Bumper Rabi Onion Crop And Low Exports Pull Down Prices.

A bumper rabi onion harvest and lower volume of exports because of high minimum export price (MEP) have been pulling down the retail prices of the vegetable over the last few weeks. But it could be a different picture entirely in the next season.

With the wholesale price ranging between R550 and R600 per quintal at Nashik, the hub of the country's onion trade, traders feel that farmers are not recovering their cost of production, which may lead to a drastic reduction in onion acreage in the forthcoming kharif season.

According to an official, while India exported 174,000 tonne of onion in April in 2010-11, the figure slid to just 30,000 tonne for the same month this year.

The commerce ministry, on the recommendation of the food ministry, had lowered the MEP to $175 a tonne from a high of $375 a tonne since the ban on onion exports was lifted in February because of a good kharif crop.

However, an onion trader from Nashik said that the MEP does not include freight charges, which pushes up the export price to $225 a tonne, far above the prevailing global price.

“We need to reduce the MEP further” in order to boost exports, said an official of the National Agricultural Cooperative Marketing Fed ration of India or Nafed, the body that used to decide on the MEP before the export of onion was banned in December last year.

However, following the huge rise in onion prices last year, the commerce ministry in collaboration with food and finance ministries decided to determine the MEP, which is leading to delays in lowering the MEP to boost exports, the official said.

Meanwhile, department of consumers affairs data say that retail prices in key metros had fallen significantly during last two months. The retail price of onion in Delhi was R11 per kg last week against R14 per kg two months back.

Similarly, prices have declined sharply in most other areas.

The National Horticulture Research and Development Foundation in its latest crop prospect reports said the rabi onion production in the country is estimated to be around 8.8 million tonne.

“During the current year more quantity of onions are expected to be stored in Maharashtra, Gujarat and Madhya Pradesh due to more storage facilities provided to farmers under National Horticulture Mission programme,” the report 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 onions.

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. It was mainly due to disruption of supplies because of a lower crop that was partially damaged because of heavy rains. Since then, the situation has improved because of better and late kharif crop in the country.

Source : financialexpress.com