AN empowered group of ministers (EGoM) on Tuesday decided to lift a ban on onion exports within two weeks of banning the shipments to curb prices, as protests against the move by political parties, traders and farmers from the largest onion-growing state of Maharashtra intensified.
The government will review onion supplies and prices in two weeks, Food Minister KV Thomas said after the EGoM meeting. The benchmark price for onion exports will remain at an elevated level of $475 a tonne, which was fixed just before the ban was imposed, Thomas added, as the government sought to balance the interest of farmers with consumers.
Sources said Agriculture Minister and veteran leader from Maharashtra, Sharad Pawar, pushed for the removal of the ban, citing losses to farmers due to a fall in returns for their produce.
The EGoM on food, headed by Finance Minister Pranab Mukherjee, had on September 8 decided to ban onion exports after prices rose by up to 65% to R25 a kg in some regions due to lower supplies following a delay in the crop’s sowing this summer. Food minister Thomas had also directed state-run NAFED and co-operative NCCF to sell onion their outlets in Delhi at a subsidised rate of R20 per kg. State governments had also been asked to intervene in the market through their agencies to curb onion prices.
The Centre was forced to ban onion exports in December last year, too, after the prices rose to R60-70 per kg in the retail market, triggering sharp reaction from consumers as well as the Opposition parties. It later lifted the ban in February after supplies improved.
The move to ban shipments earlier this month, however, triggered sharp reactions from traders from Maharashtra, who had contracted exports in huge quantities before the restriction was slapped, as well as politicians and farmers. An all-party delegation from the state, including its Agriculture Minister and senior Congress leader Radhakrishna Vikhe Patil, had met Union Finance Minister Pranab Mukherjee and also Food Minister KV Thomas last week seeking the lifting of the ban.
Asked if onion exports are viable even with the high benchmark price of $475 a tonne, Patil told FE that the immediate demand was to lift the ban and then ?we will wait to see the impact of high minimum export price fixed by the Centre for onion to decide on our next course of action?. Earlier this month, the government raised the floor price for onion exports sharply by $175 a tonne to $475 a tonne before banning the shipments.
Meanwhile, the wholesale market of major onion trading hub of Nashik has remained shut since the ban was imposed and farmers in Pimpalgaon, another key onion-growing region, have been protesting against the restriction too. Wholesale onion markets in Nashik will re-open and begin functioning from September 21 after the government on Tuesday, announced that the ban on onion exports would be lifted.
The country expects to produce 15.13 million tonne of onion in the crop year through June 2012, compared with 14.56 million tonne a year before. The country usually exports around 1.5 million tonne a year, according to trade estimates.
The EGoM also decided to maintain the limits on sugar stocks traders can hold at any point of time for two more months beyond the deadline of September 30. Traders and wholesalers in states except West Bengal can keep a maximum stock of 500 tonne of sugar, a move that was introduced to stop hoarding when there was a shortage of the commodity in the past two years. In West Bengal, the limit on sugar stocks is 1,000 tonne. The sugar industry has been seeking the removal of the curb citing surplus output in the current year through September as well as 2011-12.
An official source said the government doesn’t want to take a chance due to the current high food inflation as well as an expected rise in sugar demand during the festival season.Similarly, the limits on stock-piling of pulses, edible oil and oilseed have been extended by one year through September 2012, while a decision to end such a curb on rice has been deferred, the sources said.
The EGoM has also approved a proposal to sell one million tonne each of rice and wheat to states and 1.5 million tonne of wheat to bulk consumers such as flour millers under the open market sale scheme at subsidised rates to improve offtake. The Centre will supply rice and wheat to states at R1,492.53 per quintal and R1,170 per quintal, compared with R1,541.07 per quintal and R1,098-R1,570 per quintal, respectively.
Bulk consumers can buy wheat in the price range of R1,170 -1,425 per quintal, compared with R1,238-1,647 per quintal earlier. The grain sale and the pricing will be valid for a year from October.