Govt steps in to check bulb fiction, hikes onion MEP to $500 a tonne

Written by fe Bureau | New Delhi | Updated: Jul 3 2014, 13:39pm hrs
The Centre on Wednesday increased the minimum export price (MEP) for onion to $500 a tonne to improve domestic supply and curb exports.

About a fortnight back, the government had imposed an MEP of $ 300 a tonne on the tuber crop, the price of which is politically significant in the country.

Keeping in view of the rising retail and wholesale prices and delayed monsoon, the inter-ministerial committee had unanimously decided to fix the MEP at $ 500 a tonne freight on board --- which translates to Rs 30 a kg with a view to arrest domestic price rise and augment domestic supply, a commerce ministry statement said.

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The IMC in their meeting on Monday observed 'the wholesale and retail prices of onion are going up in producing and consuming mandis and despite MEP at $ 300 per tonne there is no appreciable decline in the exports, the official statement noted.

Retail prices of onion have risen to about Rs 25-30 per kg in Delhi, while the wholesale prices at Nasik, the hub of onion trade is ruling around Rs 18 Rs 19 per kg. Onion prices have been rising in the last few weeks, due to deficit monsoon rains in key growing areas of Maharashtra, Andhra Pradesh and Karnataka. We have sufficient onion stocks at present, its only speculations which leading to rise in prices, a trader from Nasik told FE. The government had abolished MEP of onion in March, when the wholesale prices dropped to as low as Rs 6 Rs 7 a kg in Maharashtra, the biggest producer of the agricultural commodity. Last year, the commerce ministry had reduced the MEP from $350 a tonne to $ 150 a tonne to boost exports and check a sharp fall in domestic prices.

The MEP was imposed in September last year when the retail prices rose to Rs 80 per kg in the many of the cities. The country exported 1.3 million tonnes of onions in 2013-14 out of the total output of 19.2 million tonne.

India exports onion to several countries, including Bangladesh, Malaysia, Sri Lanka, United Arab Emirate, Saudi Arabia, Indonesia and Singapore. The period between July September is a sensitive period during which onion prices rise as demand is met through stored crops from summer output, a commerce ministry official said. The official said the purpose of MEP to ensure that domestic prices do not rise sharply like last year.

The domestic onion demand during the lean period from June - November is met through stored rabi (winter) and fresh kharif (summer) produce.

C B Holkar, board member, Nafed, and a farm leader from Nasik cautioned against the imposing MEP and saidthe government should refrain itself from imposing ban on onion exports it would discourage farmers to take up sowing in the forthcoming kharif season.