Why in News?

• Union ministry of commerce and industry amended export policy of onion from free to prohibited, which amounts to banning of onions from export, with immediate effect.

  Reasons behind the Decision:

• The prohibition by the government comes amid rising prices of onions across the country.
• The commerce and industry ministry amended the export policy of onion, making it ‘prohibited’ from ‘free’ earlier.
• The decision has:
• banned exports of all varieties of onion in a bid to tame prices.
• imposed stock limits on onion traders to facilitate release of stocks and prevent hoarding by traders.

Impact of the Decision:

• Retail traders across the country will now be able to stock only up to 100 quintals of onion while wholesale traders will be allowed to stock up to 500 quintals.
• In the past, the Centre had authorised states to impose stock limits but this time it has imposed the limits on its own.
• Sudden export bans shut off the possibility of the farmer getting a bumper price for his crop, something that he feels he is entitled to, as the obverse of the distress sale he often has to undertake.

Way Ahead:

• States must act expeditiously and launch a crackdown on hoarders to bring the stocks to the market swiftly.
• Promote modern infrastructure facilities like cold storages and warehouses to use it as buffer stock.
• Instead of banning exports, the government should encourage export of onion in its raw and processed forms.
• The government must invest in food technology that would permit farmers to increase output without fear of distress sales, onion offtake assured because of its storage in a processed state
• More policy making and political attention should be devoted to raising onion output, or for that matter farm output in general. Complacency on the farm front is wholly avoidable.