Centre may have to hike MEP of onion

NEW DELHI: The Centre may have to hike the Minimum Export Price (MEP) in August for the politically sensitive onion, since increased temperatures in May and June and higher exports compared to last year threaten to increase pressure on supply and consumer prices, especially in northern India. Onion MEP is currently pegged at $200-205/tonne and National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED) is understood to be keeping a close watch on both domestic demand and on exports, with a view to calibrate onion MEP expeditiously if necessary. Exports in 2009-10 were pegged at 18.14 lt compared to 17.03 lt in 2008-09.

Onion output this season is expected to be around 95l tons compared to a lower 85l tons last season. In the capital and other parts of the north, onions primarily come in from MP and Rajasthan, with prices ruling from Rs 800-1000/qtl for the former and Rs 300-600/qtl for the latter. But increased heat this summer in Rajasthan has put a strain onion production and quality in that state, traders contend, and is likely to show up in tightened supply in the north and upwardly mobile prices in the coming weeks.

Maharashtras onions increase in July when supply in the nroth from both MP and Rajasthan are expected to dwindle. But stockists mainly access most of that crop. In addition, any onion crop that comes into Delhi and the north at the time from Maharashtra will factor in higher transport charges, consequently boosting prices for consumers, a commodity monitor said. The developments are expected to boost retail prices for the tuber atleast until such time as pressure over supply eases on account of Karnatakas onion crop which is not expected before August-September.

In the recent past, NAFED hiked onion MEP gradually since November 2009, when the prices of onion spurted in the domestic market. The MEP was around $200/t in April 2009 but a much higher $320-325/t earlier in March. However, the MEP was eased after domestic prices were seen as cooling. Earlier, Nafed raised the MEP by a whopping $150/t in phases between November 2008 and January 2009 to make exports expensive and check high domestic price before reducing the minimum price by $ 60 for February 2009.