Export ban brings down onion prices slightly

Discontent about food price inflation is another headache for the central government struggling with a slew of corruption allegations and an emboldened Opposition.

The Agriculture Ministry on Monday banned exports until January 15,and will import onions from neighbouring Pakistan,as retail prices jumped to Rs 80 per kg from Rs 35 per kg last week.

The situation will be normal in two to three weeks. Onion prices rose because of rains in Nasik and other onion growing areas,Agriculture Minister Sharad Pawar told reporters on Tuesday.

The ban on onion exports should help reduce the prices.

Average onion prices at the country’s largest wholesale onion trading hub in Lasalgaon,in western Maharashtra,fell 34 per cent after the ban to Rs 2,500 per 100 kg.

Restrictions on exports today pulled down prices in the wholesale market. They will fall further in the next few days in the wholesale and retail markets,R P Gupta,director at the National Horticultural Research and Development Foundation (NHRDF),told Reuters.

Onions are base ingredients for almost all Indian dishes. Soaring onion prices have helped dislodge Indian state governments in the past,and rising food costs often spark street protests.

Food price inflation has retreated over the past three months,but at a high 9.5 per cent is a worry for the ruling Congress party ahead of state elections next year.

On Monday,Prime Minister Manmohan Singh told his party that inflation remains a cause for serious concern in the country.

Earlier in the day the government had said any respite to the common man from the high rates may take two to three weeks.

The Centre,however,ruled out any immediate plans to import onions to arrest prices even though small consignments arrived from Pakistan.

With wholesale rates at the biggest producing centre in Maharashtra crossing over Rs 70,there were fears that the retail selling price in Delhi and elsewhere may edge towards Rs 100 a kg.

“Onion prices will remain high for the next 2-3 weeks and the situation is likely to improve only after that,” Pawar had told reporters.

The price of onions have soared to Rs 60-70 per kg in retail markets in Delhi and many other important cities of the country from Rs 35-40 just a few days ago.

“A substantial quantity of onion has been damaged because of the heavy rains in the Nashik area. Our expectation is that with the arrival of stocks from Uttar Pradesh,Gujarat and Madhya Pradesh in the next 2-3 weeks,prices will come down,” Pawar said when asked about the reasons for sharp rise in prices.

Onion prices in various Agriculture Produce Market Committees (APMCs) in Nashik,the main trading centre for the bulb,have soared to a high of Rs 7,100 per quintal.

This was due to a shortfall in production following untimely rains in the growing areas of Maharashtra in November.

Yesterday,Commerce and Industry Minister Anand Sharma as well as NAFED Managing Director Sanjeev Chopra had attributed the sudden rise in onion prices to hoarding and speculations.

Asked whether the government will import onion to boost domestic supply,Pawar said: “As of today there is no proposal to import.”

Meanwhile,some traders in north India have started importing onions from neighbouring Pakistan.

As many as 13 truck loads (5 to 15 tonne per truck) of onion have arrived from Pakistan,a senior official of Customs department in Amritsar had said yesterday.

The landed cost of onion from Pakistan stood at Rs 18-20 per kg.

Pawar highlighted the steps taken by the government to control prices such as suspension of exports till January 15 and more than doubling minimum export price of onion to USD 1,200 per tonne from USD 525 per tonne.

“Ban on onion exports should help reduce the prices,” he said.

Meanwhile,NAFED –the regulating agency of onion exports — and National Consumer Co-operative Federation (NCCF) have started selling onion at Rs 35-40 a kg in the national capital to provide some relief to the common man.

NAFED and NCCF have 25 retail outlets in Delhi.

“We hope the voluntary suspension of exports,raising of minimum export price and retail sales by Nafed and NCCF will definitely have a correction on prices,” Chopra said.

Onion production stood at around 12 million tonnes in 2009-10 fiscal,out of which 1.9 million tonnes were exported.

In 2010-11,production in Kharif season is estimated at five million tonnes.