Delhi plans to create price stabilisation fund for onions

With rising onion prices becoming a recurring problem in many parts of the country, including the national capital, the Delhi government is believed to have suggested constituting a price stabilisation fund, which would enable it to purchase onions from neighbouring areas and retail it in the capital in times of shortage. A proposal to this effect was discussed at a meeting between the Centre and state officials some weeks back.

With rising onion prices becoming a recurring problem in many parts of the country, including the national capital, the Delhi government is believed to have suggested constituting a price stabilisation fund (PSF), which would enable it to purchase onions from neighbouring areas and retail in the Capital in times of shortage. A proposal to this effect was discussed at a meeting between the Centre and state officials some weeks ago.

A price stabilisation fund would enable the state to procure and distribute onions on its own, without waiting for Central agencies such as the National Agricultural Cooperative Marketing Federation (Nafed) and the Small Farmers’ Agribusiness Consortium (SFAC), and also Mother Diary’s Safal outlets to do so in times of shortage and sudden price rise. The Centre too would contribute to the fund.

Retail onion prices, which have shot up to ~50-65 per kg in most cities, have come under pressure due to tight domestic supplies. In Delhi according to the data from department of consumer affairs, the prices have nearly doubled in the past one year.

The Union government last week imposed a minimum export price (MEP) of $850 per tonne on onion to increase domestic supplies and check rising prices.

MEP is the minimum rate below which exports are not allowed. Onion MEP was scrapped in December 2015.

In a notification, the Directorate General of Foreign Trade (DGFT) said, “Exports of onion shall be permitted only on Letter of Credit (LC), subject to a MEP of $850 per tonne till December 31, 2017.” Exports of all varieties of onions will be allowed only on LC, it added.

The department of consumer affairs in August had sought that MEP be imposed on exports by the commerce ministry. He also sought the removal of sops on export of the kitchen staple.

The government has asked the state-run Metals and Minerals Trading Corporation of India to import 2,000 tonnes of onion, and other agencies such as Nafed and SFAC to buy onions locally and supply in consuming areas.

Supplies got exhausted as large quantity of exports were undertaken in the first four months of the current financial year. The country exported 1.2 million tonnes in April-July, up 56 per cent from the year-ago period.

Also, the 2017-18 kharif crop — which is being harvested — is expected to be less owing to fall in acreage.

Officials said that the new onion crop is likely to be lower by 10 per cent as area sown is 30 per cent lower.

About 40 per cent of the country’s total onion crop is produced in the kharif season, and the rest during the rabi season.

The kharif crop, however, cannot be stored. Maharashtra, Karnataka, Madhya Pradesh, Bihar and Gujarat are the major onion producing states.