Closer monitoring of Indian onion prices has led the government to introduce another minimum export price (MEP) on the vegetable, just two weeks after a previous export restriction price was levied.

Exports of onions can now only happen at a minimum price of US$500 per metric ton (MT). The previous MEP was set at US$300 per MT, but this has done little to remedy the situation and prices have been continuing to rise since it was set on June 17.

Fears of continual price hikes are growing, exacerbated by a slow start to the monsoon season which is closely tied to India's agricultural output.

A poor monsoon season or even the anticipation of one can drive up prices, prompting a need for more imports amid concerns that some sectors will be adversely affected by drought.

So far, rainfall for June and early July has been below average.

The Intern-Ministerial Committee said in a statement yesterday (July 2) that members 'unanimously decided' to fix the new MEP at a higher rate.

"We observed that the wholesale and retail prices of onion are going up in producing and consuming mandies (Indian markets) and despite MEP at (US)$300 per tonne, there is no appreciable decline in the exports of onion,"the Ministry of Commerce & Industry said in a release.

"Keeping in view the rising retail and wholesale prices and delayed monsoons, the Committee unanimously decided to fix the MEP at (US)$500 per tonne which translates to Rs 30.00 per kg (2.2lbs) with a view to arrest domestic price rise and augment domestic supply."

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