A month ago, farmers were up in arms when onion prices declined to a record low of R300 per quintal because of higher MEP, which forced the government to liberalise exports by lowering the MEP, making Indian exports more competitive. Traders say that due to bumper summer crops, the prices are expected to stabilised during next summer months.
Farmers and traders have been storing summer crops. As we have comfortable stocks, prices are expected to be less volatile during next few summer months, CB Holkar, director, National Horticulture Research and Development Foundation (NHRDF), told FE.
Following the recommendation of the agriculture ministry, the commerce ministry had recently recommended an MEP of $175 a tonne for onion, from $225 a tonne. The MEP has been lowered by close to $375 a tonne since exports were allowed in February. Holkar said current level of MEP is the freight on board ($50 a tonne) rate, which still makes onions from India costlier in the global market.
Meanwhile, department of consumers affairs data indicate that retail prices in key metros had fallen significantly during the last two months. The retail price of onion in Delhi is R11.50 per kg last week against R20 two month earlier. Similarly, in most cities including Ahmedabad, Mumbai, Kolkata, Hyderabad and Bangalore, the prices have declined sharply.
There is no cause of concern during next few months about the rise in onion prices, an agriculture ministry official said.
The NHRDF in its crop prospect reports said the harvesting of late kharif crop is almost over and the kharif and late kharif onion production is estimated to be around 4.2 million tonne. The present crop condition of rabi onion is medium to good. The harvesting of rabi onion started from mid of March onwards would continue till June, NHDRF said in its crop prospect report. The rabi onion production is estimated to be around 8.8 million tonne.
Onion production in the country is likely to be around 12.5 million tonne during 2011-12. In 2010, India exported around 1.1 million tonne of onions. The government had banned onion export in the last week of December when domestic prices rose to R70-80 per kg in many cities due to disruption of supplies because of a lower kharif crop that was partially damaged because of rains. Since then, the situation has improved because of better kharif and late kharif crop.