Onion prices shoot up as export curbs are lifted

At the benchmark Lasalgaon Agricultural Produce Market Committee (APMC) mandi, the model onion price shot up to Rs 21.50 a kg on Thursday, as against Rs 16.50 a kg on Wednesday. This was the highest since February 11. 

The price of onion jumped 30 per cent on Thursday to hit a two-week high because of a sharp increase in demand following the government’s decision to lift a six-month-old ban on exports. 

At the benchmark Lasalgaon Agricultural Produce Market Committee (APMC) mandi, the model onion price shot up to Rs 21.50 a kg on Thursday, as against Rs 16.50 a kg on Wednesday. This was the highest since February 11. 

Exporters resumed their business immediately after Union Food Minister Ram Vilas Paswan tweeted about the withdrawal of the onion export ban on Wednesday evening. However, the decision would be effective only after notification in this regard by the Directorate General of Foreign Trade (DGFT). 

“Since the price of onion has stabilised and there is bumper onion crop, the government has decided to lift the ban on the export of onions. Expected monthly harvest in March is over 4 million tonnes (mt), compared to 2.84 mt in the corresponding month last year,” Paswan had tweeted. 

Trade sources believe the decision to lift the export ban was taken after a high-level meeting of a group of ministers on Wednesday which also discussed reducing the minimum export price (MEP) of $850 a tonne. 

Both decisions (export ban and MEP) were taken about six months back when the onion price shot up to Rs 80 a kg in wholesale and Rs 140-160 a kg in retail. The vegetable had become costlier because of damage to kharif crop following floods in major onion growing states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka, and Madhya Pradesh. 

“Exporters have started booking onion in large quantity for future shipments. Despite huge arrivals, the onion price shot up today as there was an increased demand from exporters,” said Narendra Savaliram Wadhavane, secretary, Lasalgaon APMC, Asia’s largest onion wholesale mandi. 

Onion arrivals at the mandi were reported at 1,500 tonnes on Thursday, as against 1,000 tonnes on Wednesday. 

Wadhavane said this increase in the price of onion was un-sustainable. “Currently, onion arriving at the mandi is of late kharif season and has a short shelf life. Hence, traders need to sell it within a couple of days of its purchase,” he added. 

Meanwhile, the stock limit imposed by the Maharashtra government irked traders and stockists. In December 2019, the state government had halved the stock limit to 5 tonnes for retailers and 25 tonnes for stockists. 

“The state government has already initiated the process to ease the onion stock limit. This would provide a breather for traders, especially for exporters and stockists,” said Deodatta Jaywantrao Nikam, chairman, APMC (Ambegaon, Pune).

Photograph: Reuters.