Govt Lifts Export Price Caps on Onion and Basmati Rice to Aid Farmers

The government has eliminated the minimum price thresholds for onion and basmati rice to enhance exports and increase farmers' income. Additionally, the export duty on onions has been reduced from 40% to 20%, effective from September 14. This duty had been in place since May 4.

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Boosting Exports and Farmers' Income

Commerce and Industry Minister Piyush Goyal stated that removing the minimum export price (MEP) of USD 950 per tonne for basmati rice will help boost exports and increase farmers' income. The Agricultural and Processed Food Products Export Development Authority (APEDA) has been instructed to implement this decision immediately and monitor export contracts for any unrealistic prices.

In October 2023, the government reduced the floor price for basmati rice exports to USD 950 per tonne from USD 1,200 per tonne. This move was aimed at addressing concerns that higher prices were affecting outward shipments. On August 27, 2023, the government decided not to allow basmati rice exports below USD 1,200 per tonne to prevent illegal shipments of white non-basmati rice disguised as premium basmati rice.

Onion Export Policy Changes

The Directorate General of Foreign Trade (DGFT) has also removed the MEP on onions with immediate effect. Earlier this year, the government lifted the ban on onion exports but imposed a USD 550 per tonne MEP, preventing farmers from selling their produce overseas at lower rates. The DGFT stated that the MEP condition on onion exports is removed until further orders.

India exported 2.6 lakh tonnes of onions till July of this fiscal year, compared to 16.07 lakh tonnes in the previous fiscal year. Despite high retail prices, the decision to remove the MEP on onions was taken. According to data from the Department of Consumer Affairs, the all-India average price of onion was Rs 50.83 per kg, with a modal price of Rs 50 per kg.

Retail Sales and Buffer Stock

To provide relief from rising onion prices, the Centre began retail sales of onions at a subsidised rate of Rs 35 per kg in Delhi-NCR and Mumbai on September 5. NCCF and NAFED, which maintain a buffer stock of 4.7 lakh tonnes of onions for the government, have started retail sales through stores and mobile vans.

Consumer Affairs Secretary Nidhi Khare noted that onion availability and prices are expected to remain positive in the coming months. The kharif summer-sown area increased sharply to 2.9 lakh hectares last month compared to 1.94 lakh hectares in the previous year. Additionally, about 38 lakh tonnes of onions are still reported to be in storage with farmers and traders.

Wheat Stock Holding Limits

Meanwhile, the Centre has tightened wheat stock holding limits for traders, wholesalers, big chain retailers, and processors to check price rise and hoarding. These revised stock limits were imposed barely two months after initial restrictions on June 24. The new limits will remain in force until March 31, 2025, across all states and Union Territories.

India's total exports of basmati rice stood at USD 5.9 billion in the fiscal year 2023-24. During the fiscal year 2022-23, basmati rice exports were valued at USD 4.8 billion with a volume of 45.6 lakh tonnes. According to the Foreign Trade Policy, APEDA is responsible for registering all contracts for basmati rice exports and issuing registration-cum-allocation certificates (RCAC).

The decisions come ahead of assembly elections in Maharashtra and Haryana, where Haryana is a major producer of basmati rice along with Punjab. The removal of MEP on both onion and basmati rice is expected to benefit farmers significantly.

The government's recent measures aim to support farmers by enhancing their income through increased exports while ensuring domestic availability and stable prices for essential commodities like onions and wheat.