The government?s move to reduce the floor price to export onion could boost shipments and benefit farmers. Entry of kharif crop from Rajasthan, Madhya Pradesh and Karnataka had swelled supplies, helping the government cut minimum export price (MEP) for the key agricultural commodity on Monday to $250 per tonne, $100 down from the previous $350.
The bar on exporting onion at prices below the government-set MEP of $350 had restricted shipments, since global prices are much lower at $300-350. India exported 8 lakh tonnes onions until October this fiscal, 3.5 lakh tonne below last year?s numbers. A brief ban in September and high MEP have discouraged exports.
Farmers? groups and traders had asked the government to cut MEP since excess summer stocks and a bumper kharif crop had depressed prices. Traders from Nasik, the hub of India?s onion trade, said wholesale prices have fallen to R700-900 a quintal from R1,400 a quintal in two months.
In an attempt to prevent a rerun of last year?s price surge, the government banned onion exports in September to boost domestic stocks. The ban was lifted after two weeks, but it came with a high MEP of $475 a tonne. Exporters complained that high MEP prevented exports as rivals from Pakistan and China were selling onion at $350-375 a tonne.
?With the expectation of a heavy kharif crop, domestic prices are expected to be stable in the next few months. Higher exports will help farmers realise better prices,? said CB Holkar, board member, Nafed.
?Harvests have started in Karnataka, Andhra Pradesh, Maharashtra, Madhya Pradesh, Gujarat, Haryana and Rajasthan and will continue till December-January. Late kharif harvest is also expected to start in Maharashtra, Gujarat and Madhya Pradesh from January and continue till mid -March,? Nasik-based National Horticultural Research and Development Foundation said in its latest crop prospect report.
Retail onion prices had shot up to Rs 85 a kg in in Delhi and other cities last December, forcing the government to take stern measures such as suspending exports and later importing onion from Pakistan.
India?s 2011-12 onion production is estimated at more than 13 million tonnes. Maharashtra produces over 40% of the country?s total onion production.
