Markets could run low on onions again, prompting the government to consider taking a key monetary step to curb exports and check domestic prices from spiralling.
After discussions on Monday, agriculture minister Sharad Pawar and food minister KV Thomas decided to hike a fee charged from onion exporters, or the “minimum export price,” amid signs of a major shortfall in output.Export of onions, other than premium varieties, currently attracts a levy of $275 (Rs 12,375) a tonne. This is set to go up by at least 5%.
Spells of summer rains recently spoiled crops in Nashik, a prime onion-growing region in the country. The shortfall could be as much as 3 lakh tonnes, a government official said, requesting anonymity.
Since this is equivalent to India’s total exports, the government hopes to keep prices affordable by paring exports of non-premium varieties, such as “Bangalore Rose” and “Krishnapuram”.
"Onions are currently selling between Rs 12-15 (a kg) in the wholesale markets. By increasing the minimum export price, we will be able to keep retails prices around Rs 21-22 per kg,” food minister Thomas told HT.
{{/usCountry}}"Onions are currently selling between Rs 12-15 (a kg) in the wholesale markets. By increasing the minimum export price, we will be able to keep retails prices around Rs 21-22 per kg,” food minister Thomas told HT.
{{/usCountry}}The seeds of the current crisis were sown when late August rains caught farmers unawares in western India.
High-moisture levels and temperatures, when the skies clear up, could pave the way for a wave of diseases, such as purple blotch, the onion plant's equivalent of leprosy. A similar attack followed by untimely rains had cut output last December.
“Summer harvest accounts for just 15% of the total annual production, but it is the most important because it comes at a time when onion stocks from previous harvests are fully exhausted,” RP Gupta, director of the Nashik-based National Horticultural Research and Development Foundation (NHRDF) said.
Such explanations don't make things easy for a government fighting persistently high food inflation.
An index measuring wholesale prices of farm products rose 10.05% in the week ended August 20 from a year earlier, scaling to a four-month high on the back high onion and dairy prices.