Commerce ministry proposes suspension of onion MEP
The commerce ministry has proposed to suspend the minimum export price (MEP) of onion for two months to spur exports and help growers get better prices.
"The proposal was to be discussed in the meeting of empowered group of ministers (egom) scheduled for Wednesday. But it has been postponed due to some important engagement of finance minister Pranab Mukherjee who chairs the meeting. Now it will be taken up when the egom meets next," a senior commerce ministry official said.
In last 8 months, India had slashed MEP several times from $475 per tonne in September last year to the current floor price of $125 per tonne in February this year to boost the export. India exports onion to countries like Gulf countries, Malaysia, Sri Lanka, Indonesia, Russia and other European countries. The exports have slowed down due to stiff competition from China and Pakistan. "The current MEP is not finding much favour from buyers at the global market. This year's bumper crop is also putting pressure on prices," the official added.
According to trade sources, India, the second-largest onion producer in the world after China, has exported around 1.5 million tonnes of onion in the fiscal 2011-12 while the onion production is estimated at 15.13 million tonnes in the 2011-12 crop years (July-June). Of the total production, 60% comes from the Rabi season.
"The produce is swamping the markets leading to sharp decline in prices. The production cost is more than the present market rate causing dissent among the onion growers," said Shivnath Shinde, an onion trader in Maharashtra, the largest onion producing state.
The modal price or the rate at which most trades takes place at the Lasalgaon market yard in Maharashtra is hovering around Rs 350 a quintal - down by Rs 60 a quintal over a week following huge Rabi arrivals. "The prices will further drop if demand doesn't pick up. The moderate demand in domestic as well as export market is a cause of worry for farmers," he said.
The Maharashtra government has also appealed to the central government to remove the minimum export price (MEP) mechanism for onions. The chief minister Prithviraj Chavan had met the prime minister Manmohan Singh and finance minister Pranab Mukherjee seeking removal of the MEP.