Onion price: Centre mulls MEP hike; asks states to check speculation
New Delhi: The Centre has directed states to take action against traders who create an artificial shortage of onions and is considering curbs on overseas sales by increasing the minimum export price to USD 900 a tonne.
"All states and Union Territories have been asked to take action against traders/speculators creating artificial price increase of onions, taking advantage of seasonal shortage," a senior Consumer Affairs Ministry official said.
Wholesale and retail onion prices in most parts of the country have increased sharply since July. In the national capital, retail onion prices are ruling as high as Rs 80/kg compared with Rs 22/kg a year earlier.
Maharashtra, where the maximum quantity of onions is stored, has been asked to ensure steady supplies of the staple vegetable in consuming states, the official said.
The state government has been directed to intimate the Centre if there are any bottlenecks in the supply chain as they can cause prices to rise, the official added.
The Centre also explored other ways to improve supplies and control the price rise. A committee of officials from the commerce, agriculture, consumer affairs and finance ministries held a meeting to discuss onion prices.
The committee considered a proposal of the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) to increase the minimum export price of onions to USD 900 a tonne from the current level of USD 650 a tonne to restrict outbound shipments, sources said.
The final call on export prices will be taken by the Commerce Minister, the sources said. Some committee members favoured an increase in the minimum export price even if it would have no impact on the quantity of overseas shipments.
Last month, the government imposed a minimum export price on onions at USD 650 a tonne to curb shipments and control rising prices, after which onion shipments in August dropped to 29,000 tonnes from an average of more than 1 lakh tonnes a month.
Nafed, which has floated global tenders to import onions, has not yet taken a decision due to phytosanitary issues. Some private traders have imported onions and are selling them in the domestic market.
The shortage of onions in the country has arisen because most of the stored quantities from last year's crop have been exhausted and fresh supplies from South India have yet to reach consuming states.
Onion prices are under pressure even this month as 90 percent of the stored onions from last year's crop are exhausted and only 3-4 lakh tonnes are available for consumption, the Consumer Affairs Ministry said in the status report on onions.
Around 27.5 lakh tonnes of onions were stored in the country for consumption in 2013. Of this, 15.5 lakh tonnes were kept in godowns in Maharashtra and 1-2 lakh tonnes each in Gujarat, Bihar, Karnataka, Madhya Pradesh, Uttar Pradesh, Rajasthan and Tamil Nadu, it added.