD 700 per tonne from USD 425 is taken as prices of onions at both wholesale and retail levels have been rising on lower output due to unseasonal rains earlier.

"To increase availability in domestic market, it has been decided to raise minimum export price (MEP) of onions further to USD 700 per tonne," said the Consumer Affairs Ministry in a statement.

The government is keeping a close watch on onion prices and has floated a tender for import of 10,000 tonnes of onions, which will be opened on August 27, it added.

MEP is the rate below which no exports are allowed. The rise in MEP restricts exports and improves domestic supply.

Onion prices have risen unabated in the past few weeks. Wholesale onion prices today touched Rs 57/kg at Lasalgaon in Maharashtra, Asia's biggest edible bulb market, which could further spike retail prices in coming days.

The export price was last raised to USD 425 per tonne from USD 250 on June 26, it added.

The Consumer Affairs Secretary will on August 24 take stock of the situation with agencies SFAC, NAFED, MMTC and the Delhi government.

"Prices of onions have been rising on account of a decline in total production from 189.23 lakh tonnes in 2014-15 as against 194.02 lakh tonnes in 2013-14 i.e. a decrease of 4.79 lakh tonnes," the statement said.

Onion exports fell to 10.86 lakh tonnes in 2014-15, from 13.58 lakh tonnes in the previous year.

The shortfall has primarily been on account of adverse weather conditions, including unseasonal rains which have impacted both the standing and harvested crop at major producing centres, it added.

Intervening in the market, Small Farmers Agribusiness Consortium (SFAC) and NAFED, which have procured 8,368 tonnes of onions using the Price Stabilisation Fund, are supplying onions for sale at subsidised rates at Mother Dairy's Safal and 120 booths of Delhi Milk Scheme (DMS).

SFAC is supplying onions at Rs 30.50 per kg to Safal, which is retailing at Rs 39 in Delhi. SFAC is also selling onions to consumers at Rs 35 through DMS booths whereas the Delhi government is selling onions at a cheaper Rs 30.

The state governments are also being reminded regularly to keep a tab on price rise and take effective action.