Govt bans export of onions as their prices remain high
NEW DELHI: The Union government on Sunday brought in stronger measures to tackle the rising prices of onions by banning exports of all varieties of the commodity and imposing stockholding limits, a move that makes it illegal for traders to store the item beyond federally fixed quantities.
Onion prices have more than doubled from their usual rates in many cities since August. They are selling between ₹60 and ₹80 per kg in retail markets, while wholesale rates are between ₹40 and ₹50. During times of normal availability, the consumer prices usually range between ₹20 and ₹30 per kg.
“In the view of sustained high price of onions in the market, [the] central government today took several steps to contain its prices, namely, imposition of stock limits on traders, ban on exports and has asked state governments to take strict measures to prevent hoarding by traders, including organising raids,” an official note said.
Retail traders can stock no more than 100 quintals and wholesalers can stock only 500 quintals in all states, according to the central government’s order. Stopping exports and limiting the amount traders can store are steps aimed at improving supplies. However, heavy unseasonal rain in many states continues to disrupt onion shipments. Maharashtra, Madhya Pradesh, Uttar Pradesh, Karnataka and Bihar, among others, have witnessed heavy rainfall activity through the week.
Sowing of the country’s main summer onion crop was delayed by over a month in key states due to a sluggish start to this year’s monsoon, which has pushed back harvests in what is a lean season, another reason for the spike in prices.
This crop is usually sown in April-June and harvested during September-November, a time when supplies from the previous harvest are usually exhausted. Since onions are a common ingredient in most Indian dishes, consumers are very sensitive to rise in prices.
Traders, who rely on onions they set aside for such seasonal shortages, often gouge prices, leading to inflationary spells.
On September 13, the government had restricted exports by raising the minimum export price of onion (MEP) to $850 (about ₹62,000).
Imposition of MEP makes an Indian-origin commodity expensive for foreign buyers, thereby discouraging its shipments abroad.
“There have been heavy rains in Maharashtra as well as other states. If rains don’t stop, they will continue to affect supplies,” said Narendra Wadhwane, the secretary of the Lasalgaon agricultural market committee, which oversees the largest volumes of onion trade in the country.
A government note said it had reports of traders flouting the minimum export price norms, which prompted authorities to ban exports.
The Centre holds an emergency onion reserve of 56,000 tonne, of which nearly 17,000 tonne have been supplied to states that have demanded stocks, including Delhi, Haryana, Andhra Pradesh and Tripura.
Onion prices tend to swing every alternate year or so, mainly due to untimely rainfall and lack of adequate storage.
In the first half of 2017, wholesale onion prices plunged, leading to widespread protests by farmers in Maharashtra and Madhya Pradesh, where agitating cultivators were fatally shot by police. In the second half of that year, when the government intervened in the markets to buy out excess stocks, prices began rising. The government has pressed its own agencies such as the National Agricultural Cooperative Marketing Federation of India and also Mother Dairy outlets in Delhi to sell onions at cheaper rates.
Delhi chief minister Arvind Kejriwal recently flagged off mobile vans for supplying onions at ₹23.90 per kg.