In a bid to keep rising onion prices under check, the Centre on Friday steeply hiked the floor price for exports of the bulb by $175 a tonne to $425. The Director-General of Foreign Trade issued a notification to this effect on Friday, stating that export of all varieties of onions will be subject to a minimum export price of $425/tonne FOB (free on board) with immediate effect.

The hike in MEP coincides with the completion of the harvest of the rabi crop, resulting in a marginal increase in prices. At Lasalgaon (Maharashtra), Asia’s biggest market, which sets the price trend for onions, the average or modal price moved up from ₹1,100 a quintal in early May to a high of ₹1,700 on June 24.

Average price down

However, with the pick up in sowing of kharif onions on the back of widespread rains in States such as Karnataka, Maharashtra and Madhya Pradesh, the modal prices have dropped by ₹200/quintal in the past two days.

“There is adequate supply and farmers are taking up onion cultivation in a big way,” said RP Gupta, Director at the National Horticultural Research Development Foundation. According to the latest estimates, the total production of onion during the crop year 2014-15 (July-June) will be around 189.24 million tonnes.

Trade sources said the sharp rise in the MEP would not have much of an impact on onion exports as the current period is considered a lean one for onion exports.

“Currently, not much export is taking place. It will pick up once the new crop starts arriving, after September. At present, small varieties are being exported, mainly to Malaysia. But exports will pick up during October,” said Ashok Walunj, former director, Onion and Potato Market, Vashi APMC.

“We are confident that the increase in MEP will not affect the domestic market or export prospects, because by October fresh arrivals will start and the government will cut the minimum export price,” added Walunj.

Related Topics
comment COMMENT NOW