Govt decides to lift 6-month old ban on onion exports; prices expected to fall sharply due to bumper rabi crop

The government on Wednesday decided to lift the nearly six-month-old ban on export of onions in a bid to protect the interests of farmers as prices are likely to fall sharply due to bumper rabi crop. Food Minister Ram Vilas Paswan tweeted about it:

Minister of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan (@irvpaswan): Govt lifts ban on onion exports pic.twitter.com/6HSsRNS6YU

— CNBC-TV18 (@CNBCTV18Live) February 26, 2020

India, the world’s biggest exporter of onion, banned exports of onions in September last year to keep domestic supplies intact after flooding in several states worsened seasonal shortages, leading to a spike in local prices. Sources said the decision was taken at a meeting of a Group of Ministers (GoM) headed by Home Minister Amit Shah, according to a PTI report. Wholesale prices of onions have more than halved in the last five weeks, according to data compiled by the National Horticultural Research and Development Foundation, a government agency, Reuters said. The lifting of the ban would be effective once the Directorate General of Foreign Trade (DGFT) issues a notification in this regard. The GoM on Wednesday also deliberated on whether to reduce or scrap the Minimum Export Price (MEP) on onion to facilitate outbound shipments, the sources said to PTI. The MEP is the rate below which no exports are allowed. Paswan, Agriculture Minister Narendra Singh Tomar, Commerce Minister Piyush Goyal and Cabinet Secretary Rajiv Gauba were present at the meeting. [caption id=“attachment_1261551” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] In September 2019, the government banned onion exports and also imposed a MEP of $850 per tonne. The move came after prices had started skyrocketing due to supply-demand mismatch. There was a shortage of onion as kharif crop was adversely affected due to excess rains and floods in key producing states, including Maharasthra. Currently, the arrival of rabi (winter) crop of onion has begun in small quantities and would increase from mid-March onwards. In March alone, onion arrivals are expected to be as high as 40.68 lakh tonne (Metric Tonne) when compared with 28.44 lakh tonne in the year-ago period, as per the sources. The arrival is anticipated to be higher at 86 lakh tonne in April compared to 61 lakh tonne in the year-ago, they added. Exports of onion are expected to arrest the fall in domestic prices and thereby protect the interest of growers, the sources said. During the meeting, the sources said the import of pulses, especially urad, was also discussed.