MP dumps onions, prices fall to Rs 2 per kg

The bearish trend in onion, which has been continuing for more than one and a half years, has taken another knock: dumping of onions by Madhya Pradesh in other states at throwaway prices has pulled down prices in June, claimed traders and exporters.

Onion traders have alleged that MP started procuring onions after farmers' protests and then started dumping them in other markets at cheap rates.

The MP government has been buying onions at Rs 8 per kg from farmers and had procured 4.88 lakh tonnes as on June 26. It had planned to sell onions to the poor at Rs 2 per kg, but traders from other states have confirmed to ET that the MP government has offered to sell onion at Rs 2-3 per kg.
Given the bumper exports, traders were expecting some improvement in onion prices in June. “Onion prices in the domestic market could have improved in June, but they have dropped by about Rs 1-2 per kg in the past 10 days," said Danish Shah, an onion trader from Maharashtra.

India's onion exports have hit a record in 2016-17 at over 34 lakh tonnes, thanks to bumper production, good quality, low prices and gov ernment incentives. However, exporters claim onions stored in the country will last till December and hence demanded continuation of the export incentives beyond the June 30 deadline.

MEIS EXTENSION DEMANDED

After onion prices crashed last year, the central government extended benefits of the Merchandise Exports Incentive Scheme (MEIS) scheme in August 2016. The scheme, which has been extended every three months since then, provides incentive in the form of duty credit scrip to the exporter to compensate for his loss on payment of duties. The incentive is paid as a percentage of the realised FOB value (in free foreign exchange) for goods going to notified markets.

"We have requested the government to give benefits to onion exporters on a permanent basis as it is given to exporters of other vegetables," said Shah.