Agriculture minister Sharad Pawar has asked the commerce ministry to scrap the minimum export price for onions to help boost exports, while fresh supplies dashed hopes of traders of high profits with overpriced onions.
Onion prices have fallen from levels above Rs60 per kg in September to below Rs10 per kg at Lasalgoan in Maharashtra, the largest wholesale onion market in Asia, and retail prices have plummeted to below Rs30 per kg from levels above Rs80 per kg.
Farmers and traders are now questioning the wisdom of fixing minimum export price for onions at $350 per tonne.
Farmers and other stakeholders from producing states such as Maharashtra have made representations to Pawar, demanding the removal of export restrictions.
Pawar too feels that with domestic prices crashing, exports would help producers and traders.
"Pawar has written to the commerce minister pointing to the crashing wholesale prices of onions at major producing centres and requested him to encourage exports to help farmers by removing the minimum export price (MEP) of onions," sources said.
The government had imposed the MEP on onions to discourage exports as one of the measures taken to curb rising domestic prices, which touched Rs100 per kg in October in the retail markets due to shortages.
The MEP, which had been fixed at a high of $1,150 per tonne in November, has since been reduced to $800 per tonne as prices somewhat eased in early December and has now been pegged at $350 per tonne (or around Rs21 per kg at current exchange rates).
Onion exports from the country had come down substantially to 29,000 tonnes in August due to the price curbs.
India exported about 8.53 lakh tonnes of onions in the April-November period of this year against 18.22 lakh tonnes shipped overseas during the same period in 2012-13.
Currently, farmers in major growing states such as Maharashtra, Gujarat, Madhya Pradesh and Rajasthan are harvesting the late summer (kharif) onion crop.