Under pressure from spiralling onion prices in the domestic market, the government has suspended onion exports for 15 days and raised the minimum export price to a record high of $495 per tonne with effect from October 1.
"We have decided to stop issuing fresh no objection certificates permitting exports for a period of 15 days, beginning today. Therefore, only those exporters who had obtained NoCs prior to this decision can export," said Alok Ranjan, managing director, National Agricultural Cooperative Marketing Federation, the agency that revises MEP on a monthly basis.
Since onion exports are canalised, exporters are required to obtain NoCs from Nafed and 12 state agencies.
The MEP has been raised from $225 a tonne in May to $495 a tonne in October. Despite this, domestic onion prices have risen sharply. They are currently available at Rs 24 -28 per kg at the retail level, compared with Rs 8-10 a kg in May.
Also, the prices did not come down despite the government's decision to make exports unattractive by hiking its MEP from $225 a tonne to a record $445 per tonne in August.
During the April-September period this year, the country exported 382,000 tonnes of onion, roughly a 36 per cent decline over 605,000 tonnes in the same period last year.
Prices have been rising on reports that the onion crop has been damaged in parts of Karnataka and Andhra Pradesh. "There has been a damage in certain districts of Karnataka but since there has been a 30 per cent increase in sowing over last year, overall production should be higher," added Ranjan.
However, consumption and prices are expected to fall with the start of Navratra, the Hindu period of fasting, from October 12.
"The Navratras will result in a 25 per cent dip in consumption and prices will start declining around that time", said Rajinder Sharma, general secretary of Potato and Onion Merchants' Association, Delhi.
