Traders urge govt to slash onion MEP to $300/tonne

Traders have urged the government to slash the minimum export price of onions to at least $300 a tonne to help them compete with traders from other major supplying countries, including Pakistan.

On Monday, the government had cut onion MEP about 30 per cent -- from $1,150 a tonne to $800 a tonne. However, traders feel this is insufficient for aggressive exports.

“With prices in destination markets at about $300 a tonne, we will not be able to ship fresh quantities at the current MEP of $800 a tonne.

"Even at $300, countries such as Pakistan will benefit more than India due to the lower value of the Pakistani rupee (105/dollar) than the Indian currency (61/dollar),” said Yusuf Rizvi, owner of city-based onion exporter Rizvi Exports.

To restrict exports and help cut prices in the domestic market, the government had gradually raised the MEP to $1,150 a tonne from $650 a tonne a few months earlier.

However, as the price rise was due to reduced supply, the rise in MEP didn’t help reduce exports substantially.

“We continued to meet our export commitment, albeit in minimal quantity, to continue our trade relationship with importers in the long turn.

At an MEP of $1,150 a tonne, total exports from India stood at about 2,000 tonnes.

Unfortunately, they prepared invoices of $1,150 a tonne, against their actual receivables of $400 a tonne,” said an exporter.

Now, traders have stopped fresh purchases from mandis.

As a result, this month, onion prices have halved to Rs 9-11 a kg across major producing centres.

In Lasalgaon and Pimpalgaon, Asia’s two largest onion mandis, the commodity was quoted at Rs 9.5 and Rs 11 a kg, respectively, on Monday.

“At $800 free-on-board, onion export is not workable.

“The government must reduce MEP to $300 a tonne, the prevailing market price, before traders book fresh orders,” said Atul Shah, Director of Agricultural Produce Marketing Committee, Pimpalgaon.

Meanwhile, fresh arrivals have risen, with the Pimpalgaon mandi recording about 2,400 tonnes of arrivals on Tuesday.

In Vashi APMC, arrivals declined to 775 tonnes from 1,100 tonnes on Monday, resulting in the model onion price rising by Re 1 a kg to Rs 13.5/kg.

Image: A labourer spreads onions for sorting at a wholesale vegetable market in Chandigarh. Photographs: Ajay Verma/Reuters