Context:
Directorate General of Foreign Trade (DGFT) imposed a minimum export price (MEP) of $ 800 per tonne on onion exports till December 31, 2023.
News Highlights:
- MEP aims to keep onion prices affordable by ensuring adequate domestic supply, as stock from the Rabi Season Onion crop is decreasing.
- What is Minimum Export Price?
- Minimum Export Price is set for a particular product below which it cannot be exported.
- It is declared under the Foreign Trade (Development & Regulation) Act, 1992.
- DGFT is an attached office of Ministry of Commerce and Industry.
What can be the reasons for rise in onion price?
- Consumed all year round but is not harvested around year.
- Rabi crop accounts for 65-70% of onion output.
- Low shelf life (how long does onion last)
- No onion harvesting takes place between June and September, when supply is met through stored rabi onion and harvested Kharif onion.
- Now, stored Rabi onion is getting exhausted and there is a delay in arrival of Kharif onion, resulting in low onion supply, and an increase in its price.
- Delay in the sowing of Kharif onion due to weather conditions resulted in less crop coverage.
- Cobweb phenomenon in agriculture is when farmers base their planting decisions on last year’s prices.
- Other reasons – High transportation cost (rising oil price, poor road connectivity), lack of cold storage facilities, high storage cost, etc.
Government initiatives to stabilise the price:
- Operation Greens: Scheme for development of Tomato, Onion and Potato (TOP) value chain (2018) under.
- Price Stabilization Fund (PSF) to cool onion prices.
- Irradiation of onion: In collaboration with Bhabha Atomic Research Centre (BARC) with the objective of minimizing storage loss.
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Source: Business Standard
Previous Year Question
Consider the following statements:
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2020 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
Explanation:
The overall procurement quantity should not normally exceed 25% of the actual production of the commodity for that particular year/season. Over and above the procurement limit of 25%, if any, prior approval of the Department of Agriculture (DAC) shall be required. Hence, statement 1 is not correct.
The MSP is fixed by the Central government, based on the average of MSP proposals made by various states, some of which can be higher than the Centre’s recommendation. While the proposals based on input costs vary from state to state, the MSP is fixed to avoid price inequity. When the market prices dip to a level that is below the MSP, the government agencies buy over the produce in order to protect the farmers. Thus market prices can rise above MSP. Hence, statement 2 is not correct.
