NEW DELHI: Crashing onion prices — hovering around Rs 10 per kg and even touching Rs 7-8 — in wholesale markets across the country coupled with farmers' protest in parts of Maharashtra has forced government to reduce the minimum export price (MEP) to only $350 (Rs 21,800) per tonne. This is second major reduction in the MEP in the past one week to promote export.
Sources said that the commerce ministry notified the fresh price for export on Thursday after Maharashtra chief minister Pritviraj Chavan wrote to commerce minister Anand Sharma and protesting farmers' cause was taken up with agriculture minister Sharad Pawar. For both Congress and NCP, prolonged protest by onion growers could have impacted their political fortunes in the next Lok Sabha election.
An official statement said that the reduction in MEP will not only help arrest sharp decline in prices realized by farmers but will also make export of onions more competitive in international markets.
"Now, at $ 350 per tonne we will see increase in export. There will also be price correction and we expect wholesale prices will increase to Rs 11-Rs 12 per kg. Since more and more fresh onion will reach mandis in the next few months there is little chance of retail price rising," said C B Holkar, member of board at cooperative marketing major, Nafed.
Sources said that the production cost of onion in Maharashtra — the largest onion-growing state — comes to around Rs 11 per kg.
In November, government had hiked the MEP to $ 1,150 with an eye on stopping export in view of soaring onion prices.
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