Centre’s intervention in the MEP of onion stops the price rise in markets.
A fresh supply shock triggered by a poor monsoon has pushed up onion prices, even as the government begins to release stocks from its reserves to keep prices stable during the peak festive period.
Onion prices have more than doubled in a fortnight in several states. Most vegetables have become expensive again, retailers said, driven by demand from households, eateries, and street-food vendors ahead of Diwali.
In the retail markets of the national capital, average-quality onions are selling for ₹80 a kg, up from ₹60 last week and ₹30 two weeks ago. Prices are similar in other cities such as Chandigarh, Kanpur, and Kolkata. Supply-chain intermediaries said they could spiral further.
A deficient June-September monsoon damaged the kharif onion crop in Maharashtra and Karnataka, two large suppliers, pushing back harvests while stocks from the winter crop have almost been exhausted, driving up prices again.
Wholesale prices of vegetables have dipped in Maharashtra, the largest producer, following measures to curb exports, the consumer affairs ministry, which monitors prices of 22 essential food items, said in a statement.
The government on October 28 imposed curbs on onion exports, setting a minimum export price (MEP) of $800. The imposition of MEP has shown an “immediate impact of price correction in Maharashtra markets, where prices recorded a decline of 5% to 9% from the highest price registered during last week,” the government said.
MEP is a price below which traders cannot sell to global buyers. It is a measure designed to limit cheap exports and boost domestic availability, thereby helping to cool prices.
According to data cited by the Consumer Affairs Ministry, the weighted average price of onion in Maharashtra across all the markets has declined by 4.5%. Retail prices usually come down with a lag.
Supply-chain intermediaries however said prices could spiral further as supplies have thinned following a delay in harvesting of the summer-sown crop.
