Poll sop? Centre lifts onion ban, but export duty only to benefit major exporters, traders

The Union government lifted the ban on onion exports on May 4, 2024. The decision comes ahead of voting in key Maharashtra constituencies in the third phase of the 2024 Lok Sabha elections on May 7.

The Centre’s decision is likely to increase onion prices in the coming weeks. On May 4, the rate at Lasalgaon Agricultural Produce Marketing Committee, Asia’s biggest onion market, was Rs 2,100 per quintal, peaking to a maximum of Rs 2,500. Onions from Maharashtra are exported to at least 20 countries.

But farmers in Maharashtra’s onion belt of Nashik, Lasalgaon, Solapur and other areas are far from happy with the government decision. They told Down To Earth (DTE) it would provide little relief to them.

Cultivators are particularly irked over the clause, “Export is subject to a Minimum Export Price (MEP) of USD 550 per metric ton (MT).”

According to onion growers, the clause imposes an export duty of 40 per cent and hence would cut down profits. They also warn that onion prices may shoot in the coming months owing to poor policy decisions that are farmer-unfriendly.

Thirteen seats of the state have voted in the first two phases of the general election on April 19 and 26. On May 7, some key constituencies in the sugarcane heartland of Western Maharashtra as well the onion growing areas will cast their ballots.

These include Baramati, Raigad, Dharashiv (formerly Osmanabad), Latur, Solapur, Madha, Sangli, Satara, Ratnagiri-Sindhudurg, Kolhapur and Hatkanangle.

Onion farmers in Maharashtra have already expressed their dissatisfaction and prohibited political leaders of the incumbent Bharatiya Janata Party and the Shiv Sena (Shinde) to campaign in their region.

Read

Kuber Jadhav, a farmer leader and convener of farmer’s body Swabhimani Shetkari Sanghatna, said the Centre’s decision will only help big onion farmers and traders and deprive small farmers of benefits.

“The government’s fear of facing defeat during the ongoing general elections in the onion belt of Maharashtra has forced this decision on their part to pacify farmers,” he told DTE.

Jadhav said the decision was misguided and promoted a false sense of promise fulfilment.

For instance, an onion exporter will have to pay export duty of $550 for every quintal. “If the exporter sells onion for Rs 120 a kilo, the export duty to the government will cost around Rs 40-45, which will cut down profits,” said Kishor Kadam, another farmer from Lasalgaon.

Bharat Dighole, state president of the Onion Growers’ Association, said farmers should be excluded from export duty so that they can fully benefit from the policy decision.

“There should be no restrictions on the farmers for export. This has been the case for months and we have been repeatedly demanding a rollback of export duty,” he said.

Dighole added that onion farmers have been demanding a rollback of export duty since August 2023 and have been facing losses since then. “Earlier the export duty was $800. Later, exports were totally banned. The latest update continues to levy export duty on farmers, which is unfair,” he told DTE, adding that the decision was purely political, given the elections on May 7.

Farmers in Maharashtra have faced losses to the tune of about Rs 10,000 crore approximately in the past nine months. “Will the government compensate for the same?” asked Dighole.

The onion ban was imposed in December 2023 and extended indefinitely in March 2024, until being revoked on May 4.

Jadhav said poor rains in the past few months and the ongoing drought-like conditions have already impacted sowing of summer onions by 30 per cent. “Given the reduction in sowing area and extreme summer conditions spoiling the current onion harvest, the prices are likely to rise post-elections,” he added.