Economy

Govt may impose stock holding limit on onion, potato

Shishir Sinha New Delhi | Updated on November 25, 2017

To curb hoarders who are allegedly blocking supply

After raising the minimum export price, the Government may impose stock limit for onion. The Cabinet Committee on Economic Affairs (CCEA) is expected to consider a proposal this evening.

Government sources told Business Line that the proposal is to bring onion along with potato under stock holding limit. If approved, it will be first time when vegetables will be brought under stock holding limit. These measures are being considered to curb the hoarders who are allegedly blocking supply in anticipation of poor rainfall affecting the new crop.

Such a limit ensures that traders cannot stock more than a prescribed quantum. If it is found that the traders are holding more than the limit, then they can be fined and in some cases prosecuted. Currently, stock limit provisions exist for various foodgrains and cereals under the Essential Commodities Act, 1955.

Such a step is taken to curb the price hike. Earlier today, the Commerce Ministry announced hiking the >minimum export price (MEP) of onion to $500 per tonne from $300 per tonne. Higher MEP means export will be costlier and no longer profitable for the traders. The Government has already imposed MEP of $450 per tonne for potato on June 26.

Delisting fruits, vegetables from APMC Act

Apart from these measures, the Government has already advised states to delist fruits and vegetables from the Agriculture Produce Marketing Committee (APMC) Act, so that farmers can have the option of selling their produce in the open market themselves apart from using the traditional mandi set up.

Retail prices of onion have risen to about Rs 25-30 per kg, while the wholesale prices are ruling at Rs 18.50 per kg in the national capital. Onion prices have been rising due to speculation amid anticipation of below normal monsoon despite sufficient supply in the country.

The wholesale prices of onion at Lasalgoan in Maharashtra, Asia’s largest onion market, have risen by about 80 per cent to Rs 18.50 per kg last month.

Production, exports

Onion production is estimated to have risen to 192 lakh tonnes during 2013-14 crop year (July-June) from 168 lakh tonnes in 2012-13. Meanwhile, exports fell to 13.58 lakh tonnes from 18.22 lakh tonnes.

Domestic demand during the lean period from June to November is met through stored rabi (winter) and fresh kharif (summer) produce.

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Published on July 02, 2014
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