Bumper Production And Higher MEP Pull Down Onion Exports.

Bumper production in key growing countries including India and Pakistan and a higher minimum export (MEP) price have led to a sharp decline in onion exports from the country this year.

Official sources told FE that while India exported 1.74 lakh tonne of onion in the April during 2010-11 season, exports have dropped significantly to only 30,000 tonne for April this year.

“Higher minimum export price and glut in the global market because of a bumper crop have hit exports to a large extent, leading to farmers not recovering even the cost of the production,” an official with agriculture cooperative major Nafed told FE.

The commerce ministry, following the recommendation of the agriculture ministry, had recently recommended an MEP of $175 a tonne from $225 a tonne. The MEP of onion has already been lowered by close to $375 a tonne since exports were allowed in February following a bumper late kharif crop.

An onion trader from Nashik, the hub of country's trade, said that an MEP of $175 a tonne does not include freight charges, which pushes up the export price to $225 a tonne, a price far above that prevailing globally. “We need to reduce the MEP further for boosting exports,” the Nafed official said.

Meanwhile, department of consumers affairs data indicate that retail prices in key metros had fallen significantly during last two months. The retail price of onion in Delhi was R12 per kg on Monday against the R17 per kg seen two month ago. Similarly, prices in Ahmedabad, Mumbai, Kolkata, Hyderabad and Bangalore have declined sharply during the period. Thanks to a good late kharif and summer crop, the wholesale price of onion had stabilised at around R600 per quintal at Nashik.

The National Horticulture Research and Development Foundation in its latest crop prospect report said the rabi onion production in the country is estimated to be around 8.8 million tonnes. “The storage of quality rabi onion started in Maharashtra, Gujarat and Madhya Pradesh by farmers or traders from mid-April 2011 and onwards. Onion prices are lower compared to last year and modal prices ranging between R500 and R600 per quintal in Maharashtra markets,” the report said.

“There is no concern during next few months about the rise in onion prices,” an agriculture ministry official said.

Onion production in the country is likely to be around 12.5 million tonne during 2011-12. In 2010-11, India exported around 1.1 million tonne of onion.

The government had banned onion export in the last week of December last year when domestic prices rose to R70-80 per kg in many cities due to disruption of supplies because of lower kharif crop, which was partially damaged because of rains. Since then the situation has improved because of better kharif and late kharif crop.

Source : financialexpress.com