As onion flirts with Rs 8 mark, govt assures MEP relaxation

Written by Sandip Das | New Delhi | Updated: Dec 25 2013, 14:21pm hrs
Onion pricesWholesale onion prices in various mandis of Maharashtra, the biggest producer of onions, has fallen to as low as Rs 800 per quintal.
Wholesale onion prices in various mandis of Maharashtra, the biggest producer of the key vegetable, fell to as low as R800 per quintal on Tuesday primarily due to heavy arrivals of the late kharif crop.

At the Lasalgaon mandi in Maharashtra, wholesale prices dropped to R800 per quintal before settling at R950 per quintal at the closure of trade. In Ahmadnagar mandis, prices fell to R840 per quintal. At Nashik, wholesale prices fell below R900 per quintal.

Farmers demanded further relaxation in the minimum export price of onion so that the fall in prices could be arrested.

Last week, the commerce ministry lowered onions MEP to $350 per tonne from $800 per tonne to arrest the fall in prices by encouraging farmers to export. However, traders say the actual MEP of onion is around $400 per tonne (including the freight cost), which makes Indian onion costlier in the global market.

We will shortly take up the issue of further relaxation to MEP, a commerce ministry official told FE. Agriculture minister Sharad Pawar had on Monday asked the commerce ministry to scrap the onion mep to help boost overseas shipments.

If prices continue to fall further, farmers will suffer losses as they wont be able to recover the cost of production, CB Holkar, a Nafed member and a key trader from Nashik, said.

Holkar said prices are falling due to increased arrivals in mandis. Currently, farmers are harvesting the late summer (kharif) crop in the major growing states of Maharashtra, Gujarat, Madhya Pradesh and Rajasthan.

Last month, the government had hiked the MEP of onion to $ 1,150 per tonne from $ 900 per tonne, which was seen as a symbolic move to curb shipments of the critical agricultural commodity.

Since September 19, when the government raised the MEP to $900 per tonne from the $650 per tonne fixed on August 14, shipments of onion have dropped sharply.

Onion exports had come down sharply to around 29,000 tonne in August due to the export curbs. In April-November this year, about 8.53 lakh tonne of onion was exported by India compared to the 1.8 million tonne (worth R2,294 crore) reported in 2012-13.

A food ministry official said that due to an estimated 7% drop in current years (2013-14) production, prices have risen sharply in the last three months. In 2012-13, annual onion production was more than 16.6 million tonne (mt).