Global onion prices had surged in recent months after major suppliers, including India, Pakistan, and Egypt, banned exports. File
| Photo Credit: The Hindu

The Centre on Saturday lifted the prohibition on onion exports imposed nearly six months ago, but restrained the free flow of outbound shipments by stipulating a minimum export price of $550 per tonne as well as a 40% export duty.

The change in stance on exports of the critical kitchen staple, which were banned in early December 2023 citing high food inflation and supply worries, comes days ahead of the Lok Sabha election in the onion-farming belts of Gujarat and Maharashtra.

An April 25 decision to allow 2,000 tonnes of white onion exports from Gujarat, had prompted a sharp reaction from Opposition leaders, who alleged that Maharashtra farmers, who mainly grow red onions, had been short-changed by the Centre’s extended curbs on exports.

Global onion prices had surged in recent months after major suppliers, including India, Pakistan, and Egypt, banned exports. Reporting a 300% uptick in production, Egypt lifted those curbs last month, while Pakistan has also removed export restrictions recently.

‘Price stable now’

Asserting that the government will “continue to safeguard the interests of domestic consumers as well as farmers”, Consumer Affairs Secretary Nidhi Khare said the ban was reviewed after visits to key onion market hubs to assess the current situation.

“The mandi prices of onion in Lasalgoan Mandi [the country’s largest onion wholesale market in Maharashtra] has remained stable around ₹15 per kg since April. As a perishable crop, onion has to be consumed within five to six months so holding stocks beyond shelf life will only increase storage losses,” said the top Consumer Affairs Ministry official.

With a 40% duty levied on top of the minimum export price of $550 per tonne, effectively, Indian onion exports would now be feasible if global buyers are willing to pay at least $770 a tonne.

Explained | Why was a 40% duty imposed on onion exports?

“The ban had been imposed to boost domestic supply when there was an estimated 20% decline in Kharif and late Kharif production, and has helped stabilise prices till the arrival of the Rabi 2024 crop, which is estimated at 191 lakh tonnes,” Ms. Khare explained.

No supply worries

With India’s monthly domestic consumption of onions at about 17 lakh tonnes, the Rabi supplies are expected to be reasonably comfortable till arrival of the Kharif 2024-25 crop, whose prospects are good owing to the above-normal monsoon forecast for this year.

The new conditional exports regime, introduced through separate notifications by the Finance and Commerce Ministries over late Friday and early Saturday, kicks in immediately and will stay till further orders.

On April 27, two days after limited white onion exports were approved, the government sought to allay Maharashtra’s onion farmers’ concerns by stating it had allowed over 99,000 tonnes of onion exports to select countries.

However, the State’s farmer groups and traders had said this merely referred to export quotas for six countries already announced over the past two months to be channelled through the National Cooperative Exports Limited (NCEL). Less than 10% of that export quota has been used while the permission for white onion exports neither mandated NCEL’s involvement nor did it specify a destination country, they pointed out.

On December 8, 2023, the government put a domestic ban on the export of onions.
| Photo Credit: ANI

The Centre on April 27 said it has allowed exports of 99,500 tonnes of onions, mainly sourced from Maharashtra, to six neighbouring countries despite the ban on shipments.

The Centre has also allowed exports of 2,000 tonnes of white onion cultivated, especially, for export markets in the Middle East and some European countries.

On December 8, 2023, the government banned export of onions.

Also Read: Parliamentary proceedings | Government defends onion export ban

In an official statement, the Ministry of Consumer Affairs, Food & Public Distribution said the government has “allowed export of 99,150 tonnes of onion to six neighbouring countries of Bangladesh, UAE, Bhutan, Bahrain, Mauritius and Sri Lanka”.

The export prohibition has been imposed to ensure adequate domestic availability against the backdrop of estimated lower Kharif and Rabi crops in 2023-24 compared to the previous year.

The ban was imposed amid an increase in demand in the international market, it added.

The National Cooperative Exports Limited (NCEL), the agency for the export of onion to these countries, sourced the domestic onions to be exported through e-platform at L1 prices.

NCEL has supplied to the agency or agencies nominated by the government of the destination country at the negotiated rate on a 100 per cent advance payment basis.

The offer rate of NCEL to the buyers takes into account the prevailing prices in the destination market and also international and domestic markets.

