The central government’s warning that it would impose a temporary ban on onion exports is unlikely to result in a drop in prices as the farmers and traders in Lasalgaon, the largest onion market in Asia, have already stopped exporting the crop.
This is because the price they are getting out of the domestic market is Rs48 per kg of onion, compared to Rs40 for exports.
Also, the transportation costs involved in exports are higher.
This change took place over the past weekend when wholesale prices suddenly jumped by almost 36% from Rs31.50 per kg on August 8, to about Rs43 on August 12.
The Lasalgaon market in Nashik, about 220km from Mumbai, sells around 2.5 lakh tonnes (250 lakh kg) of onions annually, of which about 50% are exported.
Domestically, onions from Lasalgaon are being supplied to Mumbai, West Bengal, Punjab, Madhya Pradesh and Rajasthan and are exported to Malaysia and Dubai from Mumbai and Bangladesh from eastern India.
But currently, all the 10-12 lakh kg of onions being sent out daily from this market are for domestic consumption because of the better price.
“On Wednesday, the Lasalgaon agriculture produce market committee (APMC) rate was Rs47.75 per kg, which is far more than in the export market.
Considering the additional transportation costs, it is better to sell onion domestically,” said BY Holkar, secretary, Lasalgaon APMC.
On Wednesday, the Union ministry of commerce and industry had released a circular stating the minimum export price of onions would be $650 (Rs39847.60) per metric tonne.
Statistics from the ministry show that India has exported 6.39 lakh tonnes during April-July, compared to 6.94 lakh tonnes in the year-ago period.
Production in 2012-13 stood at 16.6 million tonnes.
It also asked one of its cooperative agencies, NAFED, to import onions from Pakistan and Iran, and procure onions at best rates from onion trading centers like Lasalgaon and Pimpalgaon.
According to Lasalgaon APMC, 30% of the produce moves to eastern India, where it is used domestically, and then exported to Bangladesh, while 40% moves to Mumbai.