Price Cut Fails To Fuel Onion Exports.

Despite slashing the onion minimum export price (MEP) for the third time this month, there are no takers for the vegetable from India, one of the world's largest producers, as even at the lower rate the price remains above the prevailing global prices.

With domestic onion prices continuing to plummet over the last one month in Nashik, the hub of the country’s onion trade, the government had reduced the MEP to $275 a tonne last week from $350 per tonne. This was the third cut in the MEP since the beginning of this month, when it was at $600 a tonne. However, this does not include freight charges; with freight added, the price goes beyond $300 a tonne, against the current global price of around $225 per tonne.

“With the exports yet to take off and while the domestic price continues to decline, it may push farmers to reduce the area under cultivation because of non-recovery of cost of production,” said CB Holkar, director, National Horticulture Research and Development Foundation (NHRDF), a Nashik-based body.

He said large arrivals of late kharif onion are outweighing demand, which has pulled down the price to record levels. “There is a huge stock of late kharif crop which cannot be stored and the government must reduce MEP further so that farmers could at least recover the cost of production,” Holkar said.

Currently, the commerce ministry, in coordination with the agriculture and finance ministries, decides on the MEP of onions. Before exports were banned on the back of spiralling domestic prices, Nafed used to be nodal body to regulate exports.

Onion prices have plummeted to R350 per quintal on Tuesday from the R3,000 per quintal that prevailed at the start of this year. When the government imposed the export ban in December, the retail price rose to R80 a kg in many cities. The prices rose because of reports of crop damage to kharif crop. The government even imported onions from Pakistan to put a lid on the prices.

However, with the late kharif crop entering the market since early February, the situation has reversed. Last month, the government lifted ban on onion exports after farmers’ protests on crashing domestic prices.

Meanwhile, the National Horticultural Research and Development Foundation in its crop prospects report said, “The harvesting of rabi onion is expected to start from the end of March and 10% harvesting of the crop is expected in March, 60% in April, 25% in May and 5% in June.” Onion production in the country is estimated to be around 10.5 million tonne in 2010-11, a decline from 12 million tonne in the previous year. Till September 2010, India had exported around1.1 million tonne of onions, mostly to Gulf countries.

Source : financialexpress.com