Sharp rise in onion price due to hoarding

NEW DELHI: The government on Monday suspended onion exports till mid-January and raised the minimum export price for those already contracted to contain the sharply rising retail prices.

Retail onion prices have risen to more than Rs 50 a kilo in most parts of the country.

Export of onion is regulated through the mechanism of minimum export price, which is fixed by Nafed in consultation with other state trading enterprises and leading associate shippers.

Exporters require no-objection certificates for onion exports from the co-operative major. These have been suspended by NAFED, National Consumer Cooperative Federation and other state trading enterprises.
“The issuance of no-objection certificate will be voluntarily suspended by NAFED, NCCF and other STEs for exports,’’ an official statement said.

The minimum export prices or MEP for onions has also been raised to $1,200 a tonne from a much lower $525/tonne(C&F, Dubai base) for the NOCs already issued.

NAFED and NCCF will also sell onion at cheaper rates from Tuesday through their retail outlets.
When asked about the reasons for the sharp rise in onion prices, commerce and industry minister Anand Sharma said the price rise was due to hoarding and there was enough stock of onion in the country.

Rising onion prices, lower acreage under wheat and an expected diesel price hike are expected to impact once again on food prices and inflation, which has muted of late.

It is in view of this that the price fixation committee met to fix the MEP for onion export.

“The NOCs which have already been issued till today will be effected only on $1,200 per tonne C&F. NAFED and NCCF will start retail sale of onion from 21.12.2010 through their own outlets for making available onion to the consumer at a reasonable price,” the statement said.

NAFED has been keenly monitoring the availability of onions since end November on news of Maharashtra onion crop failing due to untimely rains.

Standing crop was destroyed, leading to current prices as high as Rs 60-80/kg.

In end November the minimum export price of onion was increased by $ 150 per tonne to restrict exports.
The increase was for all destinations across the board, bringing up, the MEP for Gulf countries to $525/tonne for export during the remaining part of November 2010 as compared to $375/tonne.

The current increase in price is largely attributed to Kharif crop of onion getting affected owing to untimely rains in Andhra Pradesh and Karnataka and also due to rains in Nashik area of Maharashtra.

“This is an ephemeral spurt in price which will ease out by the second week of December 2010 when arrivals of onion from late Kharif season in Maharashtra start,” a Nafed official said.

The stock of stored onion from the last Rabi has also been exhausted.