The quota allocated for export to the six countries is being supplied as per requisition made by the destination country.

“As the largest producer of onion in the country, Maharashtra is the major supplier of onions sourced by NCEL for export,” the statement said.

The government had also allowed the export of 2,000 tonnes of white onion cultivated, especially for export markets in the Middle East and some European countries.

“Being purely export-oriented, the production cost of the white onion is higher than other onions due to higher seed cost, adoption of good agricultural practice (GAP) and compliance to strict maximum residue limits (MRL) requirements,” the statement said.

The procurement target for onion buffer out of Rabi crop 2024 under the Price Stabilisation Fund (PSF) of the Department of Consumer Affairs has been fixed at 5 lakh tonnes this year.

The Central agencies, like NCCF and NAFED are tying up local agencies like FPOs/FPCs/PACs to support the procurement, storage and farmers registration to begin the procurement of any store-worthy onion.

A high-level team of the Department of Consumer Affairs, NCCF and NAFED visited Nashik and Ahmednagar districts of Maharashtra from April 11-13, 2024, to create awareness among the farmers, FPOs/FPCs and PACs about the procurement of 5 lakh tonnes of onion for buffer stock.

To reduce the storage loss of onions, the department has decided to enhance the quantum of stocks to be irradiated and cold stored from 1,200 tonnes last year to over 5,000 tonnes this year, with technical support from BARC, Mumbai.

The pilot of onion irradiation and cold storage taken up last year has been found to have resulted in the reduction of storage loss to less than 10 per cent, the statement said.

In March, the Union Agriculture Ministry released the data for onion production.

As per the data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes compared to around 302.08 lakh tonnes last year.

This is due to a decrease of 34.31 lakh tonne output in Maharashtra, 9.95 lakh tonne in Karnataka, 3.54 lakh tonne in Andhra Pradesh and 3.12 lakh tonne in Rajasthan, the data showed.

Image used for representative purpose only
| Photo Credit: PTI

The government on February 22 permitted traders to export 54,760 tonnes of onion to Bangladesh, Mauritius, Bahrain and Bhutan till March 31.

“We have allowed export of 50,000 tonnes of onion to Bangladesh, 1,200 tonnes to Mauritius, 3,000 tonnes of Bahrain and 560 tonnes to Bhutan with immediate effect,” Consumer Affairs Secretary Rohit Kumar Singh told PTI.

Also Read: Parliamentary proceedings | Government defends onion export ban

Traders are allowed to export this quantity till March 31. The modalities are being worked out, he said.

Mr. Singh said the decision has been taken following a recommendation from the External Affairs Ministry.

Currently, there is a ban on onion exports till March 31. The ban was imposed on December 8, 2023, in order to boost the domestic supply and check price rise.

Workers at Vinchur onion market in Nashik. File
| Photo Credit: PTI

The Centre has imposed a ban on the export of onions until March 31, 2024, to curb the surging local prices of the product.

A Directorate General of Foreign Trade (DGFT) order late on Thursday said: “Export policy of onions… is amended from free to prohibited till March 31, 2024.”

Earlier, on August 19, the Union government had imposed a 40% duty on the export of onions (minimum export price of $800 per metric ton) until December 31, to increase domestic availability amid signs of increasing prices and provide relief to local consumers.

In its order, the DGFT also said that the onion exports, however, will be allowed based on permission granted by the government to other countries based on their request and that shipments, whose loading had commenced before the fresh notification, are allowed to be exported.

In response to the Centre’s announcement of a ban on the export of onions until March 31, 2024, farmers in Maharashtra’s Nashik district took to the streets, blocking the Mumbai-Agra National Highway at three locations and disrupting auctions

The farmers also halted auctions in Lasalgaon, Asia’s largest wholesale onion market, Chandwad, Nandgaon, Dindori, Yeola, Umarane, and other places in Nashik.

Stating that the ban would adversely impact farmers, protesters staged road blockades with tractors for hours. With no auction at the Lasalgaon APMC, over 600 onion-laden vehicles were redirected to Vinchur with wholesale prices ranging from ₹1,500 to ₹3,300 per quintal.

Lasalgaon APMC chairperson Balasaheb Kshirsagar condemned the government’s decision, claiming it was unfavourable to farmers.

