Despite a sharp fall in mandi prices of onions due to arrival of kharif crop, the government is unlikely to remove 20% export duty on the staple vegetable citing higher retail prices. “We have to wait till retail prices come down for (withdrawal of) export duty,” an official with the department of consumer affairs said.
While the modal retail prices of onions was Rs 40/kg on Tuesday, in several cities prices are around Rs 50/kg which is still ‘higher’ in comparison to the mandi prices of the staple vegetable. With arrivals of the fresh kharif crops, the average mandi prices of onions at Lasalgaon, Nashik, Maharashtra, the hub of the country’s wholesale trade has declined by more than 50% to Rs 1900/quintal on Tuesday from Rs 4000/quintal prevailed in the last month.
In May, the government lifted a ban on onion exports imposed in December last year and put a minimum export price (MEP) of $550/tonne and 40% export duty on the staple vegetable. Subsequently in September, the government announced a reduction of the export duty on onions to 20% while MEP was abolished.
Meanwhile, the government agencies – farmers’ cooperative Nafed and National Consumers Federation of India have released 0.47 million tonne (MT) procured stocks into the market at Rs 35/kg. These rabi onions were procured from farmers as a buffer under the price stabilisation fund.
The overall recovery rates for onion have increased from 72% in 2020-21 to 81% in 2023-24 for the buffer built with rabi onion, officials said. In the current fiscal, recovery has been 85% due to storing them in controlled atmosphere warehouses.
Trade sources said that with robust arrivals of kharif crops across key producing states retail prices are expected to soften further over the next couple of weeks.
Last week, Ajit Pawar, deputy chief minister, Maharashtra in a communication to commerce minister Piyush Goyal requested removal of 20% export duty on onion because of sharp fall in price due to fresh arrivals.
Kharif harvested onion, with higher moisture content, has around 25% share in the country’s total output and the produce enters the market directly and meets the domestic demand till March. Rabi onion, harvested in April has a share of 72-75% total production and is stored for meeting the domestic supplies till November.
Retail inflation in onion in November was 5.59% on year because of high base effect. Inflation in onions in November, 2023 was 86% on year. The area under Kharif onion this year is projected at 0.36 million hectare, 27% higher than previous year.
According to the agriculture ministry, output of onion in the 2023-24 crop year (July-June) is estimated at 24.21 MT, a decrease of 20% compared to previous year because of a drop in rabi output.