Govt tries to curb onion export as retail rates hit Rs 60 per kg

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The last hike in the MEP— below which no exports are permitted — had very little impact on prices. Between June 26 and now, wholesale prices at Lasalgaon (Maharashtra) — India’s biggest market for onions — rose from Rs 1,500 to Rs 5,700 per quintal. Retail prices in Delhi, too, climbed from Rs 34 to Rs 66 per kg during this period, according to department of consumer affairs data.

India exported 12.38 lakh tonnes (lt) of onions in 2014-15 and 14.03 lt in the preceding fiscal, with these valued at Rs 2,300.54 crore and Rs 3,177.29 crore respectively. In the first two months (April-May) of this fiscal, 2.36 lt of the bulb worth Rs 444.80 crore were exported.

While barely 6-7 per cent of India’s onion production — 194.02 lt in 2013-14 and 189.24 lt — gets exported, the quantities that get shipped out are still considered significant enough to influence sentiment.

This is because the bulk of exports happen from Maharashtra, the country’s largest producer and also price setter.

Trade sources, however, believe that the latest MEP increase will not make much of a difference. “About 80,000-100,000 tonnes went out during June-July. But since then, there have been no exports. Once wholesale prices crossed Rs 2,500-2,700 per quintal towards July-end, our onions became uncompetitive vis-à-vis the crops of China and Egypt now selling at $ 400-450 per tonne,” said a source.

The current spiral — prices at Lasalgaon have surged by Rs 2,500 per quintal in the past two weeks — is seen to have little to do with exports as much as drought in the main onion growing belt of Maharashtra, Karnataka, Rayalaseema and Telangana.

Poor monsoon in these parts has raised concerns over delay in the harvesting of the kharif onion crop, which arrives from mid-September. Currently, the market is predominantly being fed by the stored onions from the last rabi crop (harvested in April-May), which also suffered some damage from the untimely rainfall and hailstorms in March.

Apart from virtually banning exports, the Centre has decided to import onions on government account. The state-owned MMTC Ltd has already floated a tender for import of 10,000 tonnes, which is scheduled to open on August 27 for arrivals.