The government has directed National Cooperative Consumers Federation (NCCF) and farmers’ cooperative Nafed to initiate procurement of 0.5 million tonne (MT) of onion at market price for the buffer from the farmers as rabi harvest has started to arrive in the market.
The department of consumer affairs directed the two agencies to pre-register the farmers for ensuring direct cash payment to farmers’ bank accounts. This follows the government’s decision to extend the ban on exports on onion indefinitely last week which is expected to bring down the mandi prices of the key vegetable.
In 2023, Nafed and NCCF had purchased 0.64 MT of onion from farmers for the buffer.
“The continuous procurement by the NAFED and NCCF have guaranteed remunerative prices for onion farmers all through the year in 2023,” according to an official note. It stated that the recent decision to extend onion export prohibition has been necessitated by the overall domestic availability against the prevailing international prices and global availability concerns,”.
The modal retail prices of onion at Lasalgaon, Nashik, Maharashtra, the hub of the country’s wholesale trade was ruling Rs 1380/quintal on Saturday. The modal retail prices are currently ruling at Rs 30/kg against Rs 20/kg reported a year back.
“The export prohibition on onions valid till March 31 has been extended until further orders,” said a Directorate General of Foreign Trade notification last week.
However, the Government has allowed exports to neighboring countries who rely on India for meeting their domestic consumption. The Government has allowed the export of Onion to Bangladesh (50,000 tonne), United Arab Emirates (14,400 tonne), Bahrain (3,000 tonne), Mauritius (1,200 tonne) and Bhutan (550 tonne).
In December 2023, the government had banned exports of onion after the modal retail prices of the key agricultural commodities doubled to Rs 60/kg from Rs 30/kg reported in September last year. The export of onions to countries is allowed on a case-to-case basis after approval from the inter-ministerial group.
Retail inflation onion was 22.1% in February, while prices rose by 29.69% in January 2024 on year. However, the farmers groups have demanded lifting the ban on onion exports imposed as supplies have risen in the market.
Sources said despite the arrival of rabi crop harvest, prices have not softened yet. According to the department of consumer affairs, the modal wholesale prices of onion on Friday were Rs 2,500/ quintal against Rs 1,500/ quintal a year ago. Correspondingly, the modal retail prices are currently ruling at Rs 30/kg against Rs 20/kg reported a year ago.
In the current fiscal, India has exported around 1.6 MT of onion. India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal.
In October, 2023, to discourage exports and improve domestic supplies, the government had imposed a minimum export price (MEP) of onion at $ 800/tonne. Earlier, the government had imposed a 40% export duty on onions in August last year.
Recently the agriculture ministry has estimated that onion production is likely to fall by 16% to 25.47 MT in the current crop year compared to 2022-23 due to a decrease of 3.43 MT in Maharashtra, the biggest producer of the staple vegetable.