On Monday, the Central government issued a notification prohibiting the export of onions. This ban on the export of onions came after 3 months of jerking the Essential Commodities Act, 1955. This act imposed the limit of stock and restrictions on the movement of food grains, edible oilseeds, onions, potatoes, and other commodities in severe conditions like war or natural calamity.
There are two possible reasons which prompted the government to ban the export of all kinds of onions. The first reason might be the constant increase in wholesale prices of onions thus making onions costlier in the urban markets.
The other reason might lie in the CPI numbers released by the MoSPI on Monday.
The Consumer Food Price Index (CFPI) for August was 9.05 as against 9.27 of last month.
At the policy level, the high CFPI and the rising price of onion were enough triggers to get an export ban on onions at a time when farmers were offloading their stored onions.
The staple crop is costlier in the wholesale market because of heavy rainfall in August. Heavy rains almost washout the almost-ready market of onion crop in Karnataka. There was also heavy rainfall in areas like Madhya Pradesh, Gujarat, and parts of Maharashtra who stored onions.
Markets will be open for trade on Tuesday, and because of the export ban of the staple crop, a sharp depreciation in prices is expected. However, traders also say that price of onion will hike from the next week due to the supply stressed.
However, traders feel the prices are again going to rise in a week or so as the overall supplies will remain stressed. The new crop, they say, will arrive only post November and with the demand expected to rise before the Dussehra festive season starts, prices will continue to remain bullish.
Some Farmers’ organizations have called this move as the “double standard” on part of the government.