Govt struggles to control onion prices as Maharashtra, Haryana elections loom large

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Updated: September 26, 2019 12:40:09 PM

NAFED: Farm experts advise the government to resort to the price support scheme (PSS), procure the commodity and then offload it through NAFED.

Onion price, Delhi, Mumbai, Maharashtra, NAFED, ExportFloods in several states have disrupted the supply of onions.

Onion Price: The Union government has been trying to rein in on rising onion prices ahead of crucial assembly elections in Maharashtra and Haryana. Onion prices have been rising since May this year and excess monsoon and supply disruptions due to floods in major onion producing states like Maharashtra and Karnataka have further hardened both the wholesale and retail prices. The matter assumes urgency as two important states – Maharashtra and Haryana are going to polls next month, and rising onion prices have affected delicate electoral arithmetic in several state elections in the past.

According to reports, retail prices of onion have hardened to Rs 70-80 per kilogram in several retail markets including Delhi-Gurgaon. In Chennai’s Koyambedu wholesale vegetable market, the onion price was Rs 50 kilogram during the morning trade on Monday.

“There are several things that the government can do. These issues require a discussion with the commerce ministry to review the whole regime of export and import if the government wants to do something sustainable,” a former agriculture secretary told Financial Express Online.

Earlier this month, the Union government notified the price of $850 per tonnes for export of all varieties of onions to discourage its export.

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“They have already done the MEP, that is minimum export price, $850 per tonne. It should stablise the market,” said Ashok Vishandass, former chairman of the commission for agricultural costs and prices under the ministry of agriculture.

However, it did not have the desired impact on the retail prices as the MEP of $850 per tonne on export of onions was imposed on September 13. But it failed to check the rising prices of the commodity that are still hovering at Rs 50 per kilogram in wholesale markets.

Another option available with the Union government is to invoke essential commodities act (ECA), 1955 and impose a stock limit on traders. Under the law, the Union government is empowered to notify a stock limit for a commodity for a specific period. It discourages the hoarders as they cannot stock beyond the limit. But it is left to state governments to notify the stock limit in their area. If a state notifies the notification issued by the Centre under the ECA then it applies on all market participants including wholesalers, retailers, importers and exporters and no one can stock beyond the notified limit.\

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The issue is under consideration as there is a feeling that onion traders are taking advantage of supply disruptions in major onion growing states like Maharashtra and Karnataka where floods have disrupted the supply lines.

However, agriculture expert Ashok Vishandass says the government should resort to price support scheme (PSS) rather than imposing the stock limit on onion traders.

“The most important thing is that they (government) should intervene in the market, procure themselves and then offload through NAFED. It will stabilise the market,” he told Financial Express Online adding that it has already been done in the past.

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