The government on Tuesday promised to procure onion at Rs 2410/quintal, higher than the prevailing mandi price of Rs 2000/quintal, as it sought to help farmers hit by the prohibitive 40% export tax on the vegetable. However, onion farmers and traders felt the move would not make any significant difference in the market, as the government’s ability to procure and store the vegetable is “limited.”
Food and consumer affairs minister Piyush Goyal said that National Cooperative Consumers Federation of India (NCCF) and the farmers’ cooperative Nafed will purchase an additional 0.2 million tonne (MT) of onion from farmers in Maharashtra and Madhya Pradesh over the next few weeks as a part of creation of 0.5 MT of buffer stock.
Meanwhile mandis in Nasik district of Maharashtra, the hub of the country’s onion production and trade, were closed for the second day on Tuesday, as traders protested against the imposition of export duty.
“Our demand has been to revoke the export duty on onion as the government has limited capability to purchase onion at higher prices at present”, Jaydutt Holkar, director, APMC, Lasalgaon, Maharashtra, the hub of the onion trade in the country, told FE.
Onion exports rose by more than 26% to 0.63 MT during April-June (2023-24) compared to the same period previous fiscal prompting the government to impose export duty on Saturday till December 31, 2023.This is the first intervention in onion exports since January, 2021. The government has not imposed a ban on onion exports since 2021 which was the norm a few years back.
India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal. Bangladesh, Malaysia, Sri Lanka and Nepal respectively had a major share in the onion exports in the last fiscal.
According to the department, the modal retail prices of onion rose from Rs 20/kg since the beginning of the year, to Rs 30/kg on Tuesday. Rating agency Crisil in a recent report said retail onion prices are expected to hit Rs 60-70/kg next month.Retail prices of onion have started to rise for the first time in the last couple of weeks after nearly two years due to reports of sluggish kharif sowing on delayed arrival of monsoon in the key producing states of Maharashtra and Karnataka.
High moisture content in the stored rabi crops because of unseasonal rains in Maharashtra and Karnataka in April has reduced the shelf-life of the staple, causing fears of supply constraints by September.
Inflation in onion, which had been in the negative zone since September, 2021, rose to 11.72% in July against 1.65% in June.NCCF and Nafed have started to sell onion from the buffer stock of 0.3 MT at highly subsidised rate of Rs 25/kg to consumers in various areas.
The estimated production of onion during the 2022-23 crop year (July-June) declined marginally 31.01 MT against 31.7 MT reported in the previous year. The output was 26.64 MT in 2020-21.
India is the biggest producer of onion and Maharashtra, Madhya Pradesh, Karnataka and Gujarat have more than 70% share in the country’s production.