The sharp hike in onion MEP is meant to deter exporters from selling large quantities of onion outside India. In August, the government had increased MEP by $20 a tonne which remained unchanged at $200 a tonne since April. After the recent hike the average MEP for onion has been fixed at $275 a tonne for September.
An official with National Agricultural Cooperative Marketing Federation (Nafed) told FE that further upward revision of MEP may be considered after monitoring retail prices for the next two weeks.
Meanwhile, the retail prices of onion across key cities have moved up significantly in the last three months. A department of consumer affairs data shows that the retail price of onion has increased from Rs 11 a kg in May to Rs 17 a kg on Monday, an increase of 54%.
The National Horticulture Research and Development Foundation in its latest crop prospects report has said farmers in Maharashtra, which produces close to 40% of the total onion output of the country, have been disposing off those stocks which had been adversely impacted by continuous humid weather in the region.
However, quality of bulbs in the market has been poor or medium. Trade sources said that the harvesting of early kharif crop in Andhra Pradesh, Karnataka and Tamil Nadu started. Overall, the area under kharif onion is going to be almost same or little more compared to last year.