Onion prices fluctuate as Govt swings into action

Onion prices started declining in wholesale markets after the Government took a string of measures to check the steep jump in domestic prices. The Union Government slashed the Customs Duty on the imports of onions to zero from 5% as it tried to reign in spiraling prices of the essential food item. The Government imposed a ban on onion exports till January 15, in a bid to increase the availability in the domestic market.



The MEP for export of onion was revised from US$525 to US$1,200 per tonne (C&F, Dubai base). There will be voluntarily suspension of issuance of No Objection Certificates (NOCs) by NAFED, NCCF and other STEs. The NOCs which have already been issued till Dec. 20 will be effected only on US$1,200 per tonne C&F. NAFED and NCCF will start retail sale of onion from December 21 through their own outlets for making available onion to the consumer at a reasonable price.

Meanwhile, Cabinet Secretary K.M. Chandrasekhar, who was entrusted with the task of monitoring the situation on an hourly basis, asked the Commerce Secretary to speed up onion imports. He also directed states to take stringent action against hoarders. Private traders already began imports from Pakistan through the Wagah border from Dec. 21.

But, despite the various Government measures it would take a few weeks before the situation returns to normal. Union Food and Agriculture Minister, Sharad Pawar said that onion prices will remain high for the next two-three weeks and the situation is likely to improve after that.

Onion prices in some regions had shot up to as high as Rs 70-85 per kg on retail level from Rs 35-40 a kg a few days ago as some crop has been damaged in key states such as Maharashtra, Karnataka and Gujarat due to excessive rains. Compared to the spiraling domestic prices, onions imported from Pakistan cost around Rs 18-20 a kg.

The National Agricultural Cooperative Marketing Federation of India (NAFED) estimates that almost 40% of onion crop in Maharashtra has been damaged by extended spell of monsoon rains. While in Gujarat, Madhya Pradesh and Rajasthan the extent of damage is between 15% and 20% this year.