Farmers cry MEP abolition as onion prices continue to slip

Written by Sandip Das | New Delhi | Updated: Mar 1 2012, 05:39am hrs
Current steady supplies coupled with the much vaunted expectations of a bumper summer crop continue to drag down onion prices, leaving both traders and farmers a worried lot.

A trader from Nasik, the countrys trade hub for the commodity, said the average wholesale price of the commodity is R300-350 per quintal. Its due to sufficient stocks, mainly because of steady current supplies and expectations of a bumper summer crop, that the prices are unlikely to go up in the next few months, he told FE.

With onion prices dipping further, farmers say theyre unable to recover even the production cost and are being forced to go for distress selling. They say the government can provide some relief to them by abolishing the minimum export price (MEP) regime, so they can make profits as then exporters will make more money. The farmers contend that the actual cost of the countrys onion turns out to be around $200-225 per tonne in the global market at a time when China and Pakistan are selling the commodity much below that price.

Just some time back, after much pressure from exporters and farmers, the Centre had cut the MEP on all varieties, but Bangalore Rose onions and Krishnapuram, by $25 to $125 per tonne.

While then food ministry has asked for abolition of the MEP regime, the commerce ministry is against it. Were not considering further reduction of MEP for onions at present, a commerce ministry official said.

Meanwhile, onion exports have declined in 2011-12 in comparison with the previous year. Till now, India has exported 1.19 million tonne (mt) against the figure of 1.34 mt in the previous year. Besides, the realisation from onion exports has declined to R1,498 crore this year against R2,159 crore in the previous year.

Sri Lanka, Bangladesh, Russia, Europe, Mauritius, China, Singapore and Gulf countries are key export destinations for the commodity from India.

There are sufficient onion stocks to meet the country's demand during the coming summer months, C B Holkar, board member of National Agricultural Cooperative Marketing Federation of India (Nafed), said.

Meanwhile, data from the department of consumer affairs indicate that the retail price of the commodity in key metros has declined to R8-13 per kg against R14-15 two months back.

Onion production in the country is estimated to be more than 13 mt in 2011-12.