Following a crash in onion prices in key producing states on higher arrivals, the Government has slashed the minimum export price (MEP) further to $350 per tonne with immediate effect, a move that would facilitate more overseas shipments.
From a high of around Rs 4,900 per quintal in early November, the modal or average prices of onions are currently hovering around Rs 950 at Lasalgaon, the largest market near Nashik.
Similarly in Pimpalgaon, another large market, the modal price for onions are also hovering around Rs 950 a quintal as against Rs 4,500 in early November. This steady decline in onion prices had forced farmers to stage protests in various parts of Maharashtra and Karnataka.
On December 10, the Government had reduced the MEP on onions to $800 per tonne in line with the softening trend in prices after arrivals picked up with the progress of harvesting in the key producing regions of Maharashtra and Karnataka.
The Government believes that further reduction in MEP will not only help in arresting the sharp decline in prices realised by farmers, but would also make the Indian onion exports more competitive in the world markets.
Onion prices were on a roller coaster since July this year with the depletion in stocks of stored produce in Maharashtra and excess rains affecting the harvest in regions such as Karnataka resulting in disruption of supplies to consuming markets.
Prices had reached a high of Rs 100 a kg in various markets including Delhi, forcing the Government to resort to imports from countries such as Egypt, China and Pakistan. The high prices continued through the months of August, September, October and November on account of various issues like untimely rains, supply constraints, less than expected production, initial speculative hoarding activities by unscrupulous traders, leading to a spike in food inflation.
The Government had imposed an MEP of $650 per tonne on August 14 and had hiked the floor price for exports to $900 on September 19 and further to $1150 on November 1 to augment domestic supplies and curb any further rise in prices.