Onion MEP Raised By $175/Tonne To Test Rising Retail Prices.

The government today increased the minimum export price of onion by a sharp USD 175 per tonne to USD 475 a tonne -- a move aimed at discouraging outbound shipments and controlling surging domestic retail prices of the kitchen staple.

Onion prices have gone up by Rs 10 per kg in last one-and-a-half months and it is being sold at Rs 25 per kg in the national capital.

In the wholesale price index, prices of onions jumped by over 57% on an annual basis for the week ended August 20. It had significantly contributed to food inflation that crossed double digits (10.05%) mark after five months.

"The minimum export price (MEP) of all varieties of onions, including Bangalore Rose Onions and Krishnapuram Onions will be USD 475 per tonne," the Directorate General of Foreign Trade (DGFT), which comes under Commerce Ministry, said in a notification.

Earlier, the MEP was USD 300 per tonne for general category onion and USD 400 per tonne for premium varieties -- Bangalore Rose onions and Krishnapuram onions.

The sharp rise in MEP is expected to discourage exports and augment domestic suppies.

Yesterday, the government had decided to sell onions at Rs 20 per kg through retail outlets of NAFED and NCCF in Delhi from September 12 to give relief to consumers.

The country's onion exports have declined by 34% to 4.52 lakh tonnes of onions till July of the current fiscal from 6.83 lakh tonnes in the year-ago, as per official data.

India exports onions mainly to West Asia, Singapore and Bangladesh.

On measures to curb onion price rise, Food and Consumer Affairs Minister K V Thomas said, "Finance, Commerce and Agriculture Ministers are of the view that an extreme step to ban onion export can be thought of only after seeing the impact of MEP hike on domestic prices".

He also explained that there is sufficient stored stock of onion in the country but due to delayed kharif crop, traders and farmers are releasing less stock in anticipation of higher prices in the coming months.

Meanwhile, Agriculture Minister Sharad Pawar is meeting traders and farmers from Nasik (in Maharashtra), the major onion producing region, tomorrow to discuss about improving supply of stored onions so as to stabilise prices.

Onion production for 2011-12 is estimated at 151.36 lakh tonnes which will be higher than the last year’s production of 145.62 lakh tonnes. Onions are grown in three seasons -- kharif (summer), late kharif and rabi (winter).

The sowing of Kharif crop has delayed due to late arrival of monsoon rains in the some parts of the country.

The government which had faced a tough time in December end last year when the retail prices of the bulb had soared to as high as Rs 80-85 a kg, is keeping a close watch this time to prevent its prices from escalating.

Source : moneycontrol.com