A move by the Government to further lower the minimum export price (MEP) for onions to $225 a tonne from $275 is likely to boost exports of the vegetable.
This is the fourth time that the MEP has been cut this month from $600 fixed when the ban on onion exports was lifted.
Besides, the Government has also reduced the MEP for Bangalore rose onions to $600 a tonne from $1,400.
“The lower MEP will boost exports to European destinations such as Greece and Italy, besides our traditional markets,” said Mr Rupesh Jaju, Director of the Nashik-based United Pacific Agro Pvt Ltd.
India had earlier exported to Greece and Italy, though not continuously.
“Countries such as Pakistan are also in the export market and shipments will depend on what sort of demand emanates,” said Dr R.P. Gupta, Director of the National Horticultural Research Development and Foundation.
But exporters are upbeat on export prospects since the lower MEP will render Indian onions competitive in the global market.
“Our prices should match other sellers and we don't think there will be any problem,” said Mr Madan Prakash of Chennai-based Rajathi Group of companies that exports onions.
“Countries such as Pakistan and China will not be able to compete with us on quality,” said Mr Jaju.
For onion on par with the Indian quality, Pakistan could quote around $300. Though the neighbouring country sells onions for $170-180 a tonne too, they are of inferior quality and are meant for Bangladesh.
Some Malaysian buyers used to this quality onion from Pakistan, too, buy it. Pakistan onion is set to arrive from next month.
“China's onion will lose out because it is a bit spicy,” said Mr Jaju.
In the global market, Indian onion costs a little higher but in view of its better quality it has a good demand. “Unless the prices rise sharply, there won't be any fall in demand,” said Dr Gupta.
The lower MEP will be of relief to traders since they need not invest more for exports. Demand from the Gulf, Sri Lanka and Malaysia for Indian onion continues.
“We are now getting enquiries from The Philippines. They could start buying from the second week of April,” said Mr Prakash.
Buyers from The Philippines have to get permits and they are waiting before they can commit themselves.
“We have an order book running to 900 tonnes,” said Mr Jaju.
Exporters expect good shipments to take place the next 3-4 months.
The Centre banned exports of onion in December when prices at retail outlets surged to over Rs 80 a kg. The ban was lifted on February 18 after the prices cooled and arrivals improved. However, the Centre fixed $600 as the MEP for shipments.
With arrivals flooding markets and farmers protesting against fall in prices, the Centre cut the MEP on March 1 to $450 before reducing to $350 on March 8 and $275 on March 16.
Onion prices had crashed to lower than Rs 400 a quintal last week, while some markets around growing centres such as Lasalgaon, Pimpalgaon were closed unable to provide space for the huge arrivals.
On Friday, onion ruled between Rs 430 and Rs 460 a quintal at different markets across Maharashtra, which is the number one producer in the country.