“Onion prices had recently come down, and the ban would lead to losses. Presently, onion prices range from ₹1,000 to ₹1,200 per quintal, despite some selling at ₹3,000 per quintal,” he said, alleging middlemen for artificial price inflation.

Mr. Kshirsagar demanded direct government sales without the involvement of middlemen.

“Farmers had already suffered losses due to unseasonal rainfall and hail. It must revoke its decision on the ban to support farmers,” another farmer said.

The farmers and traders associations are likely to meet Chief Minister Eknath Shinde, his deputy Ajit Pawar, and Nationalist Congress Party (NCP) president Sharad Pawar to express their concerns.

New Delhi:

The government on Saturday imposed a minimum export price (MEP) of USD 800 per tonne on onion exports till December 31 this year with a view to increase availability of the vegetable in the domestic market and contain prices.

The decision will come into effect from October 29.

Besides, the government has also announced the procurement of additional 2 lakh tonnes of onion for the buffer, over and above the 5 lakh tonnes already procured.

The MEP is there for all varieties of onion except Bangalore Rose and Krishnapuram onions; and for cut, sliced, or broken in powder forms.

“Exports of onions is free. MEP of USD 800 FOB (free on board) per tonne is imposed till December 31, 2023,” the Directorate General of Foreign Trade said in a notification.

An official statement said that the step will help in maintaining sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored Rabi 2023 onion is declining.

The USD 800 per tonne MEP translates into about Rs 67 per kg.

Onion from the buffer has been disposed continuously since the second week of August in major consumption centres all over the country, and also supplied to retail consumers at Rs 25 per kg through mobile vans operated by NCCF and NAFED.

“Till date about 1.70 lakh metric tonne of onion has been disposed from the buffer. The continuous procurement and disposal of onion from the buffer are undertaken to moderate the prices for consumers while ensuring remunerative prices to the onion farmers,” the statement said.

The DGFT notification added that certain onion consignments will be allowed to be exported without MEP and that included consignments that have been handed over to the Customs before this notification and is registered in their system.

Onion consignment that has entered the Customs station for exportation before this notification and is registered in the electronic systems of the concerned custodian of the Customs station with verifiable evidence of date and time stamping of these commodities having entered the customs station prior to the issuance of this notification is also permitted to be exported.

It added that export duty will not be refunded, if paid.

Onion prices have further risen to Rs 65-80 per kg in the retail market of the national capital on lower supply.

Mother Dairy, which has around 400 Safal retail stores in Delhi-NCR, is selling loose onions at Rs 67 per kg. E-commerce portal Bigbasket is selling at Rs 67 per kg, while Otipy at Rs 70 per kg.

Local vendors are selling onions at Rs 80 per kg.

Mother Dairy was selling onions at Rs 54-56 per kg on Wednesday and now the rates have touched Rs 67 per kg.

With the rise in retail prices, the Centre on Friday decided to step up the sale of buffer onion at a subsidised rate of Rs 25 per kg in retail markets in order to provide relief to consumers.

According to the Department of Consumer Affairs data, on Saturday the all-India average retail price of onion is Rs 45 per kg, but the maximum price is Rs 80 per kg. In Delhi, the average price is ruling at Rs 75 per kg.

According to the ministry, onion is being offloaded from the buffer stock in both wholesale and retail markets in those states where there is a sharp rise in prices.

Since mid-August, about 1.7 lakh tonnes of buffer onion has been offloaded in 22 states at different locations.

In retail markets, buffer onion is being offloaded through two cooperative bodies NCCF and NAFED outlets and vehicles at a subsidised rate of Rs 25 per kg.

In Delhi too, buffer onion is being sold at this subsidised rate.

A senior government official said the delay in kharif onion sowing due to weather reasons has resulted in less coverage and late arrival of the crop.

The fresh kharif onion should have started arriving by now but it has not.

With stored rabi onion getting exhausted and due to delay in the arrival of the kharif onion, there is a tight supply situation, resulting in price increases in both wholesale and retail markets, the official added.

He also mentioned that the government has doubled the buffer onion stock for the current year and this should improve domestic availability and check prices in the coming days.

For the 2023-24 fiscal year, the consumer affairs ministry through NCCF and NAFED has maintained a buffer onion stock of 5 lakh tonnes and plans to procure an additional 2 lakh tonnes of onion in the coming days.

Maharashtra Minister Dada Bhuse. File
| Photo Credit: Vivek Bendre

Amid protests by farmers and traders against the Centre’s decision to impose 40% export duty on onions, Maharashtra Minister Dada Bhuse has claimed it would make no difference if people did not consume the staple vegetable for two to four months.

The State PWD minister, however, also said on Monday that the decision to impose export duty should have been taken with proper coordination.

The Union government on August 19 imposed 40% duty on the export of onions to check price rise and improve supplies in the domestic market.

The Finance Ministry through a notification imposed the 40% export duty on onions till December 31, 2023.

“When you use a vehicle worth ₹10 lakh, you can buy produce at a higher rate by ₹10 or ₹20 than the retail rate. Those who cannot afford to buy onion, it would make no difference if they do not eat it for two-four months,” Mr. Bhuse said.

He also said the decision to impose export duty should have been taken with proper coordination.

“Sometimes onion fetches rates of ₹200 per quintal while sometimes it attracts ₹2,000 per quintal. A discussion can be held and an amicable solution can be found,” Bhuse said.

Earlier on Monday, traders decided to close onion auctions indefinitely in all the Agriculture Produce Market Committees (APMCs) in Nashik, including at Lasalgaon, which is the largest wholesale onion market in India.

The Nashik District Onion Traders Association had given the call to not take part in onion auctions indefinitely till the Centre rolls back its decision, sources said.

Several farmers and traders held protests across the district seeking a rollback of the export duty.

A labourer shortlist onion at APMC wholesale Market in Ahmedabad. File
| Photo Credit: Vijay Soneji

The Centre, on Saturday, imposed a 40% duty on the export of onions. The Centre will also offload stocks of onions in various wholesale markets to reduce the retail prices. The national average prices of the essential vegetable had increased by at least ₹5 compared to last year.

On Saturday, the national average price was ₹30.72 per kilogram, with a maximum price of ₹63 per kilogram in Champhai in Manipur and a minimum of ₹10 per kilogram at Neemuch and Burhanpur in Madhya Pradesh. “This notification shall come into force with immediate effect, and will remain in force up to and inclusive of the December 31, 2023,” a gazette notification of the Union Finance Ministry’s Revenue Department said. NCP leader and MP Supriya Sule questioned the move and urged the Centre to ensure remunerative prices for onion farmers.

Consumer Affairs Secretary Rohit Kumar Singh said the decision was taken in order to increase the availability of onions in the domestic market especially in view of the upcoming festival season. “It was also being noticed that there was a sharp rise in exports in the recent past,” he told The Hindu. He added that the Centre auctioned two truckloads, each with 30 metric tonnes of onion, in Azadpur market here and the NAFED auctioned three truckloads. He said the Centre, at a rate of ₹23 per kilogram and ₹22.5 per kilogram, plans to offload at least five truckloads per day in the coming week.

Mr. Singh said the market has started cooling by the announcement for offloading by the Centre. “We expect the rates to go down further on Monday. Because of our intervention, private traders who were holding on to their stocks have also started offloading fearing crash in prices,” he said.

Responding to a statement made by Ms. Sule in February that the Centre was trying to ban or regulate onion export harming the farmers, the Union Commerce Ministry said there was no such move. “Government has not restricted or prohibited the export of onion. The extant export policy of onions is ‘free’. Only the export of onion seed is ‘Restricted’ and that too is permitted under Authorisation from Directorate General of Foreign Trade (DGFT),” the Centre had said. Commerce Minister Piyush Goyal had also questioned Ms. Sule’s stand.

Ms. Sule said she was always speaking the truth. “I was talking what I was hearing from the ground. Farmers were telling me that there was a plan to ban or regulate the export. I requested the Commerce Ministry to drop this plan. I was told that there was no such plan. But now, they are regulating the export of onions. There has to be a balance between the interests of farmers and consumers. Farmers should get remunerative price. Consumers should get onions at a reasonable price. It is the duty of the government to ensure a win win situation,” she added.

According to the Commerce Ministry, in the ongoing financial year, about 9.75 lakh tonnes of onions have been exported. Bangladesh, Malaysia and the United Arab Emirates are the major importers of onions from India.