The government reduced the minimum export price (MEP) of onion to $800 a tonne from $1,150 a tonne on Monday with the vegetable's prices easing following large supplies from kharif crop.
Maharashtra farmers have been protesting a high MEP which made exports unviable and resulted in a price crash to Rs9 a kg in the wholesale domestic market.
The government had raised the MEP to $1,150 per tonne from $900 on November 1 as retail price hovered around Rs90-100 a kg. The floor price was imposed for the first time in August at $650 per tonne and later increased to $900 a tonne in September to deter exports.
"Exports of onion for the item description at Serial Number 51 & 52 of Schedule 2 of ITCBSE -0.11 % (HS) Classification of export and import items shall be permitted subject to a Minimum Export Price (MEP) of $800 per tonne FOB or as notified by
DGFT from time-totime", the Directorate General of Foreign trade (DGFT) notification read.
Food inflation, which has a 14 per cent weight in WPI, touched 20 per cent as vegetable inflation climbed to 95.25 per cent. Though still steady in triple digits, onion inflation showed signs of cooling, climbing down to 190 per cent from 278 per cent in the previous month.
However, exporters and farmers were not happy with the reduction because they felt domestic prices were much lower than the new MEP of $800 a tonne. "The chairmen of all mandis in Nashik district will meet in the next 2-3 days to decide the next course of action," said Dilip Bankar, chairman, Pimpalgaon APMC.
In Maharashtra, prices saw a slight upward movement with the news about the fall in MEP by $350 a tonne. Onion prices in wholesale increased to Rs13 a kg by evening, said Bankar.
Earlier in the day, farmers blocked the Mumbai-Agra highway, which is the main vegetable corridor between west and north India. The farmers, who had threatened to keep the market closed in Nashik, stopped short of doing so with an increase in supplies.
CB Holkar, director, National Agricultural Co-operative Marketing Federation of India, said, "The market is going to be flooded with onions in January. Farmers will have to sell onions at throwaway prices. The MEP in December should be about $450 tonne and about $200 per tonne in January.
Food minister KV Thomas said the MEP would be reduced to ensure remunerative prices to farmers with an increase in supply. "It's a seasonal activity to reduce MEP when arrivals increase," he said.
A government official in the know of the development said the decision had been taken during a meeting held three days ago in New Delhi.
According to him, with the increase in arrivals from Maharashtra, Rajasthan, Madhya Pradesh and other belts, the Centre was exploring ways to abolish the levy of MEP to encourage exports.
Source : economictimes.indiatimes.com