Exporters, not farmers, make money due to Govt’s decisions on onion export

The government's policy of protecting domestic consumers is directly affecting the income of the country's farmers. In order to avoid political loss in the Lok Sabha elections, the government took proactive measures to control onion prices in the domestic market and banned onion exports.

After that, special permission for export was given to some countries. Due to the ban on onion export by India, there was a huge increase in onion prices in the global market. Onion price in UAE went up to Rs 150 per kg while in neighboring Bangladesh also the price went up to Rs 100. The exporters who got special permission to export from the government took advantage of this.

Sources who keep a close eye on onion business and export told Rural Voice that onion was purchased for export at Rs 20 to 22 per kg. Whereas in the export market the price ranged from Rs 100 to Rs 150 per kg. From this it can be estimated how much profit the exporters made.

The government ended the ban on onion exports on May 4, 2024, but fixed the minimum export price (MEP) at $550 per tonne. A day before this, it was decided to impose a 40 percent duty on onion export. That means $550 has been made the basis of export duty. Despite this, onion exporters have an opportunity to earn money due to the prices prevailing in the international market.

According to sources, keeping an eye on onion business, now along with India, Egypt has also lifted the ban on export. Along with this, Pakistan has also started exporting onions.

Onion prices increased in Middle East Asian countries due to a ban on exports by India and Egypt. Even now the price of onion there is hovering around Rs 120 per kg. But due to the increase in supply from many countries, whether this level of prices will continue or not will become clear in the next few days.

However, the sources say that despite the government imposing MEP of $550 per tonne and export duty of 40 percent, onion export is still a profitable deal in the global market. But export to Bangladesh will become difficult with these conditions.

But a question arises whether onion farmers will get the benefit of this decision. The main Rabi crop of onion comes in February-March. Onions from the Rabi crop have longer shelf life. But when the crop reached the market, there was a ban on export. When prices fell drastically, the government decided to purchase onions through NAFED and National Consumer Cooperative Federation (NCCF). It is a different matter that NAFED and NCCF purchase onions only at the prevailing market prices and instead of purchasing directly, they purchase onions through their representative traders, FPOs and cooperative societies.

Onions were exported to six countries under special permission during the export ban. National Cooperative Exports Limited (NCEL) was selected for this. Recently, there was a discussion at the government level on the huge difference between the price of onion purchased for export and the export price, and the farmers should have got the benefit from it, which they did not get.

The purpose of the government's decision to end the ban on onion export before the third phase of Lok Sabha elections is to reduce the resentment of onion producing farmers. Maharashtra is the largest onion producing state in the country and it is a political issue there. In such a situation, how much the government's latest decision helps the ruling party will be known only on June 4, when the ballot boxes are opened to reveal the electoral fortunes of the contestants.

But it is also clear that the government policy of keeping prices under control is causing losses to the farmers, and exporters are taking advantage of it in the form of higher prices in the international market. However, on May 4, the price of better-quality onion in Delhi was Rs 23 per kg. From this it can be estimated what price onion farmers would have received.