Government cuts floor price for onion exports again

PUNE: The government has cut the floor price for onion exports again to help arrest the steep fall in prices that had triggered widespread protests. Farmers had blocked a key highway in Maharashtra, the largest producer, as export restrictions reduced wholesale prices to less than Rs10 but retail rates remained four times higher. The high retail price had discouraged the government from cutting the minimum export price further but the cabinet took note of the increase in supply and cut the price from $800 per tonne to $350 on Thursday with immediate effect.

“This will not only help in arresting the sharp decline in prices realised by the farmers but would also make Indian export of onions more competitive in the international markets and thereby help stabilise the onion prices in the domestic markets by balancing the interests of both farmers and consumers,” a government statement said.

Earlier, farmer protests in Chandvad, Umrane and Devala blocked the arterial Mumbai-Agra highway on Thursday. Farmers in Pimpalgaon held similar protests on Monday.

The commerce ministry was very cautious when it slashed the minimum export price (MEP) of onion by only $300 per tonne on Monday when wholesale prices declined to Rs10 per kg. Farmers in Nashik threatened to close the markets if MEP was not reduced or removed.

A government source said the Union government was concerned about retail prices which have not fallen in step with wholesale prices.

Retail prices are still Rs25-30 per kg in most consuming markets including Maharashtra. “Earlier, retail prices used to be double the wholesale prices. But now, retail prices are five to six times the wholesale prices,” said the source.

“As prices were stable at Rs10-11 per kg for two days, farmers brought more onions to the market on Thursday which pulled the prices down to Rs7 per kg. This forced angry farmers to hit the street demanding the removal of MEP,” said Chandvad APMC deputy chairman Atmaram Kumbharde.