India has decided to extend restrictions on onion exports until March 31, 2024, to maintain a stable domestic supply and rein in the escalating prices of onions. This strategic move aims to ensure an ample stock of this pivotal crop within the country, steering clear of the historical turmoil associated with fluctuating onion prices.
Onion Export Rollercoaster Ride
The government had initially introduced a minimum export price (MEP) of $0,8 or €0,74 per kilogram on onion exports from October 28 to December 31 of the current year. The objective was to bolster the presence of onions in the domestic market and exert control over their prices. As per reporters, this restriction has now been prolonged to address the persistent challenges in the onion market.
Rising Prices – The Onion Price Tag Soars
According to government data, the all-India retail price of onions witnessed a staggering 94.39% surge, reaching $0,69 or €0,64 per kilogram on November 29 compared to $0,36 per kg a year ago. A CRISIL report further highlighted a 58% increase in onion prices and a 35% rise in tomato prices in November, attributed to festive demand and reduced output during the Kharif season due to unpredictable rainfall.
The substantial surge in prices of essential food items, including wheat, rice, pulses, sugar, and onions, raises concerns for the Narendra Modi-led government. As the general elections loom in April-May 2024, managing these soaring prices becomes a crucial political challenge.
Export Duty Effects – Struggles and Revisions
Previous attempts to curb onion exports included a 40% export duty imposed in August. However, this measure proved insufficient as rampant under-invoicing of exports undercut its effectiveness. Consequently, the government abandoned the duty and opted for a minimum export price of $800 or €742 per metric tonne of onions to better regulate the onion market dynamics.
This year witnessed key onion exporters like Egypt and Türkiye imposing bans on onion exports. Simultaneously, onion production in Pakistan experienced a decline, and even Holland resorted to importing onions. The ripple effects of these global shifts contribute to India’s challenge of maintaining a significant presence in export markets, a challenge exacerbated by recurring export bans.
While the extension of onion export restrictions aims to stabilize prices domestically, it prompts contemplation on the broader implications. Balancing the interests of farmers, consumers, and global market dynamics is a delicate dance. As the government navigates this complex terrain, the effectiveness of these measures remains a focal point in addressing the onion price saga. The months ahead will unveil whether these interventions bring relief or pose additional challenges for India’s onion market.
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