Onion retreat after protests

New Delhi, Sept. 20: The 12-day-old onion export ban was lifted today after protests by farmers in Maharashtra, the largest producer of the crop, but price controls aimed at discouraging sales abroad have been retained.

The withdrawal of the ban has sparked fears of a renewed spurt in the kitchen staple’s prices, which had eased a bit after the September 8 ban.

A group of ministers (GoM) that stopped the exports had said the ban would be reviewed every fortnight. The panel decided to withdraw it today after reports that farmers in Maharashtra onion hub Nashik were holding back stocks and not bringing them to the markets.

“There will be no change in the minimum export price and (today’s) decision to lift the ban will be reviewed after 15 days,” food minister K.V. Thomas said after a meeting of the ministerial panel today, suggesting the curb could be re-imposed if prices flared up.

Retail prices in Calcutta are now around Rs 20 a kg, down from Rs 22-25 a kg on the day of the ban. But the current rates remain high compared with Rs 14 a kg a month ago, according to the department of consumer affairs.

Officials in the Maharashtra government said in Mumbai late this evening, hours after the ban was removed, that stocks were likely to flood the onion auction centre at Nashik’s Lasalgaon and other key markets in the state from tomorrow.

Union agriculture minister Sharad Pawar has sought to calm price fears by claiming the current spike was the result of supply glitches arising from heavy rains. He also held out hope of a winter decline in rates.

“The next crop is expected to be huge. In November, December and January, there will be sufficient availability of onions ,” said Pawar, whose Nationalist Congress Party counts among its supporters several onion farmers.

Traders didn’t appear to share Pawar’s optimism, though. They warned that prices would continue to rise because of high demand during the festive season. They also pointed out that the new crop could be harvested later than expected as the late monsoon had delayed sowing.

The ban had been in place for much of last year when prices topped Rs 90 a kg. It was lifted this February. Governments have been voted out over high onion prices and the Congress-led UPA is wary of a repeat of last year’s crisis ahead of Uttar Pradesh, Uttarakhand and Punjab polls in early 2012.

The latest ban was clamped a day after the Centre raised the minimum export price for onions to $475 from $300 per tonne to discourage exports. It was the fourth such hike since mid-June.