Centre imposes floor price on onion exports to ensure domestic availability amid rising prices

The union government on Saturday imposed a minimum export price (MEP) of $800 a tonne ( ₹67 a kg) on onion exports between 29 October and 31 December to ensure domestic availability.

The move comes against the backdrop of rising onion prices owing to a delay in the arrival of kharif onions, which are now expected to hit the market from Maharashtra, the top grower, in December.

Onion prices have shot up more than 50% in the past two weeks to ₹80 a kg in the retail markets of Delhi. Benchmark prices of the kitchen essential in Maharashtra’s Lasalgaon, India’s onion-trade hub, increased 58% in two weeks to ₹38 a kg on Tuesday. Average prices in key onion growing districts of Maharashtra are in the range of ₹45 to ₹48 a kg.

Traders said reduced arrivals of onions was the primary reason for the rise in prices. The arrival of stored onions has declined by about 40% in the past fortnight. Another reason is the delayed arrivals of the kharif harvest from the key onion-growing states of Maharashtra and Madhya Pradesh.

Additionally, the sowing of kharif onions in Karnataka and Andhra Pradesh has been low as farmers incurred losses over the past two years. Below-normal rainfall in these states has further reduced onion production.

Traders expect onion prices to rise further until the new kharif crop hits markets in December, nearly two months late.

“The measure has been taken to maintain sufficient availability of onions for domestic consumers at affordable prices (as the quantity of stored rabi 2023 onion is declining) by curbing the quantity of onion exports,” an official release read.

Earlier, a senior government official told Mint that a floor price for onions was being considered as exports were up significantly in October, causing an increase in domestic prices.

In response to growing demand and delayed production when prices shot up in August, the union government sold onions to consumers at a concessional rate and imposed a 40% duty on onion exports.

Since mid-August the government has offloaded 170,000 tonnes of onion in major consumption centres across the country and supplied it to consumers at ₹25 a kg through mobile vans operated by NCCF and NAFED from its buffer stock of 500,000 tonnes, the release stated. To boost domestic availability, the government will also procure an additional 200,000 tons of onion for the buffer, taking the total stock to about 700,000 tonnes.