Onion prices to remain firm despite hike in export price

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New Delhi: The spike in onion prices in the last two months is not likely to abate soon despite a steep hike in the minimum export price (MEP) by $ 145 per tonne announced by the government Tuesday.

The MEP was raised to curb exports and augment local supplies. According to traders from Nasik , the hub of onion trade in the country, fresh arrival of kharif output from key onion producing states such as Maharashtra and Rajasthan had been delayed because of deficient monsoon.

Moreover, last month’s floods in parts of Andhra Pradesh and Karnataka have also not helped in augmenting supplies.

The model wholesale price of onion at Nasik has risen to Rs 1,400 per quintal on Tuesday as against Rs 650 per quintal during last week of September, an increase of more than 100%.

Retail onion prices in Delhi were also high at Rs 25-Rs 28 per kg on Tuesday.

"The MEP has been raised by $ 145 to an average of $ 445-450 a tonne for November. The decision to raise the MEP sharply has been taken to discourage massive export, as prices in domestic markets have risen sharply during last two months,” an official from National Agricultural Cooperative Marketing Federation (Nafed), the nodal agencies for onion exports, said.

The country has already exported 9.91 lakh tonne of onion in the first half of the current fiscal, as against 9.15 lakh tonne last year. “For curbing excessive exports of onion, the hike in MEP has been imposed,” a Nafed official said. During 2008-9, the country exported a record 1.7 million tonne of onion.

According to the latest crop prospect report of National Horticulture Research and Development Foundation (NHRDF), more than 20% of stored onions in states such as Maharashtra, Gujarat , and Madhya Pradesh to the tune of 5 lakh tonne is gradually coming into the market.

“In Karnataka, 50% of kharif onion and 75% of onion in Andhra Pradesh have already been harvested and around 15-25% of Andhra Pradesh’s crop and 35% of Karnataka have been lost because of the floods,” NHDRF said in its report.