Export ban brings onion prices down sharply


WD, 21-12-2010 14:22:21


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NEW DELHI - Onion prices fell more than 30 percent after the government banned exports to rein in the cost of the vegetable, a staple and sometimes a trigger for voter protests over inflation.

Prices had more than doubled in the past week due to a shortage caused by unusually heavy rain in growing areas.

Discontent about food price inflation is another headache for a coalition government struggling with a slew of corruption allegations and an emboldened opposition.

The agriculture ministry on Monday banned exports until Jan. 15, and will import onions from neighbouring Pakistan, as retail prices jumped to 80 rupees ($1.77) per kg from 35 rupees per kg last week, local media reported.

"The situation will be normal in two to three weeks. Onion prices rose because of rains in Nasik and other onion growing areas," Agriculture Minister Sharad Pawar told reporters on Tuesday.

"The ban on onion exports should help reduce the prices."

Average onion prices at the country’s largest wholesale onion trading hub in Lasalgaon, in western Maharashtra state, fell 34 percent after the ban to 2,500 rupees per 100 kg.

"Restrictions on exports today pulled down prices in the wholesale market. They will fall further in the next few days in the wholesale and retail markets," R.P. Gupta, director at the National Horticultural Research and Development Foundation (NHRDF), told Reuters.

Onions are base ingredients for almost all dishes.

Soaring onion prices have helped dislodge state governments in the past, and rising food costs often spark street protests.

Food price inflation has retreated over the past three months, but at a high 9.5 percent is a worry for the ruling Congress party ahead of state elections next year.

On Monday, Prime Minister Manmohan Singh told his party that inflation "remains a cause for serious concern in our country".

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