Onions: What Goes Up can also Go Down

February 17th, 2011
in Background

onions India Econintersect:  In late December the Indian government put restrictions on the export of onions as prices surged, in a attempt to protect the Indian populace from one source of food inflation.  The result?  Less than two months later the export restrictions are being removed because onion prices have tumbled.

Follow up:

From The Times of India:

Government has decided to lift the ban on export of onions after its prices almost crashed in the domestic market, triggering farmers' protest.

The decision to this effect was taken by an Empowered Group of Ministers (EGoM) on Food headed by Finance minister
Pranab Mukherjee on Thursday.

The government had banned onion export in the last week of December, 2010 to augment domestic supply and contain rising onion prices, which had touched Rs 70-80 per kg then.

The ministers' panel, as a precautionary measure against possibility of price shooting again, decided to allow shipments of onions at a Minimum Export Price (MEP) of $600 (about Rs 28,000) per tonne, a senior government official said after the EGom meeting.

The MEP is close to the level that existed before the price bubble.
Sources:  GEI News and The Times of India

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