A sudden surge in onion prices on Wednesday led to the Government increasing the minimum export price to $200 a tonne. The move is seen as precautionary one so that prices do not surge like last year. In December, onion prices at retail outlets ruled over Rs 80 a kg following short supply. It then led to ban on onion exports. The ban was lifted in March but since then, the Centre has been fixing the minimum export price.

Onion prices, which had been ruling stable around Rs 550 a quintal in the last one month increased to Rs 700 on Wednesday.

“The Government need not have increased prices just for prices rising one day. It could have waited for a couple of more days,” said an official connected with onion trade.

“Arrivals had dropped and that led to rise in prices,” said Mr Madan Prakash, Director of Rajathi Exim, which exports agricultural produce, including onions.

“There is always fluctuation in onion prices. Therefore, the rise on Wednesday was not a surprise,” the official, who did not wish to be identified, said.

At Lasalgaon in Maharashtra, Asia's biggest onion market, the modal rate or prices at which most trades took place increased to Rs 701 a quintal from Rs 650 on Wednesday.

Prices for quality onions topped Rs 800 a quintal. In markets such as Pimpalgaon and Pune, prices were around Rs 850.

“Farmers are holding onions, hoping for a higher price. What is coming in the market is inferior quality,” said Dr R.P. Gupta, Director, National Horticulture Research Development Foundation.

Prices are seen rising in the coming months since kharif onions are expected to arrive only in September.

“There has been surplus production in the rabi season. We will have to watch out for arrivals,” said Mr Prakash.

Onion export floor price had been cut to $170 a tonne in April when the rate was revised downwards five times from $600 a tonne.

A Government notification on Wednesday said the floor price for export of Bangalore rose onion and Krishnapuram onion will continue to be $350 a tonne.

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