GOVT IMPOSES MINIMUM EXPORT PRICE ON ONION
14, Sep 2019
Prelims level : Economics- Agriculture
Mains level : GS-III- Issues related to direct and indirect farm Subsidies and Minimum Support prices; Public Distribution System - Objectives, Functioning, Limitations, Revamping; issues of Buffer Stocks and Food Security; Technology Missions; Economics of Animal-Rearing.
Why in News?
- The government has imposed a minimum onion export price of 850 US dollars per tonne to curb its exports and help bring down Domestic Prices.
- A notification to this effect was issued by the Directorate General of Foreign Trade. This is the first time that a MEP has been imposed on onions this year.
- During the financial year 2018-19, India had exported 21.82 lakh tonnes of onion.
What is Minimum Export Price?
- Minimum Export Price (MEP) is the price below which an exporter is not allowed to export the commodity from India.
- MEP is imposed in view of the rising domestic retail/wholesale price or production disruptions in the country.
- MEP is a kind of quantitative restriction to trade.
- Government fixes MEP for the selected commodities with a view to arrest domestic price rise and augment domestic supply.
- This is intended to be imposed for short durations and is removed when situations change.
- The removal of MEP helps farmers / exporters in realising better and remunerative prices and would also help in earning valuable foreign exchange for the country.
What Does Such Imposition Mean?
- Simply put, henceforth exports will not be allowed if the consignments are priced below $ 850 per tonne. The steep MEP will, in a way, stop all outbound shipment of onions from India.
Reason Behind the Imposition:
- This move comes after the state-owned MMTC Ltd had floated a tender for import of onions from “Pakistan, Egypt, China, Afghanistan or any other origin”, triggering criticism from farmers in Maharashtra.
- The inclusion of Pakistan in the tender list had evoked extreme criticism from various quarters.
- The MMTC, however, issued a fresh corrigendum to its tender, excluding Pakistan as the country of origin, thereby making bids from the neighbouring country ineligible.
- Prices in mandis of Maharashtra — the largest onion Growing State which accounts for over 33 per cent of national produce — has been on the rise since April.
- Imposition of the MEP are steps taken by the Centre to prevent further rise in prices